Indonesia Pest Analysis for Cosmetics

Topics: Indonesia, Investment, Macroeconomics Pages: 3 (643 words) Published: April 12, 2008
2.1.Political Environment
The Indonesian government plays a significant active role in business. Since May 1998, after Suharto resigned, the country has transformed itself from a controlling system into a democratic one (Indonesia Country Brief, 2008). Australia also has legal and political stability. Therefore, Jurlique will face no difficulty in establishing its business into Indonesia since both countries political parties seek to promote growth and encourage investment and trade, including investment abroad.

2.2.Legal Environment
“The legal-political environment does not have to be unstable or revolutionary to be of that concern to managers. Just the fact that a country’s social or political system differs from that of Australia (...) is important” (Robbins et al. 2006, 137)

Besides, Jurlique must consider the legal aspects before widening its business in Indonesia, such as the copyright law, patent law, labour law and tax legislation and see how these may threaten or present some opportunities to the organization.

The Board of Investment & State-Owned Enterprises (“BPM-PBUNM”) plays a key role in promoting and approving foreign investment project (Indonesia Country Brief, 2008). Moreover, Jurlique must consider the several restrictions that Indonesia imposes on foreign participation in domestic distribution services. Such as, to sell its products on retail level, Jurlique must operate a separate outlet.

Indonesia maintains no capital controls and foreign barter may flow freely between countries. Foreign investors have the right to repatriate capital and profits at the current rate of exchange and no previous permits are required.

Additionally, manufacturers must register all cosmetics locally produced with the National Agency of Drug and Food Control (Indonesian acronym BPOM). The producers must comply with the criteria for registered cosmetics regarding the safety, quality, packaging, and labelling of the products.

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