Indonesia is an emerging global powerhouse in Asia. With the current GDP (as of 2018) 1.042 trillion USD (source: WorldBank), Indonesia is the largest economy in Southeast Asia. Over the past decade, Indonesia has enjoyed steady economic growth, though less than needed to pull the country into upper-middle-income status, and the rate of growth is slowing.
We have list 4 tips for foreign businesses who want to expand to Indonesia.
1. Have a local contact who knows your industry
Indonesian market and regulations can be very confusing for foreign investors when they first entered Indonesia. Although the regulations keep improving, there are still a number of regulations that prevent foreign investors from entering the Indonesian market. It can be conflicting like Indonesia has begun to implement local content requirements that prevent some foreign products from being sold in Indonesia.
It is better for any company that wants to enter Indonesia market to have local contact with good experience in their field of industry, or to partner up with a local company who already has the business connections or management skills. It will really help the company to find new clients and navigate the unique challenges of the local market.
How to determine the best place to open your business? Most of foreign SMEs have chosen to open their Indonesian operations in Jakarta since it is the capital city of Indonesia and the center of business.
But this becomes a challenge for businesses whose products or services need space, such as agriculture. Navigating geography is a key skill of entrepreneurs with this type of business. Being close to the decision-makers and clients is important, and most of them are in Jakarta, but sometimes those decision-makers are influenced by people on the ground.
Logistics can also be a problem because Indonesian infrastructure and service networks have not been developed the best at this point. Thus it is really important to know where your market is, consider travel costs and distribution channels to make sure your costs don’t blow out.
3.Build good relationships with your overseas staff
Another important point is how Indonesians value foreigners’ insights. Some of the companies that have strong cross-cultural training programs in Indonesia and overseas said that Indonesian staff appreciated working for foreign companies.
4. Be aware, but not put off, with politics
While diplomatic problems may occur or defined some countries’ recent relationship with Indonesia, the small businesses exporting to Indonesia have remained consistent. Foreign businesses would be aware of those political factors definitely, but the business activity doesn’t really drop off. There’s a lot of exporters doing really well in Indonesia, and some of the companies have their rates of return are high compared to China and India.
Are you interested to discuss further with us? Call us now!