Leading Sectors for U.S. Export and Investment

Aircraft and Parts

The Indonesian aviation industry offers excellent prospects for U.S. products since the current aircraft fleet consists largely of American aircraft. More than 95 percent of aircraft and parts are imported. Leasing services, aircraft spare-parts and maintenance services look to U.S. products as their source. With its population of over 237 million spread over 13,000 islands, Indonesia is an attractive market for the airline industry. The increase in the number of airline passengers in the last two years has been impressive. The number of domestic passengers reached 40 million in 2009, and 48 million in 2010. In 2011, the Indonesia National Air Carriers Association (INACA) predicted that the industry would grow 15 percent.

Currently, there are 19 scheduled and 41 chartered airline companies operating in Indonesia. In 2010, there were 821 units of aircraft, serving 194 domestic and international routes. Garuda Indonesia re-opened routes to Amsterdam in mid 2010, after the European Union lifted the ban on four Indonesian airline companies (Garuda, Mandala, Airfast and Prime Air) flying into Europe. However, in mid January 2011, Mandala had stopped operations due to financial problems.

On January 12, 2009, the GOI enacted the new Aviation Law No 1, 2009 that restricts issuance of licenses to airline companies operating at least 10 aircraft. The law also adopts the ICAO safety standards requirements. The government will impose sanctions upon the airlines and their personnel if the safety requirements are not met. The new law also implements the provisions of the Cape Town convention on international interests in mobile aircraft equipment, which assures lenders protection of their interests. In response to the improved financial securities, lenders such as U.S. Export Import Bank and others are vigorously engaged in financing aircraft to sell and lease to Indonesian companies. Under the new law, a new government agency will be set up for managing the air traffic control and navigation systems. Private companies will be allowed to manage airports and compete with the current operators, PT Angkasa Pura I and II.

Imports of aircraft and parts for 2009 amounted to $1,035 million, with imports from the United States reaching $994 million. It is expected that the import value will remain high in the next two years since several Indonesian airline companies are expecting to receive deliveries from Boeing such as Lion Air’s 30 of B 737-900 ER aircrafts, and Garuda’s 25 B 737-800s and 10 B 777-300ERs. In addition, Sriwijaya Air bought 20 B737-300s and AirAsia Indonesia ordered 15 Airbus aircraft. Lion Air also ordered 30 ATR 72-500 aircraft.

Imports from U.S. suppliers are particularly desired in the following areas: airplanes and other aircraft, parts, aircraft launch gear and parts, engines, engines parts, instruments and appliances for aeronautical use, and aircraft electrical wiring sets. U.S. companies also have a strong presence in providing training, engine repairs and maintenance services.

In order to expand routes, additional aircraft will be needed by new and existing airlines. The Law number 1/2009 requires that by 12 January 2012, scheduled airline companies have to operate 10 units of aircraft with five of them owned by companies. Although not all of these firms intend to buy new aircraft, there are excellent opportunities for U.S. aircraft leasing companies to lease their aircraft to Indonesian airlines. In addition, with more aircraft in operation in Indonesia, there will be a greater need for more aircraft spare-parts and maintenance services in the near future. Similarly, leasing and sale of helicopters for mining and petroleum industries provide another opening for American products and services.

With the USG policy allowing export of defense equipment to Indonesia, there are also opportunities for U.S. defense manufacturers to export fighter aircraft parts and other defense related equipment to the Indonesian military.

Computer and Peripherals

There are no locally manufactured computers in Indonesia. The total local production figures indicated above refer to locally assembled computers as all or most of the components are imported.

In addition to the figures listed above for U.S. imports, a considerable amount of indirect imports enter Indonesia through other countries. Several U.S. manufacturers such as Dell, ATI, Cisco, Hewlett Packard (HP), Intel, Maxtor, Seagate, and Sun Microsystems have manufacturing plants in Asian countries from which American firms’ products indirectly enter the Indonesian market through intra-Asia distribution channels.

Total PC sales in 2011 are expected to reach around three million units from two and a half million units in 2010. In the commercial segment, small and medium size companies are the largest users of desktops, accounting for 70 percent of sales. Server x86 and Unix have the largest server market share, accounting for 40 percent and 36 percent, respectively. Sun Microsystems controls 58 percent of the Unix market share, followed by HP (21 percent) and IBM (16 percent).

The Indonesian PC market is dominated by Acer, HP, Dell, Lenovo and Toshiba. While locally assembled PCs from imported components, such as Ion, Reliance, Zyrex, Mugen, Axioo, and Access, dominate the non-business market. Most local PC brands use imported components such as: Intel and AMD processors; Memories/DRAM from Korea, Japan and the U.S.; and motherboards, mice, keyboards and peripheral cards from Taiwan and China.

An increasing number of ultra lightweight notebooks have recently emerged in the Indonesian market. This type of notebook is mostly used by corporate executives as they tend to travel more frequently and want lighter computers.

Data storage products are predicted to have a 40 percent gain in the Asia Pacific region, including Indonesia. American brands such as EMC, HP, IBM, Dell, and Netapp are leading players in the data storage market, followed by Hitachi of Japan.

Indonesia’s computer market offers potential for U.S. companies. PCs, laptops, servers, data storage, and networking equipment offer the best prospects.

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