Jakarta vs Bali: What Makes These Markets Different?

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All about doing business in Jakarta vs Bali.

Indonesia is a massive consumer market with over 250 million citizens and thousands of islands. However, most economic activities still focus on the areas of Jakarta and Bali. These two markets are what most people would choose as a starting point for their business operations in Indonesia.

There are some key characteristics in Jakarta’s population and Bali’s population that make each of them the best fit for different kinds of businesses. Below, we’ll outline the basics of what you need to know to set up a business in these two locations.

What makes Bali and Jakarta different?

Jakarta, located in the western part of the island of Java, is the political and economic capital of Indonesia. It’s where most of the authorities and government offices are based, as well as national and regional headquarters for most international companies.

In contrast, the island of Bali – located directly east of the island of Java – is Indonesia’s most popular tourist destination. Tourism and shopping – both from international brands as well as local brands and SMEs – are the backbone of business in Bali.

Jakarta is dominated by domestic customers.

Jakarta’s metropolitan area houses over 10 million residents. Most of Jakarta’s population is domestic; while the exact number of foreign residents and tourists in Jakarta can vary from source to source, the general ratio of foreign to domestic residents is much smaller than Bali’s.

While Jakarta has a mostly young population – Indonesia’s median age sitting at about 30.2 years – the overall mindset if relatively more conservative than usual Western markets. For example, acquiring halal certifications is considered a necessary step for businesses to compete in the food processing industry.

Businesses should also consider Jakarta’s high economic disparity. While overall poverty has been decreasing, Jakarta’s population still varies between higher-income and lower-to-middle-income consumers. Product offers should take into account the different purchasing power and consumption habits of Jakarta’s varying groups.

Bali is a paradise for foreign consumers.

Business in Bali is booming. Bali’s permanent resident population of about 4.2 million people is far outnumbered by its tourist population, which reached upwards of 14 million people in 2017. While most tourists in Bali are domestic, foreign tourists still represent a big portion at about 5.7 million people in 2017.

In 2017, China surpassed Australia as the leading source of foreign tourists in Bali and is projected to keep that position until at least 2020. China contributed 1.4 million tourists through 2017, Australia contributed 1.1 million, and India held third place with 273,000 tourists.

This number might also increase in the coming years. The Indonesian Ministry of Tourism is currently targeting 8 million foreign tourists through 2019.

As the commercial and financial center of Indonesia, Jakarta is where most big companies operate. Any well-established company coming into the country will most likely set up its main office in this city for a number of reasons.

For one thing, there are a lot of B2B service providers such as project management, auditing, accounting, payroll processing and HR in general. It means that you can easily outsource most administrative processes, making it easier for businesses to start operating.

Bali has great potential for small businesses and solo entrepreneurs.

However, Jakarta’s more advanced infrastructure and higher population aren’t suitable for everyone. Operational costs tend to be higher, and SMEs will find it more difficult to overcome the competition and get a sustainable consumer base.

Bali might be beneficial for solo entrepreneurs and SMEs, especially those with B2C business models. Businesses selling consumer goods, for example, might be more successful in Bali. Here, there are more tourists looking to shop and less domestic residents who usually prefer their old favorite brands.

Bali and Java, even though they are located in the same country, have a remarkably different environment of businesses. Therefore, businesses should target them differently.

Jakarta vs Bali: How to decide?

“Jakarta vs Bali” is an issue that’s very common in the minds of aspiring foreign business owners. We know it can be difficult to choose a location for a new business, especially in unfamiliar markets. Luckily, you don’t have to do it alone.

We advise that you connect with professional consultants who can help guide and manage everything for you. Greenhouse has experience in handling all processes related to foreign company registration, including preparing all the paperwork. We’re happy to help you start incorporating your business in Indonesia.

Check out Greenhouse’s market entry services.

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