Indonesia

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DOING BUSINESS IN INDONESIA

Indonesia is the largest archipelago globally, consisting of five major islands: Java, Sumatra, Kalimantan, Sulawesi, and Papua. A highly multi-ethnic and multi-cultural democratic country, Indonesia is the fourth most populous country worldwide – home to over 250 million people with over 300 regional languages. Recently characterised by stable politics and economic growth, with the largest economy in South-East Asia (boasting nearly half the region’s GDP), the rewards of doing business in Indonesia can be vast.

Despite only narrowly achieving a spot in the top half of countries ranked in the Ease of Doing Business ratings, Indonesia has recently become a more attractive prospect. Its government has focused on actively encouraging foreign investment in the country and ameliorating the regulatory and economic environment. Rivers, rainfall, and the fertile soil from volcanic activity make Indonesia a large exporter of raw materials. Its exports include nickel, gold, coffee, and coal, and it’s the world’s largest producer and exporter of crude palm oil. Combining its strong domestic consumption and expanding economy, Indonesia is a smart move for globally expanding companies.

However, businesses should prepare for some challenges when working in Indonesia. Prepare for a complex bureaucracy, a lack of transparency, poor infrastructure and high logistics costs. The mix of various cultures can prove beneficial, but beware of some social unrest.

Indonesian people are generally very polite and friendly, readily offering their hospitality. Decision-making and business dealings are often based on mutual agreement and consensus, while business is heavily relationship-focused. Naturally, it is necessary to foster deep connections with partners.

For expanding you business into this rapidly developing country, World Business Culture has all the information you need.

OVERVIEW

Indonesia is complex. That is hardly surprising given the fact that the country spans thousands of islands, has over 300 languages and population of about 243 million (which is rising rapidly.) Navigating your way around Indonesia is both literally and figuratively difficult.

However, Indonesia is a country which has tremendous economic potential. The Indonesian government is working hard to try to reduce the country’s dependence on exports of (raw) commodities and to diversify into both the manufacturing and service sectors. In addition to this, vast sums are being pumped into the basic infrastructure of a nation which has suffered from some core infrastructure weaknesses for decades.

About 50% of Indonesia’s population are under the age of 28 which means that the country has a huge demographic dividend with large numbers of people about to enter the workforce. This younger generation is aspirational and consumerist in nature. It could be argued that internal demand for goods and services in Indonesia is about to explode in the next decade.

Many observers believe that, provided some form of political stability can be maintained, Indonesia represents a country with massive growth potential. If Indonesia is to achieve its potential it needs a great deal of external stimulus and support. It needs Foreign Direct Investment and it needs skills and expertise. Indonesia probably needs your goods or services and you are advised to seriously consider Indonesia as a future market if you are not already operating there.

However, Indonesia is a thoroughly Asian country with a rich and unique business culture. The Indonesian approach to business is heavily relationship focused. You need to take time to develop deep and lasting alliances and you need to really understand Indonesian business culture if you are to avoid alienating potential partners.

This country profile provides an overview of some of the key aspects of Indonesian business culture in a concise, easy to follow-format. The document includes information on:

  • Background to business
  • Business Structures
  • Management style
  • Meetings
  • Teamwork
  • Communication
  • Women in business
  • Entertaining
  • Top tips