Here's What I've Learned about Doing Business in Indonesia

On Behalf Of Bunaiya

 

 

This November Indosight turned two. It has been an amazing time. If someone told me a year ago we’d be closing over 50 new clients in 2013 I would have thought that person is out of his mind.

That calls for a recap of what have I personally learned about doing business in Indonesia as a foreigner.

But first of all, a little bit about my background. I’ve lived in Indonesia for 2.5 years prior to which I was managing organizations in Cambodia and Estonia (my home country).

The idea for Indosight came when I was working at an Indonesian PR agency and started to get emails from my friends and network about doing business here. That’s when I realized that the biggest obstacle for foreign companies to enter Indonesia is the lack of adequate information. Someone had to solve this problem.

Here are my lessons of running a business in Indonesia for the past 2 years.

Traffic in Jakarta is a nightmare. Live as close to your office as possible.

About living in Indonesia (as an entrepreneur)

Learn to like Jakarta

First months in Jakarta were tough. Jakarta seemed like a huge overcrowded mess. I was wondering why anybody would want to live here voluntarily.

And then bit by bit I started to see the benefits. Jakarta and its surroundings have ~30 million inhabitants. There are business opportunities literally and figuratively behind every corner.

To my surprise I also learned that Jakarta can be a very fun city. It has so many opportunities for recreation and going out. If you are looking for some nightlife tips, go check out Jakarta 100 bars website.

A common phrase you hear bules (a somewhat friendly word for westerners) say is ‘I cried when I first came to Jakarta and I cried when I left it. But for completely opposite reasons’.

And even if you are not into crowds of people or nightlife you better find another thing to like about Jakarta. Because that’s where business decisions are made. In most industries there’s no way to go around Jakarta.

 

Live close to your office

Once Indosight was big enough to employ full time staff we had to find a proper office space. We found one about 10km (1 hour commute with morning traffic) away from my apartment.

First thing I did – found a new apartment just across the street of the new office. It’s so close that it takes 2 minutes by car or 5 minutes on foot.

Not having to commute every day is a huge efficiency and energy booster. Now when I go around the city I go to meet clients. Every kilometer counts, find your office and home close to each other.

Getting few batik shirts and learning some Indonesian can get you far

Succeeding in meetings

Learn about local culture and language

Everyone says that Indonesian is one the easiest languages to learn. It’s probably true – it has very little grammar and you mainly just need to learn the vocabulary. Many words are adapted from Dutch or English.

That being said, I shamefully admit that my Bahasa Indonesia is still far from being fluent. I get around but any toddler would still speak a more sophisticated language.

But even with my limited language skills I’ve learned how far it can take you. You see, Indonesia has a long history with foreigners coming to the country and not caring much about local people (shame on you, colonizers).

Don’t be one of those people. Show that you are genuinely interested in the local culture and people. Learn to introduce yourself in Indonesian. Have couple of good Batik shirts to impress the locals.

Figure out what are your favorite local foods (you can never go wrong with rendang or ipal) and know from which part of Indonesia they come from (usually from Padang).

A good place to learn Bahasa online is Memrise. It has plenty of Indonesian courses available, I even created one myself. Search for “Business bahasa Indonesia”.

Always go for the most senior person

This one is a critical lesson if you want to do business with big organizations.

Indonesian organizations have a very strict hierarchy. If you want to do business with them, always go to the highest ranked person you can reach. If you have a way to reach to managing director don’t even talk with anyone below him or her.

Decision-making always happens from top to down. A lower level employee will never bring your topic to his boss. Never. He’ll be too afraid to upset his senior.

Instead you need to talk with the boss directly and later he will direct you to one of the subordinates once the decision has been made.

And while at the meetings, always focus on the most senior person in the room. Make sure he or she feels you are in the same league.

 

LinkedIn helps when cold calls and emails don’t work

Email can be a very effective communication tool in Indonesia. But only after you have an established relationship with the recipient.

Cold calling and emailing is very hard. People are naturally skeptical and will place you to the same category with Tupperware and insurance salesmen.

So how you get that important person to meet you?

There are two ways – have someone you already know set you up or use LinkedIn.

Indonesians are crazy about social media and I’ve got countless meetings by just sending people a direct LinkedIn message. It works both with local and international businesses and even with people in their 60s.

 

Talk about money

When doing business in Indonesia there’s really only one thing that matters – money. Don’t make the mistake of being too subtle about it.

Already at the first meeting make sure the people you meet are very clear about what’s in it for them. How much money will what you offer make to them?

If there’s anything else that has importance next to money it is pride. Don’t be surprised if your prospective business partner suddenly takes out photos of himself and the president or any other VIP. Indonesians like to show off. Give them the opportunity to do so and make sure they know how impressed you are.

Finding good people is tough. Here traveling with some colleagues and friends.

Running a business

Be patient. Especially when government is involved.

Chatib Basri, Minister of Finance of Indonesia, joked recently at BKPM Investment Summit that so many Indonesian people are religious because they need to deal with government.

This pretty much sums it up – working with governmental institutions requires a lot of patience and often all you can do is pray that things will work out.

If you don’t want to solely rely on praying then the next step is to hire a consultant or lawyer to handle the government for you. Trust me; it saves you tons of money and time.

But even if government is not involved then Indonesians are naturally bureaucratic. It takes time to get things done. I’ve seen companies giving up because their bosses back in the West don’t understand it. Don’t make the mistake of not being patient. Patience will be rewarded with a huge market and abundant opportunities.

 

Finding good people to hire is tough

For the past 6 months I’ve been constantly hiring people for Indosight. We use all kind of channels there are – personal referrals, job portals, university alumni organizations,AIESEC. And still I’m only comfortable to hire about 1 out of 50 people that apply to Indosight.

The challenge is that even though there are a lot of people, only a small percentage of university graduates have the right skills and mindset to bring value to the company. And the war for such talents is tough.

Another note on salaries. Indonesians tend to have a strange way of thinking about how much they should earn. The calculations are usually based on how much money they need– for living, supporting family, impressing friends – and less about how much they bring to the company.

I personally prefer to focus on the fresh graduates of the big universities. Think University of Indonesia, UNPAD and the likes. And then be ready to put in a lot of hours to train your people.

Content marketing is how Indosight is able to grow so fast.

How to be different from your competitors

Indonesian companies don’t understand internet

The single most important thing that allows Indosight to grow so fast is that we do internet better than our competitors.

I doubt there are many Indonesian companies that have full time people for both blogging and social media and they report directly to the management. We have and we are being rewarded for it.

When a typical Indonesian company thinks of online marketing they think of either spamming in social media or creating a flashy useless websites.

So invest in internet. That’s the fastest way to grow in pretty much any industry here and stand out.

Most of the world still doesn’t understand the size of opportunity in Indonesia

I was recently in Bali meeting some IT startups. I was impressed that none of those companies had even considered targeting Indonesian market.

You are in Indonesia and you spend all this time to compete in markets thousands of miles away?

Indonesian economy, despite its problems, will continue to grow faster than almost any big economy in the world. Millions of new people will enter middle class each year. Natural resources are abundant and there’s a lot of money to be made in moving up the value chain.

17,000 poorly connected islands mean that even when the big hubs get saturated there will be dozens of other areas with substantial size and wealth to target. Ever heard of Palembang? Gorontalo?

Indonesia is often called a sleeping giant. The giant is slowly waking up. You better make sure you are here on time. That time is now.