Indonesia, with a population of 270 million—ranking fourth in the world—is a country currently in the midst of significant economic growth. This article examines Indonesia’s population pyramid and demographic trends, while exploring their impact on the economy and the country’s potential as a market.

Indonesia’s Population Pyramid and Demographic Trends

Comparison of the Population Pyramids of Japan and Indonesia

In general, population pyramids are believed to evolve alongside economic growth, transitioning from a pyramid shape (resembling Mt. Fuji), to a bell shape, and eventually to an urn shape.

Image source and reference: Ministry of Health, Labour and Welfare, “Changes in Population Pyramid”

Japan’s population pyramid has long since taken on an urn shape, and it is expected to further shift into a narrower “inverted Mt. Fuji” shape as the proportion of elderly continues to increase. As of 2020, the working-age population (ages 15 to 64) accounted for 59.1% of the total population, which is approximately 74 million people.

In contrast, Indonesia’s population pyramid remains fuller, resembling the shape of Mt. Fuji and approaching the bell shape. A distinguishing feature is the still-large proportion of youth. As of January 2022, the working-age population makes up 70.7% of the total population—approximately 190 million people.

Reference: PopulationPyramid.net, “Indonesia’s Population Pyramid 2020”

Demographic Trends in Indonesia

Indonesia’s population continues to grow. In 1980, it was approximately 147 million, but by 2020 it had reached 273.5 million. Projections indicate that the population will exceed 300 million in the 2030s. According to forecasts, Indonesia’s population will peak around the year 2065, reaching approximately 337 million people.

Image source and reference: NNA ASIA Economic News, “2020 Population Statistics Exceed 270 Million”

Indonesia’s Demographic Dividend Period and Future Outlook

Indonesia’s Demographic Dividend Lasts Until the 2030s

Indonesia is currently experiencing what is known as a “demographic dividend,” in which the working-age population exceeds both the elderly and children as a proportion of the total population. While definitions may vary slightly, it is generally believed that Indonesia’s demographic dividend period will continue until the 2030s or 2040s.

Source: JETRO, “Promising Markets Viewed Through the Lens of the Demographic Dividend Period”

Challenges During Indonesia’s Demographic Dividend Period

It is said that during a demographic dividend period, economic development tends to accelerate, social infrastructure improves, and consumer activity becomes more vibrant. With Indonesia expected to remain in this period for at least another 10 years, it will likely continue to be one of the most attractive markets in Southeast Asia.

On the other hand, there are also negative aspects, such as the possibility that a high unemployment rate could lead to social instability. As of August 2021, Indonesia’s unemployment rate stood at 6.5%, and in urban areas, it reached 8.3%—a relatively high level.

Source: JETRO, “Unemployment Rate in August Recovers Year-on-Year but Worsens from February (Indonesia)”

That said, a high unemployment rate also implies a large number of job seekers, and could therefore be interpreted as evidence of “potential in the labor market.” Another noteworthy point is that wages in Indonesia’s capital, Jakarta, remain lower than in cities such as Shanghai (China), Bangkok (Thailand), or New Delhi (India).

Source: Daiwa Institute of Research, “Indonesia as a Post-China Manufacturing Destination”

Considering that population growth will eventually slow and the working-age population will gradually decline as a share of the total, Indonesia needs to aim for an economic structure that is less reliant on labor-intensive industries.

In addition to industrial upgrading and digitalization, improving the quality of the workforce will become a critical issue—one that will likely influence Japanese companies looking to expand into Indonesia.

Lifestyle of the Young Generation in Indonesia

Generational Classifications in Indonesia

Next, we will examine the lifestyles and consumer behaviors of Indonesian youth, who make up a large proportion of the population and play central roles in both the workforce and consumption.

First, let’s define each generational group:

• Generation X: Born between 1965 and 1980 (ages 42–57 as of 2022)
• Generation Y / Millennials: Born between 1981 and 1996 (ages 26–41 as of 2022)
• Generation Z: Born between 1997 and 2012 (ages 10–25 as of 2022)

Although definitions may vary slightly depending on the source—and some distinguish between “Generation Y” and “Millennials”—in Indonesia, these two are generally treated as the same generation.

According to the 2020 national census, Generation X in Indonesia comprises 58.65 million people, or 21.9% of the total population. Generation Y totals 69.38 million people (25.9%), and Generation Z consists of 75.49 million people (27.9%).

Source: Kompas.com, “Generation Z and Millennials Dominate Indonesia’s Population”

Values and Lifestyles of Indonesia’s Young Generations

The general traits and lifestyles commonly associated with each generation are largely similar between Indonesia and Japan.

However, there are noticeable differences in consumer behavior between young Indonesians and Japanese. A brief summary of these generational tendencies is as follows:

Generation X (ages 42–57 as of 2022)
Japanese Generation X consumers tend to be cautious and place a strong emphasis on cost-performance (value for money). In contrast, Indonesian consumers often view consumption as a reflection of social and economic status. A strong belief in the idea that “expensive means good” persists, along with a relatively pronounced aspiration toward luxury goods.

Generation Y (ages 26–41 as of 2022)
In Japan, Generation Y has shifted from a focus on goods to experiences. Indonesia shows a similar trend, with many young people holding a strong admiration for foreign cultures and actively engaging in overseas travel. Both Japanese and Indonesian Millennials rely heavily on the internet for information gathering, and base their purchasing decisions on reviews and word-of-mouth, which is a shared characteristic.

Generation Z (ages 10–25 as of 2022)
Japan’s Generation Z shares many traits with Millennials but is further distinguished by being “digital natives” who are immersed in social media and familiar with the sharing economy.

In Indonesia, Generation Z is strongly influenced by economic growth and technological advancement. Compared to Generation Y, known for its frugality, Generation Z exhibits a higher level of consumer desire.

Sources: KATADATA.co.id, “Key Differences Between Generations X, Y, Z and Two Other Generations” KATADATA.co.id, “The Role of Millennials in Indonesia’s Economy”

Social Media and Japanese Culture Among Indonesia’s Younger Generations

Social Media Usage Among Indonesian Youth

According to a survey by Indonesia’s Ministry of Communication and Information Technology, the most commonly used social media platforms in 2021 (excluding chat apps such as WhatsApp and LINE) were, in order of popularity: Facebook, YouTube, Instagram, TikTok, and Twitter. Recently, Instagram and TikTok have gained particular attention as sources of emerging trends.

Image source and reference: DataIndonesia.id, “WhatsApp Reigns as the King of Social Media in Indonesia in 2021”

On Instagram, glamorous influencers known as “selebgram” (short for “selebriti Instagram”) enjoy great popularity. Indonesians are known for their fascination with celebrities, and many television programs focus on celebrity lifestyles or host celebrity talk shows.

TikTok is especially popular among the younger generation, and companies have begun using it for recruitment and promotional purposes. A common trend is recreating and posting dance videos originally uploaded by other users. When visiting parks or leisure spots, one frequently sees groups of young people filming TikTok-style dance clips. This movement is popularly referred to as “pargoy” in Indonesia.

Japanese Culture and Indonesia’s Younger Generations

For Indonesians—particularly those in Generation X—Japanese culture has long been associated mainly with manga and anime. While manga and anime remain popular among Generations Y and Z, their interests have become more diverse, extending to youth culture, traditional culture, culinary traditions, and tourist destinations.

This diversification is likely due to several factors, including the growing number of Japanese companies—especially food and beverage chains—expanding into Indonesia, increased awareness of Japanese cuisine, and the frequent hosting of events that promote cultural exchange and offer opportunities to experience Japanese culture.

Japanese brands enjoy strong trust among Indonesians. Retail shops and restaurants often use Japanese-language names or names that mimic Japanese, regardless of whether their products or services are directly related to Japan.

C2 (Participation in business meetings and purchasing goods): $230
C19 (After-sales service) / C20(Installation and repair of machinery): $300
D2 (Participation in business meetings and purchasing goods (1-year validity)): $380
E23/E24/E25 (Work VISA): $1,500

Conclusion

Indonesia is a country with the fourth-largest population in the world. As we have seen throughout this article, the proportion of young people is high, and the overall population is expected to continue growing.

From the perspective of abundant and relatively low-cost labor, as well as the presence of a large, consumption-driven younger generation, Indonesia can be considered one of the most attractive markets for Japanese companies seeking overseas expansion.