International Business / Spotlight on Indonesia : When Doing Business There ...

Indonesia is rapidly developing its economy, partly by increasing foreign investment and foreign business contacts. It is the world’s largest Islamic nation, and religion--as well as some unique cultural traditions--influence how business is conducted.


* In planning business appointments and business entertainment, be aware of religious requirements, such as visiting a mosque on Friday for noon prayers and fasting during the month of Ramadan (the ninth month of the Muslim year, which next begins on Feb. 2, 1995).

* Be aware of the significance of family and ethnic ties in business relationships. Indonesians often feel obligated to give preference to relatives and members of their ethnic groups.


* Use an intermediary to make some business contacts. Indonesians are very conscious of professional and social status; thus, senior executives often use intermediaries when dealing with people of lower status or of non-Indonesian origin. It is also helpful to have referrals from socially prominent individuals when seeking business contacts.

* Employ Indonesian nationals as senior managers in your firm to avoid delays and difficulties in dealing with the government. The government considers the employment of native senior managers a priority for foreign investors.

* Study thoroughly government laws and regulations related to business and foreign investment. Regulations affecting investment and joint ventures have changed recently.

* Be patient with bureaucratic procedures. A letter of support from a high-ranking official doesn’t eliminate the need to work through the lower-level officials who actually get the work done.


* Know the different approaches to a project. In rural areas, Indonesians decide on the leader and members of a project team and then plan the project. In urban areas, they plan the project and then pull together the people with the needed skills.

* Sample any drink or food offered--it is considered polite. However, do not reach for a beverage until the host signals you to do so.

* Be formal and polite in the presence of elders and superiors.



* Don’t use your left hand to give or receive. It is regarded as the unclean hand. It is also considered rude to point or summon someone with a finger.

* Don’t be offended if events do not start on time or if a guest arrives late. Indonesians are not known for their punctuality.

* Don’t cross your legs with one knee over the other while sitting in the presence of others. It is considered disrespectful.

* Don’t expect Indonesians to openly admit that they lack certain knowledge or that they are wrong or unable to complete a business transaction. They prefer to avoid disharmony and conflict and would rather preserve their own and others’ dignity.


* Don’t touch a person’s head, even if you mean it as a gesture of friendship. The head is the most respected part of the body for Indonesians.

* Don’t underestimate the importance of the government’s role in business affairs. Civil servants are highly respected (far more so than in the United States).

* Don’t hire too quickly; firing someone is frowned upon. The most accepted way to deal with an unsatisfactory employee is to reassign him or her.

Sources: John Irvine & Associates; Price Waterhouse