10 Major Indicators of Economic Environment in Indonesia - Assignment Example

Assignment 6: 10 Major Indicators of Economic Environment in Indonesia In Indonesia, the economic environment is characterized by several indicators. Some of the ten indicators of economic environment in Indonesia are discussed below. The current GDP relevant to purchasing power parity as recorded in 2014 is at $2.554 trillion. This is slightly higher than that of the year 2013 that was at $2.429. The official exchange rate as recorded in the year 2014 stands at $856.1 billion (Central Intelligence Agency, 2015). The per capita income is $10,200 as estimated in the year 2014. The real growth rate experienced in Indonesia stands at 5.2 % relevant to the most recent records. In addition, the Gross National savings of Indonesia as estimated in the year 2014 stands at 30.2% of GDP. Relevant to consumption of GDP, household and government consumption stands at 56.2 % and 9 % respectively. Investment in fixed capital and exports of goods and services take 33.6% and 23.5 % of GDP respectively. Moreover, the agricultural, industrial and service sectors claim 14.2 %, 45.5% and 40.3% of the GDP (Central Intelligence Agency, 2015). The labor force of Indonesia stands at 124.3 million according to the recent records. The industrial production growth rate is 4.9 %. The population below poverty line stands at 11.7 %. The unemployment rate is at 5.7 % according to the latest statistics and the Gini index stands at 36.8 as recorded in 2009. According to the budget of Indonesia, the revenues and expenditures stand at $134.7 billion and $155.2 billion respectively (Central Intelligence Agency, 2015). Taxes and other revenues account for 15.7% and the public debt stands at 23.9% of the GDP. The inflation rate was estimated at 6.3% in the year 2014. The prime lending rate of the commercial bank was estimated at 12.4 % in December 2014. According to the recent records, the imports and exports of Indonesia stand at $166.7 billion and $ 179.4 billion respectively. The major indicators of social infrastructure in Indonesia may comprise of the life expectancy, infant mortality as well as literacy levels among others. In Indonesia, the population growth rate is estimated at 0.95 % according to the 2014 statistics. The birth rate was estimated at 17.04 births per 1000 population in 2014. Death rate was estimated at 6.34 deaths per 1000 population. The infant mortality rate stands at 25.16 deaths per 1000 and the maternal mortality rate was estimated at 220 deaths per 1000 live births. The life expectancy stands at 72.17 years for all populations. From the latest commercial guide of Indonesia, there are several points of economic outlook. The guide stipulates that the population in 2012 was 244 million. This provided the market for the products sold in the country. The nominal GDP was $710 billion, $846 billion and 878 billion for the years 2010, 2011 and 2012 respectively. The per capita income has also been increasing steadily from the year 2010 to 2012. The consumer prices have also recorded some changes from the year 2010. The unemployment rates have also been dropping from 7.1%, 6.6% and 6.2% from the year 2010, 2011 and 2012 respectively. The imports and exports have also been experiencing considerable changes from 2010 to 2012. Assignment 7: How culture affects business in Indonesia It is of crucial significance to note that culture as well as its aspects may greatly influence the success of any business venture. Some cultural practices may hinder businesses as well as other developmental agenda. On the same note, some cultures can also contribute towards the promotion of the businesses. Some of the aspects of cultures may involve traditional beliefs, practices as well as celebrations. Some people may accord different meanings on certain tings involving handshakes, hugging other people, the way someone speaks and many others. These may contribute towards defining the success o any business activity (Central Intelligence Agency, 2015). It is important to note that Indonesia is a multi ethnic nation. Thus, the republic of Indonesia does not have a distinct and clear cut culture, but a collection of cultural beliefs and practices. These influence the business sector in many ways. For instance, in Indonesia, there is a general belief that human beings are always a mixture of good and evil. Once an investor is termed evil, there are high chances that such businesses will most likely to fail. In such circumstances, conducting business activities in such a culture where the business practices, investor as well as other accomplices are considered evil becomes very challenging. However, once termed good, such businesses are most likely to develop in Indonesia (Central Intelligence Agency, 2015). This cultural belief is mostly used within the Javanese culture from which Indonesia borrows a lot. In addition, most Indonesians always like reflecting on the past and associating it with the current circumstances in cultural context. Thus, if one rubbed shoulders in a bad way with them, their businesses may have great challenges in success. Assignment 8: Political Environment of Indonesia The country of Indonesia has a very rich and diverse history. This history is detailed and is recorded right from the 16th century. For instance, in the year 1670, the Dutch colonists brought the republic of Indonesia under one government. This led to the formation of the Dutch East Indies. In the year 1942, Japan invaded the Dutch East Indies (Central Intelligence Agency, 2015). This happened during the World War I. However, in the year 1945, Sukarno returned from exile. He thereafter declared Indonesia independent. Four years later, the Dutch recognised Indonesia as independent. In the year 1969, West Papua was politically annexed to Indonesia and became the Jaya Province of Iran. In 1976, East Timor was incorporated in Indonesia, but later got independence in 2002 when the republic of Indonesia dawned on constitutional changes that allowed voters elect their president for the first time. In 2004, the effects of tsunami claimed several lives in Indonesia. In 2013, the country experienced series of demonstrations following approval of major price hikes by the parliament. The government of Indonesia has three administrative arms. These include the executive, judiciary and legislative. The president is the head of the executive arm, is elected through voting and serves a term of five years. The Mahkamah Agung is considered the highest authority in the arm of judiciary. It consists of several judges appointed by the president. There are two legislative bodies in Indonesia and are supposed to last for a five-year term. These include Permusyawaratan Rakyat as well as Dewan Perwakilan Rakya (Central Intelligence Agency, 2015). In terms of risk assessment and mitigation, the government cut petrol subsidies and raised taxes for those luxury products that were exported. This was done in bid to curb the rising debt. Banks also raised their rates in order to control the amount of money getting out in form of debts. This is one of the solution measures relevant to the risk of inflation and debts in Indonesia. Assignment 9: Legal Environment in Indonesia WTO refers to a place where signatories as well as member states always converge to discuss matters related to trade. This is in regards to the problems faced as well as possible solutions to such problems. There are several agreements that each member state must sign and comply with. There are several things that WTO can do (World Trade Organization, WTO). These are all attributed to the issues of trade, both locally and internationally. Some of these include cutting on living costs alongside raising the living standards. In addition, WTO can settle trade disputes, stimulate both economic growth as well as employment, reinforce the weak as well as foster peace and stability. Moreover, WTO can reduce costs of international business operations, assist countries to realize development, foster environmental support as well as encourage good governance. Furthermore, WTO can ensure effectiveness regardless of hitting the headlines. However, in spite of the above, there are several misunderstandings about the WTO. Some of these misunderstandings are that WTO dictates policies (World Trade Organization, WTO). WTO is also perceived as for free trade. Some also perceive WTO as undemocratic. It is also important to note that some people also misunderstand WTO as the major agent that creates and worsens poverty. Some people or governments also perceive WTO as a tool suitable for powerful lobbies. WTO is also perceived to value commercial interests over development, environment, health and safety. Being that WTO involves several top ranking nations, some people believe that WTO always forces weaker nations to join. Smaller countries are also perceived very powerless in the WTO. These are some of the misunderstandings of the WTO (World Trade Organization, WTO). Assignment 10: Methods of Entry Opportunities for Exporters There are several opportunities to exploit in the business industry. This is under the courtesy of Export.gov. It is of crucial significance to note that export.gov offers a wide range of information relevant to businesses in the republic of Indonesia (Exports.org). Some of the information related to industries offered by Export.gov includes information on current industry as well as trade information. This is very important to importers of U.S goods as well as services for many reasons. One of the reasons is that such information is necessary in enlightening them of what they need in order to compete favorably in the overseas markets (Exports.org). Market research is always necessary since it enables one learn the potential of their products before exportation. Trading events are also important in enhancing interactions with buyers, distributors as well as representatives (Export.org). These are critical for the success of the exported goods. Trade leads are also important when conducting export businesses. This is because such may help identify promising and potential information regarding the markets. Solutions to Exporters Export businesses may be affected by several challenges. However, the US government has always been offering several trade solutions to its exporters. Some of these include availing them with exporting information as well as advices based on the market trends. In addition, the government has also been key in offering several services including international financing, insurance as well as offering grants to the exporters (Export.org). Moreover, provision of international logistics, licenses as well as trade data analyses are some of the services accorded to the exporters. Assignment 11: International Product Policy Several intriguing innovative ideas have been introduced in many countries globally. Some of these intriguing innovative ideas have touched on the sector of automobile industries. The automobile industry is the most affected industry when it comes to modifications of existing products, as well as inventing new automobile devices. However, other than the above, other innovations have been made on the sectors of leisure and lifestyle. This also draws a lot, and is closely attributed to the automobile industry’s innovations. However, one of the most intriguing innovations to be discussed in this section refers to the Money-making boiler. This device was innovated in the United Kingdom and is commonly in use in the same region. The device is very efficient to use. It provides two forms of energy. The Money-making boiler provides both electricity as well as cuts emissions of Carbon IV Oxide (Springwise.com). This device generates energy as a by-product following heating of the homes of the consumers. This device can most be used in areas where there is a problem of heating homes as well as cold areas. The prices of the products are also pocket-friendly, therefore, a number of people can purchase it. Promotion of the product can be done online by the use of social websites. In addition, the Money-making boilers can be promoted by the use of televisions and newspapers. Shipping can be done when a customer has ordered for the product. Shipping is done by Flow Energy, the company that produces the device. The device is also environmental friendly as it sequesters carbon from the atmosphere alongside limiting the release of CO2 to the environment (Springwise.com. Assignment 12 International Distribution In the republic of Indonesia, there are several forms of distribution channels that may be employed in ensuring efficient delivery of goods and services to their intended destinations. The Indonesian market has a large population offered by the millions of citizens found in the region. In addition, increased international relations have provided a good platform for the country to invest massively in the international trade (Kornfield, 32). This has ensured that the country of Indonesia gains a lot on the international market spectrum. However, in relation to the above, it is of crucial significance to note that the success of such trade activities is determined by the distribution channels among other things. This section is going to focus on the differences between four distribution channels used in Indonesia. Direct sale is one of the channels used for trading in Indonesia. This is very important since it promotes accountability and ensures that trust is maintained. Direct sale is always very important since it provides the company with an opportunity to explore the market, identify and decide on challenges and opportunities relevant to businesses (Kornfield, 47). Telesales is the second distribution channels used in Indonesia. Telesales is important since it leads to minimization of unnecessary costs of operations, as well as other indirect costs for conducting the businesses. In Indonesia, other distribution channels may involve selling of goods and services through manufacturers. This involves wholesale trades. This is very beneficial to the company since wholesalers always take goods in bulk from the company. This leads to creation of profits. In addition, they can also employ the use of representatives like the retailers. This is also important since it enlarges the customer base for the products. This is because both the retailers and their customers are considered the customers for the goods and services offered. Assignment 13: International Promotion This section is going to focus on the ways of advertising used in Indonesia to market their products in the international markets. It is of crucial significance to note that the success of any product in the international markets depends on a number of things. The first thing may involve how competitive the prices of such products are (Lovering and Demand, 25). The other thing that may influence the success of products on the international markets is the quality of such products. Products of low quality may not do well in the international markets as compared to the products of very high qualities. On the same note, the different ways and strategies employed in advertising the products in the international markets also determine the success of such products. The use of social websites is very critical in ensuring the success of products as employed by Indonesia. Advertisements conducted through social media reach several people within a very short time, thereby leading to success of such goods in the international markets. Television advertisements as well as use of newspapers are also important tools for enlightening the public about the goods and services offered by Indonesia in the international markets () Lovering and Demand, 37. The use of television is very important since the message reaches a number of people. This may involve the use of television interviews that make the promotion even more interesting. The use of billboards as well as telemarketing can also be very efficient as used in Indonesia. Telemarketing is important since it allows for an opportunity to identify the possible threats, challenges and opportunities to exploit in the international trade. Assignment 14: International Pricing Parallel imports may at times be referred to as the grey market imports. The parallel imports are always cross border trades conducted on products. These trades are always conducted without the notice or permission of the manufacturer, as well as the publisher (Hawin, 2004). It is always viewed as an illegal trade. It is of crucial significance to highlight the fact that grey markets of parallel trades always emerge following differences in prices of the same goods, as is experienced in different markets. It is important to note that some of the parallel imports may always be defective products. As such, conducting trades on such items is always associated with lots of risks. However, it is important to note that the difference in prices of such goods provide a very enabling trade platform for the dealers in such goods, although under no permission from the manufacturer. Parallel pricing may become beneficial to some countries since they may lead to lowering of the prices of the products initially in existence. In Indonesia, several manufacturers have engaged in several activities to prevent the issue of parallel pricing. This is because parallel pricing precipitates losses to the manufacturers as it promotes profit creations to those engaged. The manufacturers in Indonesia have engaged in restrictive contracts, regulatory barriers as well as impose trade marks on their products. This has massively aided in curbing the issue of grey markets. However, it is significant to note that parallel markets are always permitted under the international laws. The US has put more pressure on the Indonesian policy of parallel importation relevant to pharmaceutical products (Hawin, 2004). This is because the country is partly economically dependent on America. Works Cited Central Intelligence Agency (CIA), The World Fact Book. Retrieved on 14 April 15, 2015 from https://www.cia.gov/library/publications/the-world-factbook/geos/id.html. Export.org. Helping U.S Companies Export. Retrieved on 14 April 15, 2015 from http://www.export.gov/about/eg_main_016804.asp Hawin, M.  Parallel importation in selected East Asian countries : a suggested solution for Indonesia PhD Thesis, School of Law, The University of Queensland. 2004. http://www.wto.org Kornfield, Dan. Distribution Channels in Indonesia: Current Trends and Enduring Difficulties. Retrieved on 14 April 2015 from http://blog.frontierstrategygroup.com/2012/11/distribution-channels-in-indonesia-current- trends-and-enduring-difficulties/ Lovering Catherine and Demand Media: 8 Different Ways to Advertise Products and Services. Retrieved on 14 April 2015 from http://smallbusiness.chron.com/8-different-ways- advertise-products-services-19274.html. Springwise. Money-Making boiler generates electricity and cuts CO2 emissions. Retrieved on 14 April 2015 from http://www.springwise.com/money-making-boiler-generates-electricity- cuts-co2-emissions/ Read More