Indonesia / Information About the Market
INTELLECTUAL, COMMERCIAL, INDUSTRIAL PROPERTY RIGHTS
In Indonesia, significant progress have been made in terms of the protection of patents, trademark, copyright, trade secrets, industrial designs in recent years, and many world companies and brands have entered the country market to operate in the Indonesian market. On the other hand, it is worth noting that some of the violations have been witnessed in this large economy, where different legislation and/or practices can be seen in its wide geography.
According to the patents law adopted by the parliament in 2001, penalties for patent infringements were increased and an independent patent commission was set up to resolve disputes. Products and production methods are protected for 20 years according to this law.
Indonesia’s Copyright Act came into force in July 2003. Reconciliation The new law includes deterrent penalties in terms of piracy. Although the government has repeatedly expressed its intention to prevent copyright piracy, copyright piracy on computer programs, music tapes and books continues to exist.
The Trademarks Law, which is still in force, came into force in 2001 and includes various sanctions against trademark violations. This law protects trademark rights not on “first use basis” but on “whoever registers first” basis.
DISTRIBUTION CHANNELS
Due to especially the logistical conditions and difficulties of Indonesia, it is critical to use effective distribution channels in this country, which is spread over a wide area. Therefore, benefiting from strong local distribution channels is among the indispensable conditions especially for new companies entering the market.
In terms of supply and shipping conditions, ensuring that our country’s export products can be delivered to Indonesia ports at competitive prices, in a way that meets customer satisfaction, on time and continuously is a matter that needs to be handled with great seriousness, and it should be taken into consideration that the domestic distribution of these products from the ports in question can be at least as problematic as overseas shipping.
On the other hand, it is possible for companies with foreign capital to operate in the distribution sector in Indonesia according to the legislation in force, but they have to partner with local companies while carrying out such activities. Although the said situation is likely to change in the changes planned for 2020, it is not possible for foreign capital companies to operate in the distribution sector without their local partners.
ADVERTISING AND PROMOTION
Local media and newspapers can be used to promote new products, especially in regions with high purchasing power, such as Jakarta and West Java. Newspapers can only spend 35% of their total content on advertising pursuant to the regulations. In addition, the number of pages of newspapers is limited to 24. This leads to high advertising fees for major newspapers.
Mail marketing can be effective in many situations provided that address lists are correct and up to date. Local marketing companies can also assist in placing brochures, slides, advertisements, posters on buses, stops and billboards. Television ads are also developing rapidly.
Newspapers are published in Indonesian, Chinese or English in the country and being read by a wide audience. The country’s leading newspapers are Kompas, Republika, Media Indonesia, Koran Tempo, and Seputar Indonesia. The main magazines are Gatra, Tempo and Kontan. There are private channels in television broadcasting. The state’s television channel is TVRI. Major private channels are Metro TV, RCTI, SCTV, Trans TV, and TV One.
SALES TECHNIQUES AND FACTORS AFFECTING SALES
Indonesian consumers, especially the low and middle income group, are very sensitive to prices and general economic trends. As a result, importing companies usually pay attention to price rather than quality.
The key factors for success in Indonesia are to be patient and to be present in the market. Companies that set up an office in the country or open a similar agency are more successful than companies that visit the region for sales purposes once a year. Indonesian consumers value brand loyalty and brand recognition.
Distribution of the product, advertisement and image should also be taken into account in pricing. Market research should be carried out meticulously for pricing, which is an important criterion for the success of the product in the market. Both consumers’ preferences and competitors’ prices should be examined in market research. Information can be obtained from local distribution companies in this regard.
AFTER SALES SERVICES
Another criterion that is significant in entering a market and affecting success is the after-sales services provided and supporting the consumers. That being said, due to the increase in distance and cost, various problems may occur in this regard.
Although hiring a local distribution company can help with this issue, finding a local partner in the region or establishing a service provider for this purpose may be more effective. Indonesian consumers give importance that after-sales services are provided locally and fast.
PUBLIC TENDERS
Indonesia is not a partner to World Trade Organization’s (WTO) Public Procurement Agreement. Within the framework of the presidency decision published in 2004, it is aimed to facilitate the implementation of state tenders and make them transparent. On the other hand, the new rules support the use of local resources and increasing local share in government projects.
According to the last decision the government has been working on regarding public tenders, foreign companies will be able to participate in the tenders that cost over 100 billion Rupiah in construction tenders, over 20 billion Rupiah in procurement tenders and over 10 billion Rupiah in consulting tenders. The major projects of the government are being published by the State Planning Organization (BAPPENAS). (www.bappenas.go.id)
For major tenders planned by the public, it is necessary to hold tenders based on international competition. That being said, in some projects, as in the field of construction, the condition of purchasing or exporting domestic goods and services is required. Furthermore, foreign co-investors are not able to participate in the medication procurement tenders of the state.
