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Tactics and Strategies for Success in Indonesia – Part 1

The following is a roundup of recommended tactics and strategies that will help you better navigate and enjoy business success in Indonesia. They are presented in alphabetical order for ease of reference.

Clothing

The dress code varies depending on cultures and companies, but it is recommended to adopt a formal style and to respect the Muslim rules of modesty. Standard Western business attire is recommended when attending a normal business meeting. Heat and humidity in Indonesia are significant factors affecting clothing and you should be mindful of them at the time of your business visits.

Communication – Meaning of Yes

It is widely known that Indonesian people can be very indirect in expressing their

thoughts and opinions. Normally, when people say “yes,” it means that they agree to something. The same cannot necessarily be said for Indonesians, at least not in the workplace.

According to information from Emer hub, there are three kinds of “yes” that expats may want to get used to

  1. “Yes, I hear you talking “
  2. “Yes, I understand what you said”
  3. “Yes, I agree with you”

Keep in mind that a yes may not result in any action being taken by the Indonesian side. Indonesians are very polite and rarely say “no”

This can be tricky if you are an expat working with Indonesian subordinates. The first “yes” may mean that they acknowledge what you have asked. However, they still may disagree.

It is advised that before delegating work to subordinates, expats make sure there is alignment with the discussions and that there are precise instructions. Double check to ensure clarity.

Signing-Contracts-Indonesian-CultureContracts

Notwithstanding the weaknesses of the Indonesian legal system, contracts are still an important part of Indonesian business. However, there are some distinct differences that foreign investors should recognize.

In the West, the attitude is that “a deal is a deal “, and contracts consequently use a language where rights and responsibilities of the contracting parties are clearly laid out in writing. Once an agreement has been signed it is usually closed for further negotiations and is binding regardless of changes in circumstances.

In contrast, contracts in Indonesia are usually much less detailed and often are subject to renegotiation and reinterpretation. Flexibility is seen as a virtue and contracts are worded accordingly. This means that the context upon which an agreement is made is much more important than the signatures on a document.

Many foreign investors try to get around the uncertainties in the Indonesian legal system by making contracts (or arbitration clauses) subject to foreign jurisdictions such as Singapore, the UK, or the US. While this provides some extra security, it gives no guarantee of not being taken in front of Indonesian courts. Consult closely with legal counsel.

Your best chance to ensure that your local partners follow their commitments is to stay in regular contact and nurture the relationship throughout your business engagement to have business success in Indonesia.

Corruption

Be mindful of “red flags” such as unofficial meetings, flows of funds or activities through 3rd parties, special bidding processes and special requests or gifts. Stick to your company’s ethics guidelines and state them clearly at an early stage in discussions.

The prospect of having to pay illegal fees is something that foreign investors may be faced with at some point. Getting belongings through customs when moving to Indonesia, obtaining a work permit and an entry visa, or establishing a business with all the necessary licenses and permits are processes where extra fees may be requested.

Often some of these matters are dealt with through agents or consultants on a don’t ask, don’t tell basis. Multinational companies bound by a strict zero-tolerance policy on corruption will often hire a reputable law firm or global accounting firm to handle license or permit issues to make sure they are done properly, without any illegal payments being made. This doesn’t always result in no fees being paid as sometimes these legal or accounting firms in turn hire agents to deal with fees.

Prominent local Indonesian nationals are also sometimes contracted to deal with ensuring that fees can be avoided but these individuals who have leverage over some Indonesian bureaucrats are more expensive than agents. Operations that are 100% “clean” are possible, but the processes will take more time and will draw on patience and persistence on behalf of the foreign companies.

Regarding B2B transactions, foreign companies should recognize that rent-seeking, kickbacks, and side payments are not limited to the Indonesian government and are also very much a part of B2B transactions. Companies need to develop clear policies and procedures for how to deal with these matters.

Employees should be made aware of what a company’s policy is on side payments in cash or in kind in B2B transactions. No ambiguity should exist that allows employees to later claim that they were not aware that their actions were in breach of company policy.

Employees should also be asked to sign a “code of conduct “that clearly outlines what is expected of them, and the sanctions that exist for not following company rules. Training sessions in business ethics that highlight the dilemmas and temptations employees can face in B2B transactions are also important and needs to be carried out on a frequent basis.

Demeanor

Indonesia is an open, friendly, and peaceful country. Nevertheless, good cultural awareness will ease the culture shock and assure you avoid any unnecessary faux pas in daily life and business. Indonesians are taught from a young age to remain calm in public, avoid disagreements, speak quietly with due consideration and not get angered by little things. You should do the same. Adopt a humble demeanor, practice patience, and remember to smile.

Dining and Entertainment

Social events usually start late in Indonesia and expect Indonesians to arrive thirty minutes later than the given time. As a predominantly Muslim country, most of the population does not consume alcohol or pork, and in certain restaurants, fingers are used for eating. Again, always remember to eat with your right hand, keeping your hands above the table. As a Westerner, you should avoid talking about business at the dinner table unless the subject is raised by your host.

It is the normal protocol for the person who extends the invitation to pay the restaurant bill.

First Contact

When trying to establish the first contact, it is preferable to be introduced by a third party, who should be carefully chosen (a local associate or diplomat), It is advisable to try to meet the highest-ranking person of the company first. Personal visits are fundamental as Indonesians may not answer emails, phone calls or messages. Initial meetings are generally not business focused, as they are used to get to know the counterpart.

Gift Giving

Giving small gifts can help develop and maintain business relationships. To avoid any hint of corruption, gifts should be small and should not be given during first meetings. Gifts should always be wrapped and will usually be opened in private. Muslim colleagues or clients should not be given alcohol. It is advisable to give small gifts during special holidays such as Eid and Christmas.

Greetings

Arrive on time but consider that your Indonesian counterpart may be late to a meeting. Build in some flexibility to your schedule so you are not disrupted.

Generally, greetings among all Indonesians are conducted with stateliness and formality, in a slow, deliberate manner. A hurried introduction will be perceived as disrespectful.

A handshake is the most common greeting accompanied with the word “Selamat”. Many Indonesians (especially Muslims) greet each other by bowing and putting their hand on their heart. Always start with the eldest or most senior person first as titles represent the status of a person. They are important in Indonesia and should be used together with the name. Superiors are often called “bapak” or “ibu”, which means the equivalent of father or mother.

Asian cultures can interpret the respect that you show someone’s business card to be indicative of the respect you will show the individual in business. Use both hands (or the right hand only) to receive a business card as the left hand is considered unclean. Do not put the card away and regard it carefully and place it in front of you on the table.

Except for handshakes, there is little or no public contact between the sexes in Indonesia. Hugging and kissing, even between husbands and wives are frowned upon in public. Conversely, physical contact between people of the same sex is perfectly acceptable. You may observe men holding hands or even walking with their arms around each other. These displays are viewed strictly as gestures of friendship.


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