Expanding Service Provision in Indonesia
    Category: Column By : Baudouin Coomans Read : 766 Date : Thursday, October 13, 2016 - 13:35:50

    Having lived in Indonesia for over 25 years, I still find on my trips back to Europe that many people have difficulty in associating with it, both in regard to the location and its vastness. While they may have heard of Bali, many place Indonesia as somewhere off Singapore. It comes as a shock to them that superimposed over a map of Europe it would stretch from the west coast of Ireland to beyond Moscow in the east, and roughly from the Baltic to beyond the toe of Italy. Thus carrying out business in Indonesia in many ways poses similar problems to operating across the European Union, and beyond.

    While MNCs are used to expanding operations worldwide and can generally afford to set up their Indonesian headquarters in the capital, Jakarta, SMEs have a more lean and mean existence, eschewing the expense of Jakarta to operate hands-on at the site of their operations. And while much of Indonesian business is concentrated in and around the capital, or at least on Java, there are a further 10 cities with over a million inhabitants, plus 122 more that are home to at least 100,000 people.       

    However, here is where the differences between operating in an EU and Indonesian environment start to emerge. Operating in a city of 100,000 inhabitants in an EU country you’d expect to have a full range of services at hand. PricewaterhouseCoopers, for example, has 27 office locations in Germany alone; it has one in Indonesia. Under current Indonesian OAA regulation, an international financial services company can only be associated with a single audit firm, which is licensed by the Finance Ministry under the name of its Indonesian partners. However, under a recent OAI regulation, two Indonesian audit firms are permitted to link together to form a network.

    We at Moores Rowland Indonesia are very interested in exploring this area, as in regard to the provision of non-audit services such as tax, law and financial consulting, we have already dipped our toe in the water by opening a branch in Bali. Moreover, unlike the wider client base of our main office in Jakarta, the Bali operation is largely supported by foreign-owned SMEs. Therefore, we have already proven the concept that on the spot provision of services is what SMEs require in Indonesia.

    It makes sense, for SMEs need more support from professional business service providers and are less inclined to make expensive trips to Jakarta just to consult with their tax or legal advisors. Moreover, a local presence by a service company can address regional nuances—enabling more effective service to clients.  

    There can be little doubt that the current business-minded government is anxious to root out the deficiencies in both infrastructure and governance that constrict national development in Indonesia, particularly in the eastern islands. While this affords opportunities for SMEs, expanding service provision to these areas will also be required to provide a more conducive business environment.