Coping with Indonesia`s Complexities
Category: Column By : Wichard von Harrach Read : 102 Date : Thursday, December 07, 2017 - 08:29:22

Indonesia has ramped up the world’s biggest infrastructure investment program, rivalled only that in China (but relative to GDP, perhaps bigger). The numbers are impressive: By 2019, the investment program will include 2,650 km of roads, 65 dams, 3,258 km of inter-city railways, 15 airports and 109 energy projects with 35 GW and 45,000 km of transmission lines. These projects are open to both to national and international players, and opportunities abound for consultants, contractors, suppliers, operators and investors.

Thus European companies should intensify their engagement in Indonesia or at least research its potential. If the above isn’t attractive enough, Indonesia’s 17,000 islands and a population of around 260 million (world’s fourth largest by size) offers plenty of potential for products or services. In 2014, the World Bank’s Index ease of doing business index showed the country at 114th place, but now it is ranked at 72—an impressive rise.

Managing a business is complex, managing it well in emerging markets and in a cross-cultural context is even more challenging, especially if the country is in a constant flux of reform. For example, in 2017 the Indonesian energy ministry churned out 50 regulations within eight months, and the central government has issued 16 reform packages in three years, all not counting thousands of regional regulations. Operating here is a continuous challenge. Therefore, one must learn to distinguish between the vital and sustaining regulations with the ability to modify one’s business goals when necessary.

This brings up the second point – “cultural chasm.” Indonesians are courteous, amicable, accommodating and harmony-seeking compromisers. Personal relationships are vital. Europeans tend to be factual and decisive. These differing styles can lead to friction. Many foreigners wonder why they don’t get the results they want—but their style causes challenges with the locals.

Many also are not fluent in (the allegedly easy) Bahasa Indonesia, and as a result they cannot improve understanding with local language skills. Indonesians prefer to “listen,” rarely confront and tend to be diplomatic. When it comes to leadership style, Indonesians respect authority and are status conscious. They are team players who prefer collaboration versus competition, and they respect harmony.

These are generalizations, there are also important differences between ethnic groups within Indonesia, therefore it helps to know the nuances of each group before starting your business. Working and living in Indonesia is a great adventure, and I continue to enjoy it. My message to my fellow European businessmen and women is: we need to understand that the Indonesian Garuda (the national symbol) is already approaching the runway. If you are an interested player, you need to climb on board, and start understanding how to do business in crossing the cultural chasm to enjoy this rewarding ride. Selamat datang!  



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