Expanding to Indonesia is More Challenging Than You May Anticipate
A foreign investor intent on expanding to Indonesia may encounter more challenges than previously thought. Here are seven facts that you need to know before you set up a business in the country:
The Archipelago May Hinder Plans of Expanding to Indonesia
The geography of Indonesia is possibly the biggest challenge for any entrepreneur because communities may be separated by water. This means that foreign investors have to think up cost-effective ways to allow different communities to interact and communicate. Successfully expanding to Indonesia is dependent on this.
Multiple Language Barriers Make Expanding to Indonesia Difficult
Even though the government officially relies on Bahasa Indonesia as the national language, different communities have their own respective dialects. A foreigner coming in to do business must comprehend how to promote the company’s products and services, despite language barriers.
Demographics and Population Size Influence Expanding to Indonesia
This is the main reason foreign investors and local entrepreneurs are bullish on expanding to Indonesia. For one thing, one-half of the local population is below age 30 which means they may accept new technologies easily. There are more than 250 million people in the country as well so there is a demand for products and services. Tapping into these two traits of Indonesians alone would already be profitable for a well-planned business.
Religion, Culture and Socio-cultural Factors Complicate Expanding to Indonesia
The population of the country has its own religious, cultural and socio-cultural biases which may affect marketing. A company needs to create different marketing material per product per social group based on these factors, to be successful.
Lack of Financial Awareness Makes Expanding to Indonesia Harder for E-commerce
Most Indonesians are not aware of the use of financial products and services. In fact, less than 5% use credit cards. This makes it difficult to facilitate financial transactions such as mobile payments and online payments. However, many Indonesians rely on smartphones so there’s hope for e-commerce solutions when marketed the right way.
Financial Duopoly Leaders Will Affect Investors Expanding to Indonesia
There are two financial institutions you need to work with if you pursue expanding to Indonesia. One is Bank Central Asia and the other is Bank Mandiri. If you are in the technology industry, you may find yourself competing against these two, especially in online payments solutions. These two companies introduced online payments back in 2012 so they have a headstart you need to catch up with.
Be Prepared to Deal With Bureaucracy When Expanding to Indonesia
It isn’t easy trying to work with the government bureaucratic processes in Indonesia. For instance, you may need 47 days on average to set up a new company in Indonesia. By contrast, the same process of setting up a new company only takes two days at most in some other jurisdictions like Hong Kong and Singapore. This kind of red tape is a major deterrent to foreign investors who are eyeing the Indonesian market for expansion.
Anyone who would like to invest in Indonesia needs a massive storehouse of patience. You have to possess sufficient knowledge of how Indonesians think and behave too. As a business person, you should have the ability to recruit local talent intelligently. And of course, you need the right knowledge and technologies that would work under prevailing conditions. Should you need business setup services in Indonesia, we at 3E Accounting will be glad to assist you. We also offer other business services, such as accounting, auditing and taxation, among others. Contact us now so we may provide the necessary services for your new business right away.