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Indonesian Businesses
In the last few decades, foreign investors and entrepreneurs commented that it is rather difficult to conduct business in Indonesia. This is largely due to social instability, legal uncertainty and traditional-cum-conservative local cultures.
However, government is trying to change the perception in an attempt to transform the country into a modern and effective business platform to spur economic growth. Bear in mind that the local cultures are totally different from Western cultures. Therefore, a gentle reminder for Westerners and first-timers in Indonesia, you need to learn and understand the local culture and social etiquettes to smooth your business projects and meetings with other associates and affiliates. When interacting and communicating with Indonesians, try to be less confrontational and respect their opinions and differences. While some commented that it is not easy to expand your business in Indonesia due to social instability and cultural differences, the fact that Indonesia has the largest economy in Southeast Asia encourage foreign entrepreneurs and investors to continue to flock into the country regardless of the challenges. To begin with, agriculture sector plays an important role in the country’s GDP and economy. Based on a statistics released by the government, this sector employs approximately half of the work force thus, reducing the unemployment rate in the country. Unfortunately, between 1997 and 1998, the country was hit by drought. Since then, the sector has been steadily declining. Government took the initiative to introduce new policy in 2000 to emphasize on prioritizing food security and support effective production and marketing of agricultural products. Today, Australia remains as the leading agricultural exporter to Indonesia primarily for several commodities such as dairy products and wheat. Other than these commodities, rice is also considered another important commodity in the country. Statistics from 2005 revealed that rice accounted up to 23% of total agricultural output. Among other important commodities are such as sugar cane, rubber and crude palm oil. On another note, there are plenty of vehicle assembling companies nationwide to facilitate the development of automotive sector in the country. In the last few years, majority of minivans were assembled locally while two wheelers and other vehicles rely heavily on imported parts thus resulting in higher costs of production. Certain assembling companies also collaborate with foreign car manufacturers. But nevertheless, automotive remains one of the major sectors to help boost the economy and GDP. And currently, there are about 30 automotive manufacturers in the local market. Even though most countries were affected by global financial crisis in 2009, statistics from Indonesia showed that the services sector increased by 5.9%. The figure surpassed growth rate of manufacturing, mining and agriculture sectors. As a result, services sector made up to almost 52% of the total GDP last year. That indicates that over half of the country’s GDP originates from services sector. And it seems that the trend would continue in near future as the economy is currently dominated solely by services sector. Meanwhile, the manufacturing sector is facing plenty of challenges and problems. One of the major problems is the lack of infrastructure to facilitate the development. While the government is striving hard to tackle the challenges, it may take several years to be able to contribute to the country’s economy and GDP. Moving on another sector – aquaculture, this is one of the fastest food producing sector in the country. Basically, there are 10 major cultured species such as nile, carp, seabass, catfish, pangasius, ornamental fish, shrimp, grouper and seaweed. However, there are still some challenges and problems with the sector mainly due to inadequate work force. On a lighter note, tourism sector in the country is promoted in two programmes – tourism products and solely on tourism. To facilitate the development of tourism sector in Indonesia, government has also introduced five supplementary programmes such as education, tourism research and development, environmental pollution, training and tourism guidance, as well as tourism infrastructure development.
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