Indonesia: 2000 years new and a land of business opportunity…if you are prepared for the challenges

Build your Business in Indonsia

Indonesia is the string of islands to the north of Australia, and has long had issues with dealing with foreigners. These foreigners have been the Chinese traders who have been in the area for millennia, the Indian and Arab traders who have brought with them the various religious belief systems that are common to the islands, or the Dutch and other European colonists who have had a trading hold over Indonesia in recent centuries.  These tensions developed further during the battles for independence from the Dutch, and the subsequent political upheaval over various periods of the past 60 years.   These issues have been around for more than 1500 years, but have over this time not inhibited trade through the region for very long. Indonesia is at the epicentre of trade between East and West, it is a stone’s throw from Singapore, and forms a nexus between India and China.  

The past decade in Indonesia has seen a transformation in the governance in Indonesia, and has just started to settle down, with President Yudhoyono, recently elected to a new term.  Indonesia skipped through the GFC with little negative impact and maintained positive economic growth during 2008, 2009 and has seen increased forecasts of growth for 2010. The time is ripe to re-engage with Indonesia in a business sense, and take advantage of the opportunities.  In recent months the Australian and Indonesian governments have commenced working on a free trade (FTA) agreement which has the potential to create increased business opportunities in Indonesia for Australian Businesses. As with any FTA, the negotiations will take months to years, but in the mean time Australian businesses have recently gained improved trade conditions with Indonesia as part of the expanded ASEAN free trade area that has commenced in 2010. Notwithstanding these improved investment and trade conditions in Indonesia, there are still many challenges that need to be effectively navigated if investment into the Indonesian market is to be a success.

It is important to remember that Indonesia is an ethnically diverse society, with each island (there are approximately 18,000 of them) having their own cultural traditions. Add to that the influence of the Ethnic Chinese, who have been trading in Indonesia for the past 1000 years, you can see the impact culture has on how you conduct business in Indonesia. You need to know who you are doing business with, Javanese, Balinese, Sumatran or Chinese Indonesian (or any of the other ethnic groups that exist throughout the islands).

Generally speaking Indonesia has a peaceful and gentle culture, and this translates into the conduct of business. Explicitly aggressive behaviour is not displayed, and they will expect a similar calm and gentle approach from anyone with whom they are negotiating.   It is important to remember that Indonesia is a society that is based upon religion and the majority of the population are Muslim, which means that as a rule, they don’t drink alcohol, don’t eat pork, and will be accommodating of any guests they host. So don’t confuse hospitality and friendly behaviour as a sign of a successful business deal. It is said that there are three types of ‘yes’ in Indonesia which actually mean: No, maybe but probably No, and Yes. It is critical that when doing business in Indonesia that you observe all non-verbal behaviour to help ensure you can identify what the true response has been. Rarely will you be told No.

Be aware of the cultural nuances when conducting business in Indonesia

The Ethnic Chinese in Indonesia however can be a different story, and although influenced by the Indonesian culture in which they live, they exhibit behaviours much more in common with the Chinese in Singapore, Malaysia, Hong Kong and China. Relationship building is critical to business success, and it is much more likely that the business relationship may develop over a dinner banquet or a game of golf. Although aggressive behaviour is rarely displayed, you can expect dealings with Ethnic Chinese Indonesians’ to be much more assertive and forthright than with the ethnic Indonesians.

Now, don’t get me wrong there are other challenges other than the cultural issues when entering the Indonesian market and you will need to consider the legal issues and non-tariff barriers that can be a hindrance to trade.  But you need to consider the cultural nuances of trade first if you are to even contemplate success in Indonesia. Just remember the facts – Indonesia is the 4th largest country by population, with over 235 million, and it is Australia’s closest neighbour. Entering the Indonesian market is full of bureaucratic complexities and cultural challenges, but the business rewards can be very large if you are culturally aware and have patience.

About Nathan H. Gray
Nathan H. Gray is Managing Partner of AsiaAustralis. AsiaAustralis is a stategic consulting service partnership established by experienced international management consultants to assist private and public organisations achieve their strategic objectives in trade, investment and government relations throughout the Australasian region with a particular focus on SE Asia. Based in Adelaide, South Australia, AsiaAustralis has a network of associates throughout Australia and Asia that can be called upon to assist and facilitate major projects, business opportunities and government to government trade and investment facilitation. To Contact AsiaAustralis check out the website: or send Nathan an email:

One Response to Indonesia: 2000 years new and a land of business opportunity…if you are prepared for the challenges

  1. Great place …great culture

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