The cosmetics market in Indonesia is considered a highly competitive place. Hence, the creation of a strong brand through promotion is recommended for substantial entry into the market. Nowadays Indonesians are more conscious to personal image and fashion than before. In all cosmetics categories such as hair care, skin care, makeup, fragrance and hygiene products, 75% of Indonesian women prefer beauty products made with natural ingredients. Indonesian customers in general are also more attracted to those brands of foreign and foreign-like than locals. 

In Indonesia, personal care and cosmetics are sold through various channels that include specialty stores, drug stores, department stores, supermarkets, direct marketing (MLM), skin care clinics, and beauty salons. But recent trend shows that Indonesian cosmetic products marketed through social media grab significant amount of market share. There is also a trend by producers to make their products appear and feel more premiums for consumers. This product is targeting the masstige (“mass” and “prestige”) market which is the largest cosmetics market zone in the country and is anticipated to maintain strong growth. Masstige product refers to those of “more expensive than mass-produced products, but more moderately priced compared to prestige products.”  


Imported cosmetics mainly target middle-to-upper economy class population and are dominated by products from Europe, Japan, South Korea and the United States. Products from Thailand, South Korea and Malaysia, meanwhile, target specifically the middle-class ones. As for the products produced in Indonesia, they are made to meet domestic demand but are also subject to export with destinations in ASEAN, African and Middle Eastern countries. Some local manufactured brands now are attempting to reach Australia and Latin America.  


The fruitful cosmetics business in the archipelago has been enjoyed by some national brand players such as Mustika Ratu, Wardah and Sariayu Martha Tilaar. Besides these, there are also international brands who are invested in local factories such as Unilever, Mandom and L’Oréal. Other famous international brands that have entered and are distributing their products in Indonesia include those from Europe, America, Japan and South Korea in alignment with Indonesian consumers’ tendency in preferring global brand or popular culture trends. Smaller local brands like Make Over, PAC, Polka, Rollover Reaction, BLP, Mizzu, ESQA Cosmetics and Mineral Botanica also showed promising sales which means that Made-in-Indonesia brands can strive in the fierce competition and have succeeded in grabbing their portion of the e-market share, especially in the make-up sector.  


Great opportunity exists in the Indonesian cosmetics sector due to the country’s huge and growing domestic market, competitive cost of manufacture and consumers’ preference in both international brands and made-in-Indonesia products. Nonetheless, challenges in this sector still remain such as the existence of Illegal products, the mandatory halal certification rule and other technical constraints that include infrastructure readiness for verification, synchronization with international standards and certification bodies and the lack of skilled workforce. 




*2023 is prediction

Source: Kompas R&D

Source: BPS 


Indonesia’s imports of these products had been growing significantly until the end of 2019 when the COVID-19 pandemic began severely impacting the country economically. However, since 2021, the number has been slowly returning back to its pre-pandemic level.

Source: BPS


Other lotions and creams other than face and skin cream or lotion have been experiencing significant growth in the Indonesian market, followed closely by face and skin cream or lotion. The same product category is also seeing healthy growth among Indonesian exports of cosmetics. 





Despite various efforts to minimize illegal cosmetic products in the country, Indonesia National Agency of Drug and Food Control (Indonesian: BPOM) still found illegal products to be present in the domestic market. One of the legal excuses used by importers to import counterfeit and illegal cosmetic products is the Head of BPOM Regulation No. 13 of 2015 which exempts imported cosmetic products from compulsory verification. 


More importantly, Indonesia, which represents the largest Muslim population in the world, passed Law No. 14/2014 on Halal Product Guarantees that obliges all cosmetics products to be labelled as Halal by 2020. This law has since been amended by Law No. 11/2020 on Job Creation (widely known as the Omnibus Law) with Government Regulation No. 39/2021 currently being used as the main implementing regulation on the halal labeling requirement. Government Regulation No. 39/2021 provides time for affected producers to comply with the Halal law, with cosmetics producers being given until 2026 to certify their products as Halal. 


Having said that, around 90% of the raw materials used in cosmetics distributed in Indonesia are still imported. This leads to uncertainty in the country’s capacity to verify the halalness of the product. There is already considerable complexity involved in the verification of raw materials under the new framework of local content regulation. This complexity will also become an issue when auditors need to certify production facilities across several locations and/or countries, as no international halal certification recognition scheme is currently available. worldwide halal-certification institutions are at the moment mostly focused on food and beverages. It is also likely that a number of countries lack a halal-certification institution capable of cooperating with Indonesia’s certification institution to reach mutual agreements on halal certification, especially in terms of non-food-and beverage products. Enforcement of this law will thus undoubtedly prove to be a significant challenge both for government and business players and will require a large number of resources.  


Meanwhile, companies face another challenge: there is a huge shortage of talents in middle to top management positions.Companies will need to attract new talents, but it is not enough to recruit them. They will need to train, develop and retain the new and existing ones as well. As more and more opportunities will be introduced to these very connected and agile local talents, a real strategy of Talent Development needs to be put in place. Firms need to develop career growth plans for their employees, and incorporate them into their strategy, as talent centric organizations. 





Indonesia's cosmetic industry remains attractive for foreign and domestic investors. With its population expected to reach nearly 300 million in 2030, the prospects for the cosmetic industry in Southeast Asia’s largest economy is still very bright for the coming years. The reasons, among others, are that Indonesians are becoming more and more aware of their well-being with cosmetics increasingly becoming a part of that Indonesian wellness lifestyle.  


The biggest consumers of cosmetic products in Indonesia are those who live in big cities, but those in rural areas also have also showed higher enthusiasm for cosmetic products. Indonesia has a big population that is seeing its per capita GDP rising, thus there is a rising number of mid-income and affluent consumers. Seeing the potential of the domestic cosmetic industry, the Indonesian government placed this industry among its priority industries. This involves the development of import-substitution industrialization (currently most raw materials for the cosmetic sector still need to be imported), with goals to generate plenty of employment opportunities for local workers. Foreign and domestic capitals are encouraged greatly in this sector.  


For its vast population with relatively good purchasing power, Indonesia has been one of the most targeted countries for export. Recent studies show that in the next decade, Indonesia is expected to be in the top 5 or even 3 of the greatest market in the Asia-Pacific region. Not only should it be a good market place for imported cosmetics products, the Indonesian Government also wants Indonesia to be a good place to manufacture them. It is indeed the case where some giant national/international manufacturers exist in the country such as PT L’Oréal Indonesia, PT Mandom Indonesia Tbk., PT Paragon Technology and Innovation, PT Martina Berto Tbk., PT Mustika Ratu Tbk. and PT Unilever Indonesia Tbk.. For some years now, the government has been implementing various incentives to increase the exports of cosmetics particularly to its ASEAN neighbors, Middle Eastern countries, Africa, Latin America and even down under to Australia. 


The positive prospect of Indonesia's cosmetic industry has resulted in a rising number of local brands entering the market, thus resulting in a much tougher competitive landscape. But it is interesting to note that most Indonesian consumers like to try new brands, especially foreign ones (or at least sounds/looks like foreign brands). Therefore, companies are recommended to innovate and strategize with this aspect in mind in order to boost their market share.  


To deal with the rise of imported cosmetic products, local cosmetic companies have been aggressively educating consumers that foreign cosmetics are not necessarily suitable for the tropical climate. In addition, local cosmetic manufacturers have begun to improve their product packaging and design, as well as the distribution process, which is one of the key weaknesses of domestic cosmetic industry.  


The Halal industry in Indonesia has been seen as a gold mine for many investors. A total of 14% of the world’s Muslim population are indeed Indonesians. Among its 275 million people, approximately 88% of them are Muslims. As of 2017, 1.8 billion Muslims have taken over 24% of the global population. This is the fastest growing population of a major religion. 


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