Indonesia as an Investment by U.S. Firms
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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 consid
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imately 180 shopping centers, 46 major department stores, 28 new shopping malls, and 380 supermarkets (Indonesia - Security equipment, 1994, 11). It is projected that in 1997 Indonesia will require an additional 300,000 m2 in retail space. Construction on the nation's first super mall began in 1994 with plans calling for it to cover 180,000 m2 and include 250 shops, an amusement center, and an 800 seat food court (Indonesia - Security equipment, 1994, 11).
Indonesia is experiencing a thriving tourist industry. In 1995, Indonesia listed 500 hotels with roughly 500,000 rooms. However, in that same year, the government's Capital Investment Board released additional contracts for 55 new hotels, representing an increase of 15,000 rooms, in recognition of the tourism industry's annual growth of 15%. The Indonesian government is well aware that reports of high rates of crime can retard the growth of a region's tourism industry, as in the case of Florida after reports of targeted attacks by criminals on foreign tourists, and in some cases devastate a nation's tourism industry, as in the case of Brazil and Jamaica (Reese, 1996, 3). Thus, Indonesia's tourism industry is a major source of purchasing orders for security equipment, es
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Approximate Word count = 1926
Approximate Pages = 8 (250 words per page)
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