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Doing Business in Indonesia – Pros & Cons, Some Useful Tips

By: Nuss_Boy

Doing business, the Indonesian way, how does it work?

This is a personalized view of doing business in Jakarta from a “localized” foreigner who stayed in Jakarta for 13 years and is still trying to figure what is right and what is wrong in getting business done in Indonesia.

There are some pros and cons attached to doing business in Indonesia. Let’s focus on the positive sides first and then I will tell you about some of the downsides in the Indonesian business environment.

The key attractions of doing business in Indonesia are as follows

1. You don’t have to be the smartest, just get one thing right and run with it

Indonesia is a huge market, with a 240 million population, making it the third largest market in Asia outside of China and India in terms of size and potential. You don’t have to be the smartest, I found that out in school long ago, there is always somebody smarter than you. You just need to get one idea or one product right and there is this huge 240 million market waiting to be your “potential” customer.

In Singapore where I was born, you have to try very hard, while the potential end result in sales is 40 drums of a product, matching the size of the Singapore market of 5 million people. So in other words, Indonesia offers unlimited potential in terms of distribution.

2. Relations, relations, relations!

Business here is very much about relationships and the “trust” factor. Once the channel is established and set up, a good relationship can last years. I used to supply a critical item to a factory in Batam, with one huge order a year, worth 500 000 USD and there were only 2 competitors. We kept winning the deal year after year. My insider friends told me that even though the competitor has better technical support, and high profile manufacturers, they could not beat my close relationships and personalized services.

3. Anything can be either very  fast or terribly slow, depending on how you press the buttons.

Most newcomers to the Indonesian market will complain how slow everything goes. Getting a company set up is less than 2 months is already a challenge, elsewhere this can be done in a week. What I have learned is that in Indonesia you have to press the buttons in a different sequence. Things go slowly because the approach to an issue is already not right in the first place. If you meet the right person, in the right position, who trusts you and your business things can move fast. Don’t try to rush things, don’t lose patience, just find the right person, the gatekeeper and build a relationship.

That all sounds positive right? Well, don’t expect business as usual in Indonesia. Let me now turn to some major issues and structural problems that the business world in Indonesia has.

1. Lack of legal certainty and rules

You almost need to be a lawyer or an accountant, or have one by your side when doing business in Indonesia. The legal rules and documents are fuzzy at most and subject to interpretation from “judges” that have their own interests in mind when they rule. So what it boils down to is simple: always check, double check, triple check. Make sure there is no misunderstandings, get the paperwork checked, and have legal assistance stand by before, rather than after signing anything.

You are not going to get justice back. My personal experience in this is real, I make one mistake on after 10 years of successful business and I am 20% of where I am from where I started bleeding a  in USD seven digit  figure loss. Ouch!

2. Traffic

You learn to be very patient in Jakarta. 50% more plus of your working hours is spend caught in the traffic getting from point A to point B. There is only 3 ways out of this situation:

–        you are rich enough to hire a helicopter that can fly you from one major roof top to another. (This just does not work for me even as I am scared of heights).

–        do it the president way, get a police escort front and back and let the front police cars block off anybody else getting into the toll road till you exit. (This again does not work for me as there is only one president here and it is not me).

–        Don’t go out , stay at home. Well, it is an option but in this era of fast information flows, if you are not going to hit the road and get into the meeting place, show your face and build a relationship, your competitor will and you are going to lose all the deals.

Conclusion? Prepare to get stuck, learn to be patient, relax and make room in your schedule for traffic jams of all sorts and sizes.

3. A ‘Yes’ is not automatically affirmative

I come from a background, let’s call it the old fashioned Chinese ways, where when we commit and say yes, we do all we can to deliver.

Part of the Javanese culture is to be polite and never say no. A yes can mean ‘yes,’  ‘yes I hear what you are saying’ or ‘yes, but actually no.’ After 2 weeks of waiting and no reply, you most likely realize that it is a ‘no.’ After more than 10 long years, I still have this perpetual problem where I think that someone has said ‘yes’ when it actually meant ‘yes I heard you but am still considering, and it might turn into a ‘no’ later.

If anybody thinks wants to learn more about my USD one million dollars mistake, drop me a line to my twitter account and buy me a cup of tea in Jakarta. I will tell you more tales about doing  business the Indonesian way. Or maybe I can persuade my editor to give me a new piece to write on ‘How to lose a one million dollars doing business in Jakarta.’

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