With the accelerating pace of Chinese enterprises going global, Indonesia, as the largest economy in ASEAN, has become a core choice for many Chinese-funded enterprises to deploy in Southeast Asia.
It not only boasts broad consumption potential and sufficient labor supply, but also enjoys policy dividends brought by the China-Indonesia “Two Countries, Two Parks” cooperation — in March 2025, Batang Industrial Park, an important part of the “Two Countries, Two Parks” initiative, was upgraded to an Indonesian Special Economic Zone (SEZ). Indonesian President Prabowo personally inaugurated it and hoped to build it into “Indonesia’s Shenzhen”, providing more policy support for Chinese enterprises to build factories overseas. Data shows that according to information released by Indonesia’s Ministry of Investment and Downstreaming, China’s direct investment in Indonesia reached 3.6 billion US dollars in the first half of 2025, continuing to maintain its position as a major source of foreign capital in Indonesia. The investment is concentrated in the downstream industrial sectors prioritized by the Indonesian government, and more and more Chinese enterprises are choosing Indonesia as their preferred destination for overseas factory construction.
However, in the actual landing process, many Chinese enterprises have fallen into the predicament of delayed landing and cost overruns. Fundamentally, it is not a problem of capital or technology, but the core lies in failing to accurately understand Indonesia’s import tariff rules, missing the optimal layout track, and ultimately leading to lower-than-expected investment returns.
Key Reminder: The underlying logic of Indonesia’s tariffs is “High Tariffs Protect Finished Products, Low Tariffs Support Upstream Industries”. This rule directly determines the profit space and layout direction for Chinese enterprises to build factories in Indonesia, and is a core point that all overseas enterprises must grasp first.
Combined with Indonesia’s latest investment policies, industrial development status and practical experience of Chinese enterprises going global, this article will dissect the core rules of Indonesia’s tariffs, analyze the tariff differences in key industries, help you find the right layout track, avoid cost traps, and efficiently land in the Indonesian market.
I. First, Understand: What is the Core Logic of Indonesia’s Tariffs?
The average level of Indonesia’s import tariffs is in the upper-middle range among ASEAN countries, about 7%-10% overall, but there are significant tariff gaps between different industries.“High tariffs on finished products/complete machines and low tariffs on parts and raw materials” is the core principle throughout.
The essence of Indonesia’s introduction of this tariff policy is to achieve three major goals:
1. Protect local labor-intensive industries and strategic manufacturing industries, and lay a solid foundation for the development of local industries;
2. Promote the downstream transformation of industries, increase the added value of local products, and promote Indonesia’s transformation from a resource-exporting country to a resource-processing country;
3. Through the combination of “high tariffs + investment incentives”, force foreign-funded enterprises to build factories locally in Indonesia, driving local employment and industrial upgrading.
This is also the core reason why enterprises from China, South Korea and Japan abandon direct exports and choose to build factories in Indonesia. For Chinese enterprises going global, understanding the tariff policies of key industries can not only avoid tariff costs, but also conform to Indonesia’s industrial orientation and enjoy local investment incentive policies (some industries can be superimposed with tax incentives in special economic zones).
II. Analysis of Tariffs in Key Industries to Find the Right Layout Track
Combined with Indonesia’s tariff rules and industrial orientation, the following 5 key industries are the preferred directions for Chinese enterprises to build factories in Indonesia, which accurately match the logic of “low tariffs supporting upstream industries”, with controllable costs and prominent opportunities.
1. Automobile and Auto Parts Sector: New Energy Supporting is the Core Breakthrough
Indonesia imposes a high tariff of 40%-50% on imported complete vehicles, directly raising import costs; while the import tariff on key parts is only 10%-25%, among which the tariff on electric vehicle parts is as low as 0%-10%.
At present, Indonesia is fully promoting the development of the new energy vehicle industry, planning to produce 400,000 electric vehicles by 2025. Chinese-funded brands such as Wuling, BYD and Chery have taken the lead in deploying. Among them, BYD plans to invest 1.3 billion US dollars to build a production line with an annual capacity of 150,000 vehicles, which is expected to be put into operation in the fourth quarter of 2025. New energy supporting parts have become the key for Chinese enterprises to seize the market.
2. Home Appliance and Electronics Industry: Local Assembly Plants are the Optimal Path
Indonesia imposes a tariff of 15%-20% on imported finished electrical appliances (such as TVs, refrigerators, air conditioners, etc.), while the import tariff on home appliance parts is only 0%-10%, and the tariff on core accessories (such as components, PC boards, etc.) is as low as 0%-5%.
Currently, Indonesia is striving to build an “ASEAN Home Appliance Assembly and Light Manufacturing Center”. Low tariffs have reduced the cost of importing parts, and local assembly plants are not only in line with local industrial orientation, but also can achieve cost control.
3. Textile and Garment Industry: Reduce Costs and Increase Efficiency by Relying on Demographic Dividend
Indonesia is an important global textile processing base, with international brands such as Nike and Adidas having deployed here. Its core advantage lies in sufficient and low-cost labor resources.
In terms of tariffs, a 15%-25% tariff is imposed on imported garments and footwear, a 5%-10% tariff on raw materials such as fabrics and yarns, and a tariff as low as 0%-10% on auxiliary materials. Chinese enterprises focusing on garment processing and footwear manufacturing can make full use of the advantages of raw materials and demographic dividend. It is worth mentioning that the Batang Industrial City Special Economic Zone in Indonesia has attracted footwear enterprises to settle in, providing a good carrier for Chinese enterprises to deploy.
4. Daily Chemical and Cosmetics Industry: Build Local Factories to Avoid Dual Barriers
Indonesia imposes a 15%-25% tariff on imported daily chemical products (such as skin care products, shampoo, etc.), and an additional 10%-30% luxury tax on high-end daily chemicals. At the same time, imported products need to pass complex halal certification, resulting in high access thresholds.
For Chinese enterprises, building factories locally in Indonesia can avoid both tariff and halal certification barriers, more accurately meet local consumer demand, and quickly open the market.
5. Food and Beverage Industry: Food Deep Processing Conforms to Industrial Orientation
Indonesia imposes a 20%-30% tariff on imported dairy products and sugar-sweetened beverages, 15%-25% on processed foods, and as high as 150% on alcohol, making imported products less competitive.
As an agricultural country, Indonesia focuses on supporting agricultural processing industrial parks. Chinese enterprises deploying in food deep processing and beverage production can rely on local abundant agricultural resources to reduce raw material procurement costs, which is in line with the direction of local industrial support. Yuanhong Investment Zone, the Chinese park in the China-Indonesia “Two Countries, Two Parks” initiative, is also in in-depth docking with Indonesia’s agricultural and fishery resources industries, providing support for Chinese enterprises to deploy in the field of food deep processing.
III. Summary: Tariffs are the Key for Chinese Enterprises to Build Factories in Indonesia
For Chinese enterprises to build factories in Indonesia, opportunities and challenges coexist, and tariff rules are the key to overcoming challenges and seizing opportunities. 2025 marks the 75th anniversary of the establishment of diplomatic relations between China and Indonesia, and the cooperation between the two countries has entered a new stage. The industrial opportunities under Indonesia’s “Golden 2045” vision are constantly being released, providing a broader space for Chinese enterprises to go global.
Different from direct exports, the core of factory layout is to “follow the trend” — understanding Indonesia’s tariff logic of “high tariffs on finished products and low tariffs on raw materials”, and choosing the appropriate track according to their own industrial advantages, can effectively avoid cost traps, quickly integrate into the local market, and seize a place in the Southeast Asian market.
In the future, we will continue to track Indonesia’s investment policies and tariff dynamics, sort out more practical tips for Chinese enterprises going global, share industry layout cases, help Chinese enterprises going global land smoothly and develop steadily in Indonesia, and work together to explore the new blue ocean of the Southeast Asian market.
