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How to Do Business in Indonesia

By McElroy Translation,
Austin, Texas 78701 USA


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Indonesia’s Gross Domestic Product (GDP) for 2006 was US$364 billion (US$960 bn PPP). In 2006, nominal per capita GDP was US$1,640, and per capita GDP PPP was US$4,752 (International Dollars). The services sector is the economy’s largest and accounts for 45.3% of GDP (2005). This is followed by industry (40.7%) and agriculture (14.0%). However, agriculture employs more people than other sectors, accounting for 44.3% of the 95 million-strong workforce. This is followed by the services sector (36.9%) and industry (18.8%). Major industries include petroleum and natural gas, textiles, apparel, and mining. Major agricultural products include palm oil, rice, tea, coffee, spices, and rubber.

Indonesia’s main export markets are Japan (22.3% of Indonesian exports in 2005), the United States (13.9%), China (9.1%), and Singapore (8.9%). The major suppliers of imports to Indonesia are Japan (18.0%), China (16.1%), and Singapore (12.8%). In 2005, Indonesia ran a trade surplus with export revenues of US$83.64 billion and import expenditure of US$62.02 billion. The country has extensive natural resources, including crude oil, natural gas, tin, copper, and gold. Indonesia’s major imports include machinery and equipment, chemicals, fuels, and foodstuffs.

The official language is Bahasa Indonesia, although many government officials and business people speak English. The official unit of currency in Indonesia is the rupiah, which is divided into 100 sen. (Credit cards are really only useful in large hotels, restaurants and foreign companies, so it is inadvisable to rely solely on plastic money in Indonesia. Travellers’ cheques and foreign currency, particularly US dollars, can be easily exchanged at banks across the country. If you are travelling beyond large Indonesian centres, try to attend to your banking before you go, or carry a supply of cash for currency exchanges.)

Post and Telecommunications

  • The postal service in Indonesia is quite efficient, particularly from large centres such as Jakarta or Yogyakarta.
  • International calls can be made from Wartel (Warung Telekomunikasi) offices across the country.

Business Etiquette
  • As in most Asian countries, business cards are very useful for making introductions. Never pass or receive cards with the left hand, as this hand is considered unclean.
  • General forms of address in Indonesia are "Pak" for a man and "Ibu" for a woman.
  • It is conventional to give a light bow of the head when shaking hands or taking one’s leave.
  • Gifts, though small, are frequently given.
  • Gifts are not opened when given. This practice shows the recipient is gracious, not greedy.
  • The most important thing to remember when selecting gifts for Indonesian people is that Indonesia is a Muslim country and therefore, alcohol and products made from pigskin are unsuitable.
  • Be particularly careful when selecting gifts for Indonesian women, as certain items of clothing or cosmetics may not be suitable for devout Muslims.
  • Always take care to respect Muslim religious conventions. Although most Indonesians are Muslims, Indonesia is not an Islamic state and allows freedom of worship to all religions. Indonesia also contains large Hindu and Christian minorities.
  • Always avoid pork and alcohol, as these products are not consumed by Muslims.
  • Avoid lunch appointments during the holy Ramadan fasting month. This month is calculated according to the lunar calender and varies from year to year.
  • Do not schedule meetings between 11am and 1pm on Fridays, as this is the time most Muslim people attend the mosque.
  • Never shake hands or pass or receive objects with the left hand, as this hand is considered unclean.
  • Never touch a person’s head, or point with a forefinger, as this is considered impolite.
  • Give ample time when requesting an initial appointment with a company. An initial telephone call should be followed up in writing with a dossier of information on the requesting company and the purpose of the meeting.
  • Always avoid adopting a didactic position at meetings. It is better to take a low profile and whenever possible, let your host do the talking. Never be pushy or insistent.
  • Do not crook your index finger to call someone over. This gesture is offensive.
  • Do not put your hands into your pockets when talking with someone.
  • No physical contact between men and women is made in public, except a possible handshake.
  • Never stand with your back to an elderly person or a high ranking official. As you enter a room be aware of the people who will be in that room with you.
  • Always rise when your host/hostess enters the room.
  • Leaving food on your plate signifies you are impolite, so eat all the food you are served.
  • Only use your right hand for eating, when touching someone, or handling money/papers.
  • Talking is impolite while eating dinner. Conversation is reserved for before or after the meal.
  • Never show the soles of your feet/shoes or touch anything with your foot.
  • Never touch another person’s head, this includes a child’s head (such as a pat on the head).
  • Never eat while walking in public, or chew on a toothpick. Yawning in public is inappropriate (cover your mouth if you must yawn).
  • Remove your hat and sunglasses when going indoors.

Business Attire

  • Indonesia has a very hot, tropical climate, so it is wise to always dress in light, cool clothing. Most of the time formal casual clothing is suitable.
  • For business meetings, both men and women should wear a lightweight or tropical suit. Men should wear a jacket and tie when making official calls or attending formal occasions.
  • Indonesia is an Islamic country so care should be taken care to avoid wearing revealing clothing.
  • For certain formal occasions long-sleeved batik shirts are appropriate for men.
  • An umbrella is an essential wardrobe component in rainy season (September - February).
  • High heat and humidity require packing enough clothing to always appear clean and fresh. You may have to change your clothes several times a day to maintain this look.
  • Women should wear long-sleeve blouses and skirts that cover the knee.
  • Women meeting in a more formal office should wear a suit with hosiery.
  • Women are limited to clothing colors that are muted or dark. Leave brightly colored clothing at home.
  • Men should wear coat and tie until appropriate to dress more casually. Follow the lead of those you are meeting with.
  • Men generally wear dark slacks, long sleeve and light colored shirt, and tie (no jacket).
  • "Lounge suit” requires men to wear a business suit. This term may be included on an invitation.
  • Men may find in a very casual business office that a short sleeve shirt and no tie would be appropriate.
  • Women must always cover their upper arms when wearing a casual blouse.
  • Jeans may be worn for very casual, but never shorts for men or women. Even though the climate is warm and humid, proper attire even for very casual appearance will always dictate your choice of clothing.

Business Hours

  • Government offices are open between 7am and 3pm on weekdays and are closed on weekends.
  • Banks are open between 8am and 5pm Monday to Friday, and until 1pm on Saturdays.
  • Post Offices are open between 9am and 5pm Monday to Friday, and until 1pm on Saturdays.
  • Department stores are open between 9am and 9pm Monday to Saturday.
  • Although not as bad as that of Bangkok, Jakarta suffers from serious traffic problems and it is wise to avoid scheduling business appointments during rush hours. Plan no more than four appointments each day.

References used and further reading

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