Foreign Competitors Enter Indonesia's Promising Franchise Business
In 2014, about 30 to 40 foreign franchise holders (mostly from Singapore and the USA) intend to enter Indonesia as the country's franchise business expands about 20 percent per year. Levina Supit, Chairman of the Indonesian Franchising and Licensing Association (Wali), said that Indonesia's franchise business is currently dominated by the food and drinks and services sector. The new foreign market participants will focus on these two sectors as prospects are promising due to Indonesia's rapidly expanding middle class.
According to Supit, these foreign franchise holders are also interested to enter the retail, education and health sectors. However, they will first wait and see for results of the legislative and presidential elections, scheduled for April and July 2014, before starting expansion to Indonesia as political stability is expected to be more stable after the elections. Supit declined to mention any names yet of the foreign investors.
For domestic franchise holders and franchisees, the influx of international brands implies that competition will intensify. Currently, there are fifty local franchises.
Last year, the government of Indonesia issued a number of important new rules for the franchise business.