Indonesia has seen a rapid growth in its economy in the last two decades which has inevitably given rise to a skyrocketing crime rate. These two factors alone suggest this nation is a potentially lucrative market for any American producer and exporter of high quality security systems. Currently, no high end or sophisticated security equipment including fire and burglar alarms, video surveillance, signal equipment, and a bevy of other types of monitoring or warning systems, are produced domestically. This lack of domestic security systems production means Indonesia's booming commercial and residential construction industry must rely on imports for incorporation into their building projects. It is true that government statistics for the period 1990 through 1995 have shown a slight decline in the importation of security equipment but this report will detail why this is a misleading figure.
While the Indonesian market is potentially very lucrative for United States firms exporting security equipment, such an investment is not without a certain number of obstacles. Some of these obstacles include Indonesia's absurdly high import tariffs, the critical need of foreign security firms to conduct their business through middlemen and the higher costs associated with this practice, and a need for improvement of Indonesia's infrastructure to facilitate the transportation of security equipment to potential customers.
Despite these pitfalls, Indonesia is worthy of investment consideration by American security firms because of its booming economy as well as crime rate, the fact that there is no domestic competition and little world competition other than European firms, and the excellent reputation of Indonesian companies in terms of paying their bills.
According to Reese, (1996), who studied the market for security equipment in Indonesia and reported his findings in a market research report, the Indonesian economy has grown by 7% annu...