How to Overcome Challenges of Startups in Indonesia
Indonesia attracts locals and foreigners because of the potential profitability of doing business in the country. However, it can get a bit difficult when business people encounter challenges of startups inherent to the country. Still, this doesn’t mean that you cannot set up a startup company there. It just means that you need to be courageous, intelligent, and patient when you form a startup company in Indonesia.
Capital Required to Set Up a Startup Company
Anyone setting up a new company needs to have at least $800,000 USD (or IDR 10 billion) as capital. You will also need around $200,000 (equivalent to IDR 2.5 billion) for your minimum paid-up capital. This can be daunting for you to secure by yourself. The solution could be taking out a business loan from a local bank. You can also try to raise the money yourself from people you know.
Restrictions on Foreign Ownership
There are also other challenges to startups in the country. For example, there are rules that dictate how much of your company will be set aside for foreigners. In the past, the government was very strict about these rules. One industry that has recently seen a relaxation of the rule on foreign ownership is the insurance industry. The government requires an insurance company to generate capital first via an initial public offering. After that, the previous cap on foreign ownership is waived. The government will also not require the insurer to have local investors as part owners of the insurance company.
Lack of Suitable Infrastructure
It is unfortunate that the local infrastructure is insufficient for doing much business. However, some might find opportunities in those Indonesian locations that do have a suitable infrastructure, such as Java. This remains one of the biggest challenges of startups in the country.
Hiring of Staff for Indonesia
A foreign company entering Indonesia will have to prioritize hiring locals for its labor force. Investors though are given easy access to work and stay permits. The government will allow a foreign company to bring in their own people if there are no locals available. This makes it a bit awkward to do business unless you head to Indonesian universities to recruit talented graduates. The supply of talented workers may work in your favor, especially if they’re well-trained and have the right attitude.
You may also check on local rates for salaries if you will be hiring Indonesians for your company.
There are many problems that arise when you attempt to do business in Indonesia by setting up a new company. Foreigners may find these problems daunting. However, you may still be able to set up a startup company if you are careful to follow Indonesian laws.
One solution to your problems could be tapping the services of business setup specialists in Indonesia such as 3E Accounting. We can help you in various areas of business. Some areas they render service in are accounting, auditing, taxation, human resource, and even corporate secretarial services, among many others. This will help you avoid feeling overwhelmed by the many challenges that face foreign businessmen in Indonesia. Contact us today!