June 4, 2014
A special thanks to tilyanPristka for sponsoring the Indonesia edition of our Global Startup Report.
In this week’s chapter 27 entrepreneurs share their tips and advice for successfully doing business in Indonesia.
There is a lot of bureaucracy, a lot of paperwork. Where possible get translations of the various things (laws and rules) in your native language. Don’t just get a second opinion, get 5 or 6, from whichever organization and/or department, invariably more information will be forthcoming.
There are several things that entrepreneurs should pay attention to starting up a business in Indonesia, especially when dealing with government bodies and state-owned enterprises. Bureaucracy here is quite an obstacle, and you have to make a connection with the right person to handle this issue.
The market here is more traditional and social. Consumers like to establish a connection through interaction with the sellers. That’s why it’s important to utilize all kind of communication line with the customers, including chat applications (e.g. WhatsApp, Line, or BBM).
Lastly, you have to go mobile. Indonesian people tend to forget more to bring their wallet than their cellphone. Mobile Internet users has grown rapidly because of the cheap data plan services in Indonesia.
First and foremost it is important to abide by the laws and regulations of Indonesia. If a foreigner is working in Indonesia, it is important to get the necessary work permits. Also, when hiring Indonesians, always ensure your company is set up properly and proper contracts are signed with the employees.
If one is a startup, get in touch with local startups as the community is always ready to provide knowledge. If hiring or outsourcing is required, feel free to ask those in the community.
To do business in Indonesia you must learn of Indonesian’s habits, so you will be able to adjust your company rules into it and get loyal employees.
Something you should aware is Indonesian religion tolerance, so you can adjust your company building and rules into it.
You have to have a local management team, or a respectable local partner.
Creating a startup in Indonesia will save you a lot in living expenditure, the internet is good enough and the available talents are passionate about what they’re doing. Startup hubs in Indonesia are still limited and small, but this is growing every day.
Many will point you to big city like Jakarta, Bandung, or Surabaya for networking, but if the location doesn’t matter for you, then I suggest Bali as your home.
Bali is great place for foreigners, the facilities are good to support your startup, Balinese are very hospitable toward foreigners and generally can communicate in English better than other part of the country.
This is a good starting point for creating a startup. If you feel stressed while working then you can just go touring around Bali, there are many great and beautiful places to enlighten your mind.
Depends on the type of business, if its ecommerce they need to aware that Indonesia consists of many islands, hence mastering distribution is important. Regulation on digital business is not well develop but the government already put strong attention on E-commerce business.
Indonesia is culturally strong, relationships are as important as the product/service we sell. Find a good partner to work with, having local partner that already has the network and relationships can speed up your progress in Indonesia.
Know the who’s who in your industry, get to know them and build relationship other than just business relationship. Business gets done mostly in informal ways. Be cautious with who you meet and trust.
Most really successful businessman in Indonesia tend to stay low profile. These folks don’t necessary go and present at events, seminars, and conferences. They like to keep it low and let the results speaks for itself.
There are many so called ‘entrepreneurs’ that are very active giving talk and appear at events who are not necessary successful.
Don’t get over excited over internet data you find. Most VCs and startup see the huge potential because of the internet data that’s published. The trick is, there are many hidden factors that are not published in those reports. Jakarta is a not proper representation of the whole of the Indonesian market.
Be aware of people who look popular in the startup/IT industry. Some of them have no success, but have lots of bullshit displaying their merit(s).
Spend time to meet and talk with many people in the industry to get a good idea how the industry works in Indonesia, because it’s totally different from other countries.
Never try to bribe the authorities, they will ask for more if you do.
Make sure you have connections in Indonesia before doing business. Indonesia is a very social country, and sometime you have to rely on connections.
Doing business is not easy, no matter where you are. However, you will have a very high chance of success here if you can create a solution for Indonesian market.
Since the country is still in high-growth phase, there are still lots of opportunities with little to no competition in certain markets. The things they should be aware of are government regulations and the people (partners/ team members) which can be tricky.
Word of Mouth is STILL king in the country. Get your public to be discussed by different groups, communities, or buzzers rather than spending so much on media advertisements.
Have a local partner. You need someone to show you around, with the mindset of expanding the business together with you. Your partner’s mindset is important, be careful in finding the right local partners.
Work with the local communities or groups, get them to help you grow and expand your business.
Mobility. I think this should apply in most countries, but I think your approach should be easily accessible and viral, consider making a 30 secs video for your business so you could spread it easily with social media. @BayuEkaputra Gellies Media
Maintain trust with your buyers and colleagues. This is something that costs a little extra in Indonesia.
Indonesia is a land of opportunity. It’s a growing market with huge potential. Languanga could be on barrier. Most people in Indonesia do not speak english well.
Second will be government and regulations. Many things are still not yet well-structured and regulated. Knowing someone locally will be the key to understand how things are done here.
I refers to the PDCA cycle in all my businesses: 1. Planning, 2. Do, 3. Check, 4. Action
Create a business model that not only benefits all parties, but also innovative, creative, and attractive. They should be aware of both direct and indirect competitors, but don’t worry about this as long as you have a great team behind your business and keep on innovating.
There are more than 250 Million people living in Indonesia, most of them being lower-middle class. If you want to build a solution, build one that works for these people. Only then you can unleash the major market potential of this country.
Spend time to learn how most Indonesians do this; buy things, socialize with friends, get from one place to another, and most importantly, shop online.
Most important of all, don’t complain. Granted, Indonesia is waaayyy…. behind in administration, setting up a company etc. The regulation is confusing, and how companies work differs from most of the world.
Corruption is rampant, and bribery is everywhere. But, there’s also a lot of positive sides. Like it’s big population, stable economy, respect for westerners, and generally nice population are just a few to mention.
So if you are coming down to do business here, just the basic understanding that accepting Indonesia as it is and try to do your magic, instead of just complaining here and there will be a very good start.
It is necessary to clarify your position from the beginning. You have to pay the whole attention on your company’s legality status. Make a clear agreement with your partners, you need legal protection to avoid any future legal troubles.
Join existing communities, because that’s one of the channels that allows you to find new opportunities.
Never re-invent the wheel. New ideas are always coming up in mature markets such as in the States or Europe. People try the new ideas and if they like it, then the possibility of the product taking off is higher. That’s definitely not the case in Indonesia. People are hesitant to try new things because the majority of them are not power users.
If you decide to re-invent the wheel and try to create a new creative product, you might end up having to spend your resources and time educating the market.
Be patient. There are very few successful exits in Indonesia (eg: kaskus.com, pricearea.com, disdus.com) because of the current existing ecosystems (lack of experience from startups, lack of investors, low internet penetration market and lack of government support).
Due to these drawbacks, you will need extra efforts and time before developing your product, getting your first initial traction and then moving to a sustainable model.
Stay lean. Referring back to my early comment about the lack of investors in Indonesia. I strongly suggest entrepreneurs to stay lean, focusing only on the product and getting the initial traction. It is difficult to get investors to invest in ideas. They want to see some proven data first before investing, even for seed funding.
Know your market. Indonesian consumers are consumptive but they are also price sensitive. They also love freebies and discounts.
Have a local person in your team support who have a better understanding about Indonesia, so the person can guide you and assist you during your ventures.
Indonesia has a lot of resource and is cheap.
Key factor is resource and market. First, make sure to have access to reliable resources, better if you already have the resource from your origin countries. The advantage is resources in Indonesia are cheaper from other countries, but you must know how to manage it.
Make sure you know how to handle your market in Indonesia, my tip is make your clients as comfortable as possible, not all clients are educated with technology, so better prepared for that 🙂
Networking is key here. Many business decisions and meetings happen because of leveraging on existing network.
1. Take time to do your research in all the legalities.
2. Use Geekhunter.com to find top programmer resources.
3. Search for co-working spaces in your area. Bali has great ones like Startup Getaway, Hubud, Sanur Space and a new one in Kuta called Lineup Hub. Word of a new one in Canggu too.
4. Get involved with local events and do what you can to give back to the community in which you are building your business.
There are many people in Indonesia doing good business with hard work, but some of them are only match-making or only doing work as a broker. If it is related to infrastructure or government policy, you should check it first with local people.
Software products for business sold in Indonesia require a lot more support from your team because the target customer is used to having a phone call and visitation.
Indonesia is practically a blue ocean, where there is only few competitors in IT business with a huge portion of local business still running business conventionally.