Background To Business in Indonesia

The development of business in Indonesia has, for many years, been inextricably linked to political influence and patronage.

It has been virtually impossible to make progress on any major project without the right level of influence with senior people in the relevant government ministry – and the closer one’s contacts to the President, the better.

The last Asian currency crisis has forced the government to address some of the cronyism inherent in all business dealings – and a good deal of progress is being made in this area. (The issues of corruption and graft had reached such a scale that the World Bank, reportedly, had a special category in its cost calculations for major projects, just to cover these unaccountable expenses.)

Such contentious issues as bribery and corruption aside, the Indonesian approach to business shares many similarities with customs and practices found in neighbouring Malaysia – hardly surprising as both countries contain a Muslim, ethnic Malay majority and a small but commercially disproportionately influential Chinese minority. Attitudes and concepts of acceptable behaviour, therefore, focus on such issues as the need to show respect to seniority, the unquestioning acceptance of hierarchical structures and the constant striving for the development and preservation of harmony within the group environment.

Indonesia with a population of 260 million and a rapidly growing economy, represents a significant business opportunity in such areas as electrical goods, automotive, retail and infrastructure. To access this market though, you need to understand the business culture.

A brief overview of some key concepts to consider when doing business in Indonesia

Written and Produced by Keith Warburton

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This country profile has been produced to give a short overview of some of the key concepts to bear in mind when doing business with contacts in Indonesia. It is intended to be an aid to business people who have commercial dealings with counterparties in the country but should not be seen as an exhaustive guide to this topic or as a substitute for more substantial research should there be a need.

With this in mind, we have covered the areas which are key to a better understanding of the cultural mindset underpinning business dealings in Indonesia and which are, quite often, extremely different from the approach and thought processes associated with business in other parts of the world.

Therefore this briefing note is broken into short, bite-sized sections on the following topics:

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