May 26, 2014
A special thanks to tilyanPristka in Indonesia for sponsoring the Indonesia edition of our Global Startup Report.
In this week’s chapter 27 entrepreneurs share their thoughts and advice on relocating to Indonesia.
You have to understand what indonesian culture is.
Indonesia is such a wide country, determine where exactly you wish to build your start up in. There are some recommended and interesting cities namely Jakarta, Bandung, Jogjakarta and Surabaya. No need to worry, you can search more information before showing up anyhow.
One thing you have to find for sure is a good network. Here, co-working spaces are a new trend, so there are not many of them yet, and it is definitely not easy if you have ‘nothing’ when you arrive.
If you have no acquaintance in Indonesia, try to find start up communities through popular social media platforms. Send them an introduction email to get to know each other. Indonesians are excited to establish relationship with foreigners, moreover when you have just exactly the same vision as theirs.
Indonesia has a unique market, it has lot of culture and traditions. Lot of potential can be had in the Indonesian market. Technology in Asia is dominated by Indonesia, from social media, app developers to the IT industry. This Big Market become my consideration to starting business in Indonesia.
Network! Ask people you trust to connect you to trustworthy professionals. If you will come to Indonesia, find other entrepreneurs who understand your project or requirements.
When incorporating in Indonesia, make sure that you have the legal documents first. When you’re doing B2B, sometimes your customers will ask for these documents.
Mandatory documents include:
– Obtain the standard form of the company deed, arrange for a notary electronically, obtain clearance for the Indonesian company’s name at the Ministry of Law and Human Rights.
– Notarize company documents before a notary public.
– Apply for the Certificate of Company Domicile.
– Apply to the Ministry of Law and Human Rights for approval of the deed of establishment.
– Apply at the One Stop Service for the permanent business trading license (Surat Izin Usaha Perdagangan, SIUP) and the company registration certificate (Tanda Daftar Perusahaan/TDP).
– Obtain a taxpayer registration number (NPWP) and a VAT collector number (NPPKP).
– Register with the Ministry of Manpower.
– Apply for the Workers Social Security Program (Jamsostek Program)
– Importers License Number (API/Angka Pengenal Impor)
Well, first of all, price of housing and food in Indonesia is as high as just any big city in the world out there. But if you know where to look, you can really save costs on this.
Bribery is rampant, but they have more respect to westerners, so you can use this for your leverage. To find housing, you can use a lot of job portals. For taking care of businesses, hire a notary or a lawyer to make the job easier, and LEARN from them.
Like any city out there, we have our share of problems, mainly traffic. So you will need to adjust your lifestyle and make appointments way before to still have spare time to not to be late.
More importantly, Indonesia is very centralized to Jakarta, but it is not saying that other areas are underdeveloped. Depending on what your aim is in Indonesia, Jakarta might not be a great place to start. Other big cities here like Bandung, Denpasar (Bali), or Malang might be what you are looking for. Ask around.
1. Find the right local partner(s) with the same vision. Do some background checks on them before you’re going to decide who to partner with.
2. Utilize local resources as much as possible and do some knowledge sharing and listen to them, it will bring more benefit for you.
3. Let your local partner(s) deal with the authorities. But let them know that you’re ready to support them, if needed.
4. Keep a low profile, unless your have tons of ammo.
To every entrepreneur who is relocating to Indonesia for the first time, they should have a very good concept, and should know Indonesia’s culture first before starting any kind of business here. Be innovative and attractive, and also understand the needs, wants, and expectations of potential customers.
First things first is to get familiar in advance about the local culture with life in general and working culture and ethics. This is far more important than market / business size or potential.
Most companies fail not because of the wrong business or services in relation to the market, but due to failing with human related issues. Set the right expectations.
Have to learn Indonesian Language. Need to make sure you can adapt with high air pollution. Labour cost is cheap but mostly are uneducated.
The process of registering a company can take quite long, so make sure you do your research first, and get it started as soon as possible.
1. Do your homework – not just market research but consumer behaviour if its a consumer related product/service you are working on.
2. Know the legal stuff – Talk to as many entrepreneurs who have relocated to Indonesia as possible for advice. It can be a complex process and you want to make sure you get it right from the beginning – makes things much easier.
3. Have fun – Indonesia is generally a welcoming place. Be respectful of the local people and they will also treat you well.
4. Putting together a good team can be a challenge because of certain skill sets that may be difficult to find. Good talent is key so keep the good guys – whatever it takes.
For relocating your business in Indonesia, you must first familiarize yourself with the bureaucracy and the culture of the Indonesian people. In doing those you will be able to find the suitable way to establish a company and expand your business among the society.
Indonesian markets are different from other markets, hence you must make sure that you can fit that in and achieve revenues from such market. Personally, I’m still not confident with the B2C and long tail type markets in Indonesia, so I think it’s better to plan your revenue streams from other sources.
Few tips about relocating to Indonesia:
– The infrastructure in Indonesia is still lacking:
1. Only a few vendors provide internet connection via cable, the rest are still on DSL. Internet speed is not fast and unstable even in the big cities.
2. Traffic jams are one of main problems in the big cities like Jakarta. It impacts business’ productivity significantly. It might take about 3-4 hours to travel from the airport to downtown during peak hours or when it rains. Usually it only takes about 1 hour. Traffic jams become a stressful routine for working people. For entrepreneurs relocating to Jakarta, I strongly suggest finding a working space close to where you live. You can start with co-working spaces such as (Comma, GEPI ).
3. There is no MRT or good public transport that we can take, even in downtown. Usually people rely on taxis or personal cars. If you are in a rush for meetings, you can always take ‘ojek’ or rented biked with driver, although safety is not the highest priority here.
The market is huge (~270 million people as of 2013). However, the internet penetration rate is relatively small (~35%). Online purchase penetration rate is also small (1%).
It is difficult to monetize B2C products. While if you are going for B2B products, you will have to deal with the bureaucracy which is very tedious.
The living cost in big cities, like Jakarta or Bali gets more expensive every year because of the inflation, while smaller cities like Jogjakarta are extremely cheap.
The startup scene is still early stage. The community is relatively small but growing especially in Jakarta and Bali. Raising money can be one of the toughest challenges as there are not a lot of local tech investors in Indonesia especially for Series A round and above. Startups have to seek funding from neighbouring regional countries such as Singapore or Japan.
Relocating to Indonesia? You have to know about the Indonesian culture and demography. So many people still living with their traditions, including their shopping style. Indonesia has a large population, but only about 30% shop online. The other 70% still shop with the conventional style.
Demography is another factor because Indonesia is vast and there are a lot of cities. Shipping cost is something that we have to consider if we want to reach more buyers.
Indonesia is a country with diversified culture, and the culture itself is quite different compared to other countries. There are some issues that are considered as sensitive and may be conflicting with western countries.
You can find out about consumer’s behavior through research reports. However, to know about Indonesian’s character you have to interact, as often as you can, with numerous type of people. Through this, you can understand better about the character itself. Because in my opinion, character can not be read from a report, you have to experience it yourself.
I would suggest to get to know someone locally that can help you get on your feet for the first time. Indonesia is huge on social media, such as Linked-in, Facebook, and Twitter. You can get to know people from these channels.
Try to get to know the market condition, find who are the players in the same industry, pay a visit or meet them at an event. Knowing who you can work with or who is going to be your competitor will help you understand the market better.
As with relocating to any other country, you have to learn the culture. Indonesia has its shortcomings. By learning the culture and despite of the shortcomings, you will come to love the country.
1. Indonesia is a cash-based society, always carry cash in your pocket.
2. Feel free to wear short-sleeve batik everyday to work (not only on friday). Indonesia (Jakarta especially) is very humid and hot. Batik is versatile (it’s comfortable cause you don’t tuck it in).
3. Stay away from some of the street food. Do yourself a favor.
4. If you choose to relocate in Jakarta, live in the South or Central. These are where most of the English-speaking communities live.
5. Jakarta has terrible traffic. Especially on Friday evenings. So, plan your meeting trips carefully. Google maps ETA just doesn’t work here. Waze works.
Always remember the tap water is not portable. It is advisable to dine in restaurants and not food stalls along the road. One can always try to learn and speak in Bahasa and the locals will be very appreciative.
Indonesia is a big country with a large population, but live on Java. Starting in Java or a nearby location will give you great access to talent and opportunities. Precaution is a good thing and a necessity in Indonesia.
1. Learn the culture and language.
2. Make friends with Indonesians as that is how you’ll learn all the ins and outs of living in the country, and makes life much easier.
3. Seek local entrepreneurial communities in Indonesia. For example in Bali here is Startup Getaway, Hubud, Sanur Space, Lineup Hub and more are emerging.
4. Find reliable internet – Indonesia is still 2nd to last in terms of having the slowest internet speeds in SEA, hehe but we work with it and 3g works really well too.
5. Attend lots of networking events for both local and foreign expats.
6. Use an agent to help you sort all business licenses and visas, this will ensure you are covered no matter what.
7. Attend Project Getaway a 1x/year entrepreneurial event in Bali to connect you with some super smart people that can help build your business.
Before relocating to Indonesia, make sure to know the local situation and really understand the market based on your research while in Indonesia (maybe partner up/ be friend with Indonesian people).
You will not get the whole picture of what Indonesian really needs; however by visiting Indonesia for at least 4 good weeks and talking to local people, you would get a clearer picture of what the consumers needs. After that, just work your way up from that perspective. I think that is the best approach to relocate to Indonesia.
Take into account what you need in the location you are relocating to. Being such a vast developing country, there is a large discrepancy between various parts of the country, and even various parts of a city.
Don’t take out a large contract for a building straight away, you need want to see if any localized flooding occurs, any electrical outages, internet connection stability, etc, etc.
K.Y.M: (Knowing Your Market is important.) Indonesia’s landscape and market demographic is different compared to the neighboring countries such as Singapore and Malaysia.
Markets like Singapore are considered very responsive to new things in the market, however Indonesia is so much different; markets in Indonesia are not very responsive but the influence power is very strong in the country and it affects the market behavior a lot.
From there you can see some openings on approaching the market.
Image credit: rezwan