ASIATODAY.ID, JAKARTA – Around 71.4% of Japanese-affiliated companies in Indonesia are expected to be profitable in terms of operating income in 2023. This is the highest profitable percentage of Japanese companies in ASEAN. This is the result of the 2023 Japanese Companies Business Conditions Survey conducted by the Japan External Trade Organization (JETRO).
In addition, 42.1% of Japanese companies in Indonesia answered that the estimated operating profit in 2023 increased compared to the 2022 survey.
“This was driven by many companies stating that there was an increase in demand from the domestic market,” said Industry Ministry spokesperson Febri Hendri Antoni Arif in Jakarta, quoted Wednesday, March 20 2024.
Previously, Febri accompanied the Minister of Industry Agus Gumiwang Kartasasmita to receive a presentation from the President Director of JETRO Jakarta, Mr. Takahashi Masakazu regarding the results of the 2023 survey.
With Indonesia’s positive business conditions, around half of the Japanese companies in Indonesia surveyed expressed a desire to expand their business in the next one to two years. The survey results show that the percentage of business expansion continues to increase after the Covid-19 era, in contrast to conditions in China where expansion continues to decline in the same period.
Around 49.5% of Japanese companies in Indonesia responded to the survey saying they would expand. This percentage increased by 1.7 points from the 2022 survey.
“In addition, only around 4.2% of respondent companies stated that they would reduce capacity or relocate to other countries,” added Febri.
Expansion of domestic market needs is the main reason for companies to expand their business.
JETRO said that expectations for the expansion of domestic market needs in Indonesia are higher than ASEAN as a whole. Japanese companies in Indonesia view several factors as advantages of doing business in Indonesia, including market size and growth potential, low wage costs, ease of recruiting local staff, local industrial clusters formed by client companies, and political and social stability.
“Meanwhile, several things that are still considered the top risk factors are increasing labor costs, unclear management policies from local governments, time-consuming tax procedures, undeveloped and unclear legal operating systems, and administrative procedures that also take time,” said Febri.
The transformation towards Industry 4.0 is also the focus of Japanese companies in Indonesia. About 30% of companies say they have implemented automation in production lines, and 70% of the companies surveyed are interested in doing so.
As many as 80% of companies stated that advancement of production lines and technologies and increasing workers’ wages were the background for carrying out automation in Indonesia.
Meanwhile, more than 70% of companies say they have implemented or are considering decarbonization initiatives. As many as 44.3% of companies stated that they had made decarbonization efforts, such as reducing greenhouse gas emissions. This number increased by 8.6 percent from the previous year’s survey.
Febri added that the optimism of companies operating in Indonesia shows that the national economy is currently still quite strong. The strengthening of the economy is in line with the positive performance of the manufacturing industry which is the largest contributor to national Gross Domestic Product.
“This condition is also felt by industrial players operating in Indonesia. “The Ministry of Industry will continue to support manufacturing companies to develop their businesses by pursuing strategic policies,” he explained.
Meanwhile, the Business Conditions Survey of Japanese Companies aims to understand the current business activities of Japanese-affiliated companies operating in Asia and Oceania.
President Director of JETRO Jakarta, Mr. Takahashi Masakazu said that there are several activities carried out by JETRO to support the business of Japanese companies in Indonesia, one of which is holding seminars related to Domestic Component Level certification with PT. Sucofindo.
“The focus of this main activity is to provide an explanation regarding the concept of calculating the Domestic Component Level and Company Benefit Weight to companies so that they can increase the value of the Domestic Component Level of their products,” explained Mr. Takahashi. (ATN)
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