How To Do Business In Indonesia
Indonesia is one of Australia’s closest neighbours, the fourth most populous nation on Earth and is one of our most important trade partners. It’s also rapidly rising in wealth and opportunities are abound. But doing business in Indonesia is very different to doing business in Australia. I hope to shed some light on things by sharing some of my experiences.
I first came to Indonesia as a fifteen-year-old in 1997. Since then I’ve been to Indonesia between sixty and seventy times. At various times, I’ve taken classes to try to learn the language, I’ve visited many different places, I’ve spent more than 5% of my total life in Indonesia and I feel that I have a deep understanding of the people and the culture.
In recent years, I’ve also done a fair amount of business in Indonesia. From sourcing products to capital raising to seeking to sell to the rapidly growing Indonesian middle class. I think there would be few Australian’s my age that have more business experience in Indonesia.
Despite some of what I talk about in this article (which may appear to be criticisms), I love Indonesia and its people and am proud to say that I have many Indonesian friends.
I assume that if you’re reading this article you’ve already researched a few things about Indonesia and are aware of some of the cultural differences that exist between the two countries. Perhaps you’ve also been to Indonesia a few times on holidays. But to get anywhere in business in Indonesia you need to be very respectful of local cultural norms – even if they occasionally frustrate you.
Forget Your Mandate
One thing that I learned early on is that it’s entirely possible to schedule a meeting with someone important, book a flight, make the effort to come all the way to Indonesia only to find that the person you planned to meet either isn’t available to meet you or they aren’t particularly interested in discussing what you came to talk about.
Meetings in Indonesia tend to be much more about building rapport and just getting to know each other than about nutting out specific points.
So, although you think that you deserve some respect for making the effort to fly all the way over for a meeting, you can leave your bullet points and notepad in your suitcase because you won’t be needing them!
Don’t expect to make fast progress
Put any delusions of making amazing progress, brokering a deal and getting everything you want done in a single trip to one side. It’s just not realistic.
For me, I would estimate that I made around a dozen individual trips over the course of a couple of years to achieve everything that I wanted to achieve. Mind you, that’s not all down to a difference in the way people in each country operate – our business was complex and there were many challenges to overcome over a long period of time.
Be over 40 to be taken seriously
This is becoming less true now, but 5 years ago when I first started coming to Indonesia for business meetings I was told that Indonesians don’t consider a man to be mature until he is 40 years old. Until then you’re just a kid.
Fortunately, that mould is been broken partly thanks to a wave of young Indonesian entrepreneurs who have built hugely successful businesses. I actually tried to invest in one of these businesses about 2-3 years ago – Gojek. I recently heard that they are now raising $1 billion USD in their latest funding round. Needless to say, that investment would be looking pretty healthy today had I been able to get in on that deal.
Anyway, my point is that just like the western world came to accept twenty five year old entrepreneurs after the movie “The Social Network”, I think Indonesians are also coming to realise that a persons’ age isn’t perfectly correlated with how good you are.
Don’t worry if the person you’re meeting arrives late
The traffic is bad in most Indonesian cities and I’ve found people tend to treat planned meeting times as rough guides only.
The good news is that it goes both ways, I recently turned up 3 minutes late to an important meeting and apologised profusely for being late only to have the person I was meeting tell me “Late? You’re not late, you’re early. This is Jakarta, relax bro.”
Don’t bother with a tie
Just like ties have gone out of fashion over the last decade in Sydney, the same is true of Jakarta. Actually, the truth is that I don’t know if anyone ever wore ties here a decade ago, but it’s hot and often humid here, so leave your tie at home.
Receive name cards with two hands
It’s important to show a lot of respect around the card giving “ceremony”. Act as though you are receiving something very valuable and important. Don’t just reach out with one hand and grab it like you might in Australia, and instead of just stuffing it into your pocket hold it up for a moment while you read it and look impressed with how nice it looks.
Likewise, with giving your name card – give it with two hands like it’s a present that the receiver should be grateful for. It’s a ritual, but so far it seems that everyone does it, so you might as well get used to playing the same game.
Place name cards on the desk in front of you
This is just a little trick I use to help me remember everyone’s name. Often meetings will include 3 or more representatives from the company that you’re meeting.
To help me remember names I place the name cards of the people in order from left to right based on which chairs they are sitting in.
This way if you want to address someone by name midway through the meeting you can just glance down at the name card corresponding to the chair that person is sitting in.
Prepare yourself for the company propaganda video
I’ve actually come to love this part, because I find it hilarious (although I would never show it!). At the start of any meeting with a company that you’re meeting for the first time you can be sure that they will ask you to watch an introductory video about their company that looks like it’s about 20 years old.
This video will surely cover the age of the business, their capabilities, accolades and a bunch of other useless facts such as how many square metres of 2nd floor office space they have. Nod approvingly.
It’s often an all-day affair
In Australia we’re used to having 30 minute meetings, or a long meeting might last an hour. We get in, each party presents their key points, we nut things out, we come to a plan of attack and we say goodbye. In Indonesia, it doesn’t work like that.
Expect to have someone come to pick you up around 8am, drive for an hour or more to get to the meeting location, meet some people, talk about some things and then be invited for a slow lunch before saying goodbye and calling it a day without actually ticking off much of what you came to talk about.
Eat when you’re told to eat
It’s common place for snacks and drinks to be served at different times during meetings. Don’t grab anything until you’re offered. Once offered don’t decline an invitation if others are eating or about to eat. Say a gracious “terima kasih” (thank you) while you eat and drink what’s on offer without flinching if it’s not what you might usually eat or drink.
The Elephant in the room
This one frustrates me somewhat. I’ve had plenty of meetings because there was a big, obvious issue that needed to be addressed, but no one would talk about the problem in the meeting.
This is very different to Australian culture where if there is a problem you might say “look guys, X isn’t doing Y, what can we do to fix it?” and together both parties will acknowledge that there is a problem and work together to fix things.
In Indonesia many things are unsaid, but assumed to be understood. The result is uncertainty for both parties. It’s also uncool to bring attention to any problems that may reflect badly on someone (more on that later).
Unfortunately there doesn’t seem to be much of an alternative. Everyone can see that there’s an elephant in the room, but no one is willing to acknowledge it. Instead, people might indirectly make comments around the periphery of the issue and hope that you are able to figure things out through guesswork – without talking about it.
Not unique to Indonesia, but there is a need to “save face” and not cause someone else to be embarrassed as well as not bringing attention to any of your own faults.
Again, this one bothers me. While I have no issue with not causing someone to be embarrassed, I would much prefer to fix a shortcoming and slightly bruise your ego than I would leave your ego intact, but not resolve the problem.
In certain industry’s this can be downright dangerous. Take the Korean Airlines case study for instance. It was found that co-pilots were so afraid of causing the Captain any potential embarrassment that they frequently did not speak up to avert an accident – with fatal consequences.
That gives you an idea on how much importance many people in Asia place on the notion of “saving face”. Korean co-pilots preferred to die than to cause their Captain to be embarrassed.
Unfortunately, the combination of being unwilling to acknowledge that a problem exists and then unwilling to bring it to someone’s attention that corrective action needs to be taken means that trouble shooting and problem solving often takes a long time.
Why not just do things the “Aussie” way then?
I know what you’re thinking – why not just point out the giant elephant and suggest concise, actionable ways to rectify the problem?
While I’ve never really tried this exact approach, I have a sense that it would go down about as well as you might expect.
Part of the problem is that because Indonesian culture is more gentle, less direct and more respectful, we Australian’s already seem rude in comparison.
If you’re an entrepreneur or have climbed the corporate ladder at all chances are you’re a go-getter and you go out and grab things instead of taking more passive routes in life.
That means that the types of Australian’s that Indonesian’s are most likely to come across in business settings are very likely to be some of the pushiest, most determined and most direct Australian’s of all.
Therefore, you’re already going to be perceived as rude and pushy. Try your “hey look at this huge problem, why aren’t we doing anything about it?” crap and I wouldn’t be surprised if your business relationship was terminated – indirectly of course.
Being Australian isn’t always a good thing
I’ve spent lots of time in Asia and I think Indonesia is perhaps most susceptible to frequently changing sentiment towards Australia compared to other countries where sentiment seems to be more consistent over time.
From time to time there are political hoo-ha’s or media controversies that citizens of either country might find offensive. While it’s mainly just skin deep and negative sentiment doesn’t ever appear to be widespread, it is still worth being aware of.
For brands looking to sell your products or services to Indonesia you need to ask yourself serious questions about your positioning. While it may always be a good thing to be an Aussie brand if you’re selling to the US, the same is not true in Indonesia.
Let’s talk about bribes
Before coming here for business for the first time I wasn’t sure what to expect. Was someone going to slide an unmarked envelope across the table to me and expect me to fill it up with cash and slide it back? I really had no idea, but assumed some amount of back-hand payments were going to be necessary to get anything done.
I’m not here to debate the morals of bribes, but I will say that nothing of the sort has ever been mentioned or alluded to by any person or business that I’ve met with.
Actually, there have been a couple of semi casual meetings where someone might say that a certain government process is capable of being expedited or similar. I didn’t pry, but I can join the dots.
Rising Middle Class
I’m super bullish on Indonesia and have been for at least 5 years. I consider Indonesia to be under-rated in terms of potential for the future and while everyone else seems fixated on China, I find Indonesia to be the more interesting proposition for growth over the coming decades for a bunch of reasons.
Like most of Asia, Indonesia has a middle class that is rapidly rising in wealth and is keen on conspicuous consumption. That represents an opportunity for anyone looking to sell to Indonesia.
Gone are the days of thinking of Indonesia as a poor country, these days there are an incredible amount of ultra-wealthy people – especially in Jakarta.
This middle class wants the latest smart phone, they want the latest apps and services, they want to go to an expensive shopping mall on the weekend and shop in designer clothing stores. Believe me, the money is there already.
Free Trade deal
At the time of writing our two countries are negotiating a more comprehensive free trade agreement. This is also great news if you are wanting to source anything from Indonesia.
Even though Indonesia is rising in wealth fairly rapidly, sourcing a range of products from Indonesia is still very economical, even when compared to China.
Communication is easy
A quick funny story, I remember one early meeting I had in Jakarta where I brought a local interpreter along with me. At one point in the meeting I was having trouble explaining something in English, so I asked the interpreter to explain, only to watch him also try to explain the point in English!
I didn’t pull him up on it at the time (gotta save face), but I later gave him permission to speak Bahasa before eventually deciding that an interpreter was completely unnecessary for most meetings.
You need to go pretty far off the beaten track in Indonesia before you’ll run into any real communication problems. You’ll generally be perfectly fine with English, but may have to make some effort to speak a little more slowly than usual and to properly annunciate your words.
“Good luck” on your journey in Indonesia. It’s a huge and maturing marketplace if you’re looking to sell to Indonesian’s or setup business there. It’s also an extremely young demographic with half of the population being under the age of 30.
It’s also a great place to source various goods and services.
There are many other intricacies of Indonesian culture that I haven’t touched on in this article, but with a little research and by spending some time on the ground you’ll get to understand those things over time.
I hope this helped at least a little, thanks for reading and feel free to reach out to me if you want any more information.
Written by Marty Spargo