20 Years of Rödl & Partner in Indonesia

published on February 23, 2018

On January 23, 2018 we celebrated our 20-year anniversary in Indonesia. More than 60 guests, clients and business partners followed our invitation to join us in celebrating this happy occasion in our new office premises in the Green Office Park GOP.

The event was opened by office head Tomy Harsono, followed by Ute Brockmann, Deputy Managing Director of the German-Indonesian Chamber of Industry and Commerce (Ekonid), with interesting speeches about German-Indonesian business relationships, cooperation, past achievements and an outlook on chances ahead.

Subsequently, Prof. Dr. Christian Rödl gave an introduction into the history of Rödl & Partner in Germany, Asia and Jakarta in particular. He illustrated our philosophy that efficient internationalization is enhanced by developing own local presences, rather than by creating an artificial network of franchises or affiliates. We choose to set up our own offices and rely on a close, interdisciplinary and cross-border collaboration among our colleagues. As a result, Rödl & Partner stands for international expertise from a single source.

The current economic situation in Indonesia

For the past year as well as for 2018, a slight increase in GDP of 5.2 and 5.3 percent respectively has been forecasted, compared with 5.0 percent in 2016. This indicates that the local economy is dynamic and robust. But in terms of growth rates, countries like the Philippines or Vietnam are gradually moving past Indonesia. Nevertheless, the increasing demand for technology and the considerable reserves of various raw materials offer many opportunities for German companies. Important sectors medium-sized foreign direct investments are focusing on are infrastructure, mechanical engineering as well as the metal and electrical industries.

Although there is a tendency towards greater equality with regard to the treatment of foreign and domestic investments, restrictions continue to exist in many economic sectors. These serve to protect national interests and the domestic economy, and are defined at irregular intervals in a negative list set up by presidential decree. The last version took effect on 18 May 2016. This has facilitated market access into more business sectors, and in some cases – such as numerous manufacturing sectors or industry-related services – up to 100 percent of the market may be held by foreigners. The acceptance of negotiations for a free trade agreement between the EU and Indonesia, which seeks to reduce trade barriers, was announced on 18 June 2016. The fourth round of negotiations on the Comprehensive Economic Partnership Agreement (CEPA) took place in Surakarta (Central Java) in February 2018.

During the first term of office of Joko Widodo, who has been elected President of the Republic in 2014, Indonesia appeared relatively stable, both democratically and economically, and was able to positively develop its position as an investment location. There are signs that this stability will sustain and that economic conditions will be liberalized in the medium term. However, the president's policy also reveals some protectionist elements owed to pressure from within the party: For example, the local production of industrial products is to be strengthened, which will entail ongoing import and distribution restrictions. In this regard, the new version of the negative list has only partially facilitated foreign investment. These factors should be carefully considered upon market entry planning.

Companies aiming to cross borders particularly need experienced people by their side – which is the reason we have been providing our services since the end of the 1990s in Indonesia – starting with a small team. Now more than 40 experts assist our clients in being successful in this dynamic market.