The year of living prosperously? Doing business in Indonesia


In this blog by The Airport Economist Tim visits the hustle and bustle of Jakarta to find out the tricks and traps of doing business in modern Indonesia.

Indonesia has always been important to Australia as a near neighbour and a trading partner. The islands that make up Indonesia have been inhabited by traders for centuries. In fact, for Australia, our first trading ties occurred when the Indigenous people of Arnhem land traded trepang – sea cucumber – and other goods with their counterparts in Makassar (now called Sulawesi.) In fact when Indonesia was colonised by the Netherlands in 1800 it was done so to set up trading routes for the Dutch East Indies trading company and was itself known as the Dutch East Indies.

After Japanese occupation in World War 2, the Indonesian nationalists fought for independence (with the support of Australian waterside workers who refused to load Dutch ships) and ‘Merdeka’ (Independence) was declared in 1945 in the capital Batavia (the name change to Jakarta) and acknowledged by the Dutch in 1949.

President Sukarno ruled Indonesia after Dutch rule until a coup by military leader Suharto who himself became president in 1967.

In 1997, Indonesia was hit hard by the Asian financial crisis which prompted the end of the Suharto era and IMF intervention. But since then, Indonesia has built up a young democracy and the economic reforms brought in post-1997 have improved Indonesia’s economic fortunes (they even paid back the IMF loan ahead of schedule)

Now President Joko Widodo has put commerce and international competitiveness at the forefront of his agenda and as a former mayor of Jakarta he has a strong commercial background.

As a result Indonesia is a force to be reckoned with, economically speaking. Indonesia’s GDP is close to 900 billion US dollars, making it the 16th largest economy in the world and 119th in terms of GDP per capita. It’s already a G-20 country and is tipped to become the world’s seventh biggest economy by 2030, overtaking both the UK and Germany. The country is a major exporter of natural resources like crude oil, natural gas and coal. Palm oil is also big business, with Indonesia both the world’s largest producer and consumer of the product. But it’s not relying on exports of rocks and crops to drive growth we’re seeing increasing domestic consumption too.

And with a population of 250 million people, there’s a growing urban middle class as well as aspirational communities in the regions in this tropical archipelago of 18 000 stunning islands running from the Indian Ocean to the Pacific…. From iconic Bali and Lombok to economic drivers Java and Sumatra.

Indonesia’s economic success took many by surprise after the 1997 Asian financial crisis and one reason has been the success of many foreign partnerships. For instance, Australia’s Telecommunications giant Telstra has teamed up with Telekom Indonesia, which Erik Meijer, a Dutch born long-time resident of Jakarta, describes as “one of the most successful business partnerships” he’s been involved in, with Telekom Indonesia’s local knowledge, insights and familiarity with local regulators making the journey much easier for Telstra.

Similarly in the retail space, Australian health supplement company Blackmores has teamed up with local pharmacy retailer Kalbe to take advantage of the growing health consciousness of the Indonesian middle class. Ongkie Tedjasurja of Kalbe explains: “We operate on a basis of openness and respect. We do disagree openly at times but we always find a solution.”

In some ways Ongkie is expressing the natural Indonesian pragmatism in a business context. And after some turbulent times, Indonesia is thriving economically and in terms of its social institutions so that next year and the one after can be years of living prosperously.

When travelling around the world it is important to be aware of business and social etiquette. The Airport Economist show produces Tim’s Tips at the end of each episode at the airport as Tim flies off to his next international business destination.

For you to successfully launch into Indonesia it’s important to understand the local culture, and how partners and clients think and operate. Indonesia is technically a secular state and recognises six main religions… but it’s important to remember you’re operating in a largely Muslim environment. Indonesia is a diverse archipelago, so what goes on in West Java is very different than Yogyakarta or Bali. It’s not all the same.

Here are Tim’s Tips for Indonesia:

  1. Don’t be overwhelmed by Jakarta’s size and hustle and bustle, but make sure you book accommodation and transfers before you arrive. There’s a strong, successful local business community that embraces foreign investment.
  2. Understand the country’s diversity. Remember, the Balinese and Javanese are two very different people. And there are many more cultures in Indonesia’s diverse communities.
  3. It’s a predominantly Muslim country, so embrace local customs and respect the local culture.
  4. And lastly enjoy yourself. Experience the country’s lively dining scene, spend time with the local people and discover their great sense of humour.

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The Airport Economist TV show on how to do business in Qantas destinations in Asia and around the world is currently being shown on Qantas Domestic and International flights.

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