Download your free copy of Doing Business in Indonesia
Doing Business in Indonesia
Indonesia's 250 million citizens constitute a major market potential
for many entrepreneurs. At some five per cent annually, the economic growth is significant. Meanwhile the
Government makes large investments to upgrade infrastructure
nationwide. And to unravel red tape to woo foreign investors.
Even so, those investors require a long term commitment to set up shop
in the archipelago.
Read more on this page about: Banks
, Investment Climate
, Quick (online) deals
, Take your time
, Be Seen
, Personal Relationships
, The Unseen
One of the most important
documents to arrange is the visa. Details of the admission
are available through the Indonesian embassies and consulates.
(Bank BCA, one of the most
popular consumer banks)
(Bank Indonesia with an English section)
Indonesia has branches even in the most remote villages)
(Bank CIMB Niaga)
(HSBC's Indonesian branch)
(real time Indonesian stock quotes and
currency exchange rates)
(Jakarta Stock Exchange
-largely in Bahasa Indonesia
(Bank Mandiri is
Indonesia's largest bank)
(formerly Bank Internasional Indonesia -BII)
(organizers of business
promotion events in East Java, such as Indonesian City Expo and
(Indonesia Investment Coordinating
(Central Java Investment Board)
(Channel International Patent
for help on patenting and other intellectual property rights issues in
(Everything you need for organic agriculture -this site is in
tool that helps businesses find available serviced offices, managed
and business centre accommodation in Indonesia)
(one stop tax and
combines a number of producers of rattan, bamboo, wood, silver and
paintings, handicrafts and furniture)
Commerce, the site is mostly in Bahasa Indonesia
but has a buyer-seller section
(service agent to help you
with visa applications, business services, investments, real estate and
B2B forum, also in Dutch and German)
Yellow Pages -English and Indonesian)
Indonesia's economy suffered greatly in the late 1990s,
in part as a result of the financial
crisis that struck most of Asia at the time. The economy has
stabilized since then and has demonstrated solid growth figures of fice
percent, and improving credit ratings.
The country has extensive natural resources outside of Java,
gas, tin, copper
and gold. Indonesia
is the world's second largest exporter of natural gas, though it has
become a net importer of crude oil. Major agricultural products include
Indonesia's major trading partners are Japan,
bank of Indonesia is Bank Indonesia
Indonesia's government is making steady progress in attracting foreign
investors through a conducive investment climate. There are numerous
opportunities for large and small investments in
any of the economic sectors.
Indonesia's credit ratings enjoy positive reviews. The
Rupiah remains a strong currency in the
region. It won't be long for Indonesia to join the ranks of the BRIC
The World Bank recently ranked Indonesia as the world's 10th largest
Still, widespread corruption and notorious red tape remain major
obstacles. Legal protection for
(foreign) businesses is another issue. Further challenges are caused by
For all those reasons the successful entrepreneur should make several
trips to Indonesia to test the waters, talk with those who have gone
establish a good relationship with the local business community and
government institutions and trade organizations.
There are agencies, such as Okusi
and INA (Indonesia
providing professional assistance.
Talk with your Embassy, don't hesitate to hire a good Indonesian lawyer
from the start and familiarize yourself with the business culture.
A Quick (online) Deal
A strong word of advice for unsuspecting overseas
customers: don't be tempted to make a
seemingly quick and clean (online) deal if you have not met the seller
personally and ensured that he/she and the company can be trusted.
It's far better to invest time and money
into flying to
Indonesia to check out the man or the woman and his or her business.
Remember: too good to be true is not true.
Doing business in Indonesia and working together with Indonesians is
not much different from doing so in other countries.
Unfortunately, Indonesian business people still bear the stigma of
undisciplined. It is believed that they always show up late
for appointments -or not at all, and like to change agreements after
the signing of the contract.
Some of that may still be true. But things are changing fast in
Indonesia. On time arrival for appointments, honoring commitments
and living up to expectations are now accepted practices.
You may improve the situation further by taking into account a few more
Take your Time
Time is fast becoming a scarce commodity, also in modern Indonesia.
Yet, you will need lots of time in getting to know your Indonesian
business partners: building up a
strong personal relationship with them is considered
more important than the deal itself.
The bottom line is: become friends. Doing business successfully without
being friends is one of the most difficult feats to accomplish.
In general, it is not done to be blunt or too direct. In preparation of
your first-time business meeting in Indonesia it is not a bad idea to
time and money in a cross-cultural training. If it is a good training
you will be introduced to the notion of tidak enak
nice, not tasty
and also 'doesn't feel good'). Indonesians often feel that it doesn't
feel good to
say what is on their mind. It might offend the other party and make him
lose face. The result is that you may think the deal is done, while in
your partner is not in full agreement with all the terms. You will find
later when those parts of the agreement are ignored or cause problems.
From your part it is good to hold on to being as outspoken and direct
would be in a business meeting at home.
There is no way to fly in, do a quick deal and fly home again before
The result will be very disappointing.
More on this topic in our free travel and culture ebook Enjoying
Any contract is only a number of sheets of paper. Although officially
(tax stamps), in essence it remains just
To ensure that the deal goes as agreed you need to rely not only on the
you have cultivated with your business partners, but also on frequent
Send email, make phone calls and, most important of all, make
regular visits to your business partner. Better still, ensure that you
have a local presence.
Attention to detail is all important: Indonesia has been cash
strapped for so long that a work mentality has developed in which
'fixing things' has become trhe norm.
The need for maintenance is almost always overlooked or ignored.
Instead, one waits until something breaks down and only then tries to
fix it. If there is no fix, the tool, machinery or object remains as it
Budgeting and regular training for quality management and
maintenance are essential. Ensure that the maintenance budget is
actually used for that purpose and not siphoned off.
In 2010 newspapers reported about insulted dock workers in
Batam going birzirk,
destroying most of the facility and burning cars. All that because an
supervisor had called them "stupid Indonesians". A local police chief,
trying to calm them down was greeted with cheers for saying that all
insulting Indonesians should leave the country.
The incident is a stark reminder that expatriates may have problems
how things are done in Indonesia. As a logical response foreigners may
prefer to distance
themselves from 'the crowd'. It's a course for disaster waiting to
Many problems can be avoided with very little effort.
If you have your office or factory in Indonesia, make a point to be
seen and be heard: get out of your office regularly and
spend some time on the work floor. Look at the production process,
ensure that quality is delivered.
supportive relationship with as many of your workers as
possible or ensure that they understand what you mean
by quality. Chat and joke with them, be interested in them. Solve
together with them.
What ever happens: don't ever raise your voice, but solve issues behind
The secret is to become a real and caring bapak
(father figure) or ibu
Procedures in Indonesia are rather bureaucratic. They are also rather
complicated and often difficult to comprehend.
Many formalities require going to offices, standing in line, filling
and paying fees (sometimes you will not get receipts).
Living in Indonesia, of course you will have staff to take care of all
that, but still you may need more time to get things done than you had
Fortunately there are several agents to help you obtain visas and all
permits, even to set up your own company and in general to help you
in Indonesia, including Okusi
As with business relations, building relations with officials pays:
unfortunately Indonesia ranks very high on the
international corruption perception list.
Somehow you will have to develop ways to reduce the amount of
corruption you are exposed to.
One way of doing that is to build relationships with officials you have
to deal with regularly.
Such as at the Immigration office, the Home Department, customs
you are importing or exporting) and even the sub-district office in the
town of residence.
Establishing and maintaining high business values and norms, and
high standards of accountability and honesty are other ingredients of
successfully, but possibly slower than you wish.
There is a different reality in Indonesia few expatriates consider a
serious issue. It is magic, sorcery, witchcraft; the unseen world of
good and evil forces.
Modern Indonesian businessmen alike may shrug it off as old fashioned
rubbish. Yet, very little is needed to upset someone seriously enough
and bring him or her to consult a master in witchcraft, with the
objective of casting a curse on you or your family.
Take some time to ask people to tell something about guna-guna
and ask if they have had any experience with it.
Although the tales may sound unrealistic, it is better to be safe than
The Unseen is a factor you might as well reckon with..