|Doing business in Indonesia (part 2)|
|Society and Culture|
|Indonesia is the fourth largest country in
the world with approximately 200 million people, most of whom live on
Jave where the capital Jakarta (population 8 million) is located.
Despite having a number of very large cities, most people still live in
rural areas. In Irian Jaya (western end of Papua) and remote parts of
Kalimantan (Borneo), the local tribespeople have barely moved into the
Indonesians are primarily Malay, except in Irian Jaya where they are mainly Papuan. The Chinese form about 3% of the population. Despite the Malay predominance, there are around 300 different ethnic groups with a wide variety of different subcultures,social structures and languages, because of the geographical spread of the populations across many islands. The national language," Bahasa Indonesia", a variant of Malay, is compulsory in primary school. Ethnic identity is usually as important as national identity and used as the primary basis for building and maintaining relationships. Geographic and economic distinctions among the rural, coastal, tribal, and urban Indonesians further the country's heterogeneity.
|Indonesia is one of the most populous Islamic nations with around 90% being Sunni muslim. The rest are mainly Christian (6% mainly tribal Iban), and Buddhist (2%, mainly in Bali). Due to the Hindu influence, the Balinese have a very fatalistic attitude. Religious freedom is guaranteed and tolerance is highly valued by Indonesians. Nevertheless, as elsewhere in the Islamic world, there has been pressure to move toward Islamic fundamentalism, and there have been a few clashes between ethnic and religious groups as some people feel threatened and ambivalent about modernization. There is a requirement for all offices and building to have a prayer room. However, few Indonesians have embraced fundamentalism.|
|Like Malaysia, Indonesia is a high power
distance collectivist culture with a traditional hierarchical and honor
oriented society. There is strong ingroup loyalty encompassing family,
friends, and members of the same ethnic group. This provides a basis for
the favoritism so rampant within the economic structure. Traditionally
Indonesians have valued large families with extended families living
together, supporting and helping one another. However, the increasing urbanization
and the need to move to where jobs can be obtained is breaking up this
interdependence and extended family living.
Harmony and respect prescribe the relations between
people. Conflict is avoided while values and behavior in all aspects of
life are directed towards smooth relations with others. Indonesia
society is characterized by concepts such as consultation, agreement and
solidarity, follow my leader or "Bapakism" (bapak = father) is
a well known expression for this behavior, as people find it necessary
to honor older people, and those of higher status have the role of
fathers in an organization. Suharto has survived on the basis of this
value. Bapakism is based on astrictive considerations such as age,
seniority, wisdom and class. Within organization, loyalty is more
important than wisdom and class. Within organization, loyalty is more
important than efficiency. It is the role of the "bapak"
manager to maintain harmony and they will use organizational assets to
achieve this goal. Managerial authority and power do not stem from
Western considerations of contract or appointment. Subordinates will
therefore not make decisions, and there is a wait and see attitude for
senior managers to reveal what the decision is.
|You should try to gain an introduction to
the party you wish to meet. This will speed up arrangement for a meeting
and lead to speedier discussion. Cold calling, even if successfull, will
lead to the first meeting only being spent on establishing credentials
and developing trust. Always address your letter or fax requesting a
meeting to the most senior person of the company. They will then assess
who should see you, particularly in terms of the level you hold in your
organization or the specialist knowledge involved.
Personal connections are often more important than economic criteria in making government and business decisions. Having the right connections is so important that it can be quite difficult in some areas to access senior person or gain a meeting without them. Connections usually start with a person's family and filter down to the Indonesian Chinese business person you really need to meet. The need to have these connections and the practice of paying people a fee to arrange them is so persuasive that even the World Bank has an informal taxation category in its cost estimates for Indonesian projects. There is also an overt favoritism with well connected firms being backed by state owned banks to finance pet projects. With credit in short supply and high interest rates, this favoritism creates difficulties for other companies. However the recent economic problems of Indonesia have resulted in shaky banks being closed and favored deals ceasing for the present. Now that Indonesian business is opened up to foreigners, corruption and efficiency is declining as reform and modernization is led by Western trained technocrats.
You will prosper better in your attempts to do business in Indonesia if you have been able to arrange through trade shows, or other professional contacts, some local partner, representative, or agent to serve as an intermediary. This partner can be an actual business partner or a consulting or trade firms that acts as a formal go between. If you are committed to do business in Indonesia, the presence of a well qualified Indonesian with good English skill operating your representative office is a valuable asset.
Your local partner, representative or consultant must have the correct political connections, which implies access to senior state and other officials. Connections with socially acceptable people will have an undue significant influence on business interactions. Unfortunately, family, friends and contacts may prove more important in a business relationship than the quality of the product or service being offered.
The Chinese business community control many of the
country's businesses, and there is considerable animosity towards this
small group who appear to have prospered at the expense of the Malay
Indonesians. However, there is emerging an indigenous Malay business
class termed pribumi, similar in character to the bumiputra business
person and traders in Malaysia. This pribumi group is being
encouraged to counteract the Chinese dominance. Hence they are another
useful entree into a business venture in Indonesia.
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