20 Business Practices in Indonesia

Indonesia is an archipelago country with more than 17,000 islands that has many diversities in culture and customs. Moreover, Indonesia is located across the equator of the Earth. So, Indonesia has a very strategic geography which increases the advantages of people around the world to do the business in Indonesia. Therefore, many businessman from other countries has been investing and doing the business in Indonesia. Yet, because of its distinct cultures and languages, there are several concerns that are needed to understand by people who want to conduct business in Indonesia. The business practices in Indonesia are somehow a little bit different from other countries, because Indonesia businessmen who come from various regions in Indonesia have different opinions and ways to do the business.

Before start the business, you must know about Business Etiquette in Indonesia. Then,  there are some general business practices that are mostly done in Indonesia, as follows :

1. Understanding the People’s Identity and Customs

First of all, understanding of Indonesian people and culture is surely needed to conduct business in Indonesia. Harmony and face are two crucial things. Shame must be avoided anytime and anywhere. In Indonesia, family relationships comes before work. Rank and status are highly observed. Bahasa Indonesia is the statutory national language of the country. However, for business with foreign people, Indonesian people can also communicate in English.

2. Greetings to Build Relationships

In Indonesia, the first thing to do before conduct the business is building a relationship with other businessmen and investors from either Indonesian people or foreign people. The relationship can be build by meetings and greetings. Greetings are suggested to be formal so that  the investors or businessmen know that they are respected. A genuine smile is a must in every greeting. Greetings in Indonesia usually are accompanied by a handshake and a slight bow to the potential partners. After that, business cards are normally exchanged after initial greetings. If you want to know how to built long-term and good relationships with Indonesian People, you must know first about Social Life in Indonesia

3. Introductions to Conduct Good Impressions for Business

Indonesia as one of the eastern countries who holds the norms and customs tightly also has some concerns for introductions especially to conduct a business. The introductions in Indonesia is pretty simple, only by saying full names and surname. However, people being introduced are usually in sequence from the eldest to the youngest in the meeting. And also, titles are important in Indonesia as they clarify status. If any titles are known, surely they are used in conjunction with name.

4. The Way of Thinking of Indonesian People in Business

In Indonesia, the way people look to each other is a little bit different from other countries. Indonesia had its independence as a result of their own people’s fight and struggles. So, most Indonesian people believe that people globally divided into two kinds, the good and the bad ones. Yet, Indonesian people also have high esteem and confidence. So, the way of thinking of Indonesian people follows these patterns. For understanding the way Indonesian people think about business, maybe you can read about Indonesian Lifestyle.

5. Problem Solving in Indonesia’s Business

Indonesian people will be feeling challenged for any problem identifications. The desire to get everything good and beneficial makes Indonesian people will come up with some ideas. As a democracy country, Indonesian people solve the problems majority by discussion and consensus.

6. Expectations of Performance

Indonesian people are expected to complete the tasks within some time yet still accurately. The efforts and commitment to team are highly appreciated. Moreover, the abilities to maintain harmony and respect the superiors alongside the organizational structure are highly fundamental for every individual in business.

7. Appraisal of Performance

Indonesia has been learning from other developed and developing countries for decades since its own independence, also in business aspect. Some curriculums and learning systems in Indonesia surely almost the same with other countries. Therefore, in Indonesia, the appraisal of performance are also applied for every aspects in life, including business. However, the appraisal of performance depends on each corporate culture in Indonesia, because the culture of every company is different. Yet, every person has always been reminded of this critical aspect, so that they can work with high disciplinary, both as an individual and team.

8. Motivation and Inspiration for Indonesian People

As a common human being, Indonesian people also need something to makes them keep moving forward and reach many goals for corporate business. The factors which are the most necessary for Indonesian people are strong connections and relationships, good credibility of the company and its management and feeling needed for the corporate. Other aspects that are also considered by Indonesian people and motivated them are rewards and money, yet the harmony and work environment are still above.

9. Negotiations in Business

In Indonesia’s business, mostly negotiations are done in teams after good relationships are already established. In Indonesia, high standard is also used. So, people are normally asked to do more than expected, to make a room for improvement and development. In Indonesia, elders and senior individuals are highly respected to speak first or longer than others. Yet, it is not impossible for others to speak also, but wait for the turn to speak is suggested. Silence is also very valuable in some moments of negotiations. There is no “hard-bargaining” in Indonesia’s business. For making a good deal, you can learn Business Ethics In Indonesia.

10. Rules for the Meetings

People who want to join the business meetings are expected to be on time. Since in society, Indonesian people are known to be not too discipline for time, it is also the same for business. Especially for some elders. However, there are still some Indonesian people that are very strict about time. In the meetings, only the most senior people are permitted to speak. It is not recommended for subordinates to express their opinions if their supervisor is there. Some decisions are usually already made in pre-meeting (if there is any). Multiple meetings are sometimes necessary to create all the decisions. The meetings’ time is considered not in the times of Muslims’ prayers (five times a day), as most Indonesian people are Muslims.

11. The Process of Making a Decision

After some discussions and consensus, plus voting if needed, then the decisions are made by hierarchical concept, as the same as some other countries. Decisions are passed on from top to down. The superiors have the powers authorizing the decisions to become legal. Indonesian people usually do not rush in making a decision. They will think and discuss about it thoroughly.

12. Dining with Partners or Customers

In business, sometimes there are some social events that are needed to attend by the business partners or customers. The event is usually started late and it is expected that people arrive about 30 minutes later than the given time in Indonesia. Because Indonesia is a predominantly Muslim country, most of Indonesian people do not consume alcohol or pork. Moreover, in certain restaurants, fingers are used for eating. The rules are as follows; eat always with right hand (exceptional for the left-handed people), keep hands above the table and avoid talking about business at the dinner table unless the subject is raised by the host. In Indonesia, usually the person who extends the invitation that pays the restaurant bill.

13. Relationships with Customers

Relationship with customers are typical a long-term relationship. This is based on the ongoing trust that is already established. A well-established relationship is primary aspect for any kind of business.

14. Relationships with Superiors and Subordinates

The characteristic of relationship with superiors and subordinates is Patriarchal. Patriarchal here means that the supervisor is given the utmost respect. As a result, the supervisor is also responsible for caring to subordinates and also training them.

15. Maintain the Continuity of Communication

In Indonesia, communication is highly important. Indonesian people believe that make a call is better than text, and a visit is much better than a call. Moreover, Indonesian people are not too direct in showing their denial. So, direct confrontation is not recommended, especially in formal meetings. Keep the communication with each other of business partners is really needed.

16. Business Opportunities in Indonesia

Recently, Indonesia is the 16th largest economy country in the world. Business in Indonesia is challenging, and investors should be a little bit patient to wait for financial returns. However, the opportunities are available across many aspects such as consumer and retail, engineering, education, infrastructure, transport, renewable energy, finance and others within natural resources. The country is also rich of nickel, gold, coffee, forestry and marine sources. There are several ways to operate or develop a business in Indonesia including establish a representative office and appoint an agent and also set up a joint venture company, distributor or importer.

17. Business Dealings

In western countries, most business dealings are done quickly, not too long-winded. Here, in Indonesia, business dealings can be very slow. As stated before, relationships in Indonesia must be allowed to grow over time, also by numerous visits are often necessary to complete the business transactions. Emails, telephone calls and simple visits are highly appreciated. Indonesian people are not rush decision makers.

18. Gift Giving after the Business Cooperation Ends

The gift or bonus giving after a business cooperation between partners in business is commonly applied in Indonesia. This aspect, however, is different for each ethnic in Indonesia. For example, the gift giving for chinese ethnic, items to avoid is including scissors, knives and other cutting stuffs because it indicates that the giver wants to break the relationship. Another example, for Muslim/Malay ethnic, do not give any kind of alcohol since it is forbidden. If the food is given, the “halal” label is very considered.

19. Hiring in Corporate Business

The hiring rules are not carelessly made, the rules are based on the credentials and relationships. The formal contract that are needed to signed between two person in charge is used in any corporate business in Indonesia.

20. Dismissal in Corporate Business

Same as the hiring, dismissal rules are not carelessly made. Furthermore, dismissal is a very last option because of the loss of face to individuals and corporate itself. Its only recommended if you can’t do other stage above properly.

All in all, those are 20 Business Practices, which is defined as the process, procedure and ways to conduct business and reach certain corporate’s goals in Indonesia, that you shall probably know. Hopefully, the customs and cultures in Indonesia that are good and beneficial for business are always being kept by many people, both Indonesian and also foreign people.