Business opportunities in Indonesia are aplenty but it’s important to first understand how things are done there in order to succeed. Its government has recognised this potential and has introduced measures over the years that encourage foreign investment.
“When in Rome, do as the Romans do” is a phrase commonly used in the world. However, in Indonesians they go by the phrase of “Hold up the sky of the land where you walk”.
This mean, rather than just fitting yourself in, that phrase suggests that you should actively contribute to maintaining order by respecting local customs, which is a major setback when you plan to start a business in the Republic.
Here we discuss ways to avoid the downfall on your business incorporation endeavor in the Indonesian market.
One of the main areas that the Indonesian government as well as many private parties have been eagerly trying to push SMEs towards is digitalisation. This is not only important for Indonesia, but also important for investors to connect with the locals and to the outside world. Although it highly depend on the type of business you are in, eventually everything be dealt with online.
With trade in general becoming increasingly digital, going online is an urgent necessity for Indonesian businesses. However, it is something they have been slow to do, due to poor internet access and lack of skills and manpower in the IT Communication and infrastructure sector.
Although the amount varies, there are only about one out of every three people are connected to the World Wide Web in Indonesia today. With a slow connection speed – thanks to challenging geography and a thinly spread population of around 255 million people – mobile broadband penetration in Indonesia is currently 24.2% while just 1.3% of the population has a fixed line connection which illustrates the scope of future growth, with Indonesians plan to move online and take full advantage of online based services, ie e-commerce.
According to recent studies, with a third of Indonesian SMEs are still operating offline, another 37% have only basic online capabilities.
The study suggested that offline businesses has the potential to generate revenue up to IDR140 million by going online, and adopting a digital strategy to their business.
The silver lining in all these are, businesses in Indonesia has recently been able to access training and workshops that help them make use of the mainstream digital platforms such as Facebook, Twitter and Instagram for business purposes.
Indonesians has a very strong uphold when it comes to hierarchy, power and status. A failure to show the expected level of respect can be off putting. Bahasa Indonesia or the Indonesian language uses a myriad of personal demonstrative to establish the power dynamic between two people. Indonesians also make small talk to establish where they sit on the hierarchical scale.
Foreigners with foreign investment in Indonesia will not be expected to understand the intricacies of Indonesian power dynamics, but will be required to demonstrate respect to seniors. This will bring the closeness of the employer and employee to a different height.
Have Patience and don’t Show Anger
In Indonesia, even a simple task can take longer than expected to complete. How well you deal with this will influence the outcome of your relationships with the individual or organisation you are dealing with. In any situation, you must remember to not show any outburst, given the power dynamics that exist in Indonesia.
Emotional outbursts can only be interpreted one way in Indonesia, negatively. Showing strong emotion in public is considered embarrassing and uncalled for, and action that makes everyone around uncomfortable. Also, by demonstrating that something did not work in Indonesia, you are inadvertently pointing the finger at a local’s failure and making them embarrassed.
The idea here is to be patient, and it will all fall into its rightful place.
Many nationalities, generally expect certainty and an outcome going into a meeting and finishing it, or when entering into a contract. In contrast, there is higher level of ambiguity when that scenario is taking place in Indonesia.
While you many often attend a meeting with a concrete objective on your mind, the primary purpose of an Indonesian counterpart at the same meeting may be to get to know you better. Pushing and pestering for a decision may negatively impact on your relationship with them, and might also jeopardise any future business venture that you might be able to conduct with them.
Maintaining a personal relationship is the vital key to a successful business in Indonesia.
The one certainty of doing business in Indonesia is that you will need friends to help you at some stage. As you might already know, opening and incorporating a fully owned foreign business in Indonesia is costly, and therefore some investors opt for local business incorporation. This requires a trust, and more than that relationship with the one you are trusting.
The value Indonesians place on relationships cannot be overstated. Thus having wide business networks can make all the difference. Most often, the success of a business is related to the strength of the relationships you have with your local partners, or even your suppliers.
Avoid Issues that Will Result in Conflict
Having conflict with anyone is the last thing on any Indonesians’ mind, therefore, they will go to great lengths to avoid conflict and maintain harmony in their lives. In business, the balance between preserving harmony and getting things done can be tricky, even for Indonesians.
Being direct and calling things as they are may be interpreted as a method of confrontational in Indonesia.
Always keep in mind that Indonesians do not take it entirely well when there is any conflict arises, as that will be seen as challenging their pride. When potential conflicts arise, they look for ways to leave both parties’ dignity intact. An embarrassed smile is usually a signal that you have overstepped the mark. Therefore, it is always important to remember this and act accordingly.
Paul Hype Page & Co – OSS service provider and Asean Chartered Accountant.
Paul Hype Page & Co. have 3 physical offices in Singapore, Malaysia and Indonesia
Our Firm Goal is to assist Foreigner and Foreign Companies to set up business in Asean.
How we can help you:
We will call you back, please click below link and make appointment with our Sales consultant:
Step 1- Listen to your Business plan and Relocation needs.
Step 2- Analysis your Tax Planning
Step 3- Recommend the most suited type of Company Incorporation, Open Bank account and Work Visa
Step 4- Arrange for your Spouse and Children Visa
Step 5- Assist as your company to hire staffs and handle all HR matters
Step 6- Every financial year end, we assist you with your yearly OSS Finanical and Tax Complianc
Step 7- Assist you to expand business to Malaysia, Indonesia, Vietnam and Thailand.
Get in Touch with Us Today.
Paul Hype Page