Indonesia is the Muslim country, which is located in the far each of Malaysia and Singapore and it consists of about thirteen thousand islands. It is located between the Pacific Ocean and Indian Ocean. The country has huge population and the main cities are Smatra, Java and Jakarta. Most of the area is mountainous, rain forests and swamps. Most of the population of the country is Muslim and the common language is Indonesian.

Political Factors

The political system of the country is democratic and the president and vice president of the country are elected through parliament. It is declared the Republic and their rules and regulations are developed under Roman-Dutch law. The president and vice president are elected after five years and president has authority to appoint his cabinet through the votes of public. This country got the independence from Japan on 17 August 1945 and since then, it is celebrating its independence on that day. Although this country is struggling hard to get the financial stability and it has introduced various reforms yet 22% of its population is spending their lives under poverty line.

Economical Factors

Indonesia is developing country and the government has taken various serious steps to increase the GDP growth in few years. The government spends only 23.5% on their GDP and they have the revenue of $92.62 billion and their expenses are about $98.88 billion. Indonesia has the reserves of crude oil and natural gas and it is at the 8th position in exporting the gas. Indonesia has made significant development and it has robust GDP growth to 6.1%. This country earns the GDP growth of 14.4% from agriculture, 48.1% from industry and 37.5% from service sector. It has given specific attention on FDI and has good inflow of FDI with $67.3 billion, which shows its consistently increasing side and strength in their economic sector.

Indonesia imports some products like machinery, fuels, chemicals, equipments and foodstuff from other countries like China, Malaysia, Japan, US, Thailand, South Korea and Singapore. The government has changed its policy towards exports of its products and the major exports are oil and gas, textiles, electrical appliances, rubber, and plywood to countries like India, Malaysia, China, Japan, Singapore, US and South Korea.

Social Factors

Indonesia has large population, which is increasing steadily with the ratio of 1.13%. They have good average life, which is over 70 years. Most of the people live in urban areas. Most of the people are concerned with agriculture and industry and they are working for the development of their country. The government has given specific attention to education and it has impressive literacy rate of 90.4%. This country spends 3.6% of its GDP on its education. Government has its own public schools and colleges, where the students can get education at the nominal fee charges. It has developed some universities, in which education is given to the students in different disciplines and the students are taking interest in getting more and more education, which is necessary for their survival as a nation in this world. Maj0ority of the population is Muslim, then Protestants, Roman Catholic and Hindus.

Technological Factors

Indonesia has developed their own transport system and they have 139 airports, railways and water ways to go to other parts and islands of the country. As it is located in the ocean, so there are many big and small ports and it has the biggest merchant marine of 971 in which 114 are registered with foreign countries. This country has developed its communication system and various new brands of the smart phones are available there. People like to use landline and cell phones and they also use internet. There is very less crime rate, which is good result of the interior policies of the government. The government has adopted the effective broadcasting technology. They have their 54 TV channels in which 11 are national TV networks and some are located in the private sector.

Environmental Factors

The geographical location of the country is very interesting as this country is mostly comprised of thousands of the islands and it is located between Indian and Pacific Oceans. It is hot and humid country and the weather condition is about mild and moist round the year. More than six hundred languages are spoken in this country and it has over 1100 dialects. It is composed or rain forest and mangrove swamps and has some snow capped mountains. It is 7 hours ahead of GMT and 16 hours ahead from US. There are many active volcanoes and they burst from time to time, which can create natural disaster in the country. The earthquake of 9.0 magnitudes caused the tsunami in the country in 2004 and it claimed 155,000 lives. It also faces the deforestation, massive forest fire and soil erosion and the volcanoes spread devastation in the areas, which it is broken out. The forest fire affected the timber industry badly and it caused heavy loss to the country.

Legal Factors

Indonesia has introduced new rules and regulations in the country and labour laws are introduced to give the right share of income to the labor. This law shows the 7 hours workdays and 40 hours workweeks. When labor works for 4 consecutive hours, then 30 minutes break is allowed to them. The government also introduced the company law and every company has legal entity and they have directors and commissioners. The commercial banks have their prime lending interest rate of 6.41% and the discount rate of Central bank is 10.83%.

The government introduced the environmental law and the Municipal Noise Reduction plan has started the noise limits in the residential areas, hospitals, schools and religious places. In the business sector, the tax system is introduced with various reforms and the tax on first 25 million is 10% and on next 25 million, its rate is 15% and next 50 million, the rate of tax is increased to 30%. The income tax is implemented on the companies and on the individuals.


1. Indonesia (2015) Available at: (Accessed: 12 April 2016).

2. PESTLE analysis of Indonesia. Available at: (Accessed: 12 April 2016).

3. Editorial, R. (2012) Research and markets: PEST ANALYSIS – Broadband and Internet market in Indonesia. Available at: (Accessed: 12 April 2016).

4. Available at: (Accessed: 12 April 2016).

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