Notes on the Indonesian Business Environment
Greetings from Jakarta!
We are approaching the end of the rainy season here in the southern hemisphere and I am now more than halfway through my stay in Indonesia. In this blog post, I aim to provide a brief overview of the Indonesian business culture and environment, which differs significantly from Finland in terms of the ease of doing business.
In the three months I have stayed here so far, I’ve quickly learned that Indonesia is a challenging country to do business in. Although it has an attractive consumer market, with a relatively young population that is slowly getting wealthier, the Indonesian government has not made it particularly easy for foreign companies to operate here. The government appears to believe that foreign firms need Indonesia more than Indonesia needs them. There is a lot of confusing and seemingly unnecessary regulation that foreign businesses, including FinnCham members, have to deal with.
I believe the country has a lot more potential than it currently realizes. Indonesia is underperforming in attracting foreign investment compared to Vietnam, for example. The situation is further complicated by U.S. tariffs, which are likely to impact labor-intensive sectors in Indonesia the most. Despite all this, Indonesia is still attractive due to its large domestic market and consumer base, and rich natural resources. It is the largest country in Southeast Asia, and it would be a mistake to ignore it simply because of its bureaucratic challenges. It takes time to adapt to it, but Nordic companies (such as KONE, H&M, and Nokia) in various industries have shown that it is possible to succeed in Indonesia. I will revisit this topic in my final blog post.