baliWhen doing business in Indonesia, learn a few essentials about the country and its diverse culture. This will make your engagements with Indonesians more enjoyable, productive, and results-oriented. Among the key categories shaping Indonesian attitudes in social business environments are:

concept of time

personal relationships

harmony

business methodologies

gift giving

social norms including hierarchy and ethnicity

body language and behavior

colonialism, independence, and nationalism

There are always exceptions to the stereotypes portrayed in the following discussions.

 TIME

Time is considered limitless in Indonesia, encouraging a leisurely pace in all walks of life. Indonesians do not hurry, but rather see hurrying as impolite. They are generally not punctual, but expect foreigners to be on time. Indonesians do what is achievable rather than follow rigid schedules. Therefore, flexibility and patience are critical to success. Things change with time, and nothing is predictable. This often causes frustration for those accustomed to the faster pace of business negotiation in the West. In Indonesia, drawn-out bargaining and negotiation is assumed and encouraged. Thus, foreigners must be patient and prepared for a slow process. This can cause frustration for those accustomed to the increasing speed with which global business is being conducted. In Indonesia, lengthy discussions must occur in order to develop respect in the relationship.

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RELATIONSHIPS

Strong relationships are essential to successful business ventures in Indonesia. Relationships are the basis for friendships, where understanding and caring are necessary ingredients to long-term success. Developing and building relationships and business contacts are generally done through introductions. Nurturing and keeping the relationship over a long period calls for mutual respect and harmony between the parties.

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HARMONY

The accepted code of behavior among Indonesians embraces mutual deference and respect, restraint, politeness, discussion, and consensus in order to produce harmony. Aggressiveness and conflict are avoided at all costs. As time is eternal, the decision-making process which is done by informal consensus, is often painstakingly slow. Occasionally, consensus may be difficult to reach. Moreover, Indonesians avoid embarrassment. So that one may not embarrass or be embarrassed, employees generally only pass on news of positive developments to their superiors. Thus, business information can often be distorted, and managers may be forced to go outside their immediate business to get accurate information. Extending into a general context of harmony, it is important to show respect to your Indonesian hosts by showing interest in their national culture, language, and religions. Doing so will foster lasting harmony in your relationship.

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BUSINESS METHODOLOGIES

The culture of business in Indonesia is much different than in the West. Business in Indonesia is more like a chess game than a horse race. Relationships are absolutely essential to access and success. Often it is more important who you know than what you know. Foreign companies will find it in their interest to locate a reliable local partner to act as an intermediary in getting access. This partner can be an Indonesian individual or a representative office staffed with knowledgeable Indonesians. Working closely with a partner shows your continued interest in Indonesia to government officials, who may be key to extending future contracts or favors. Political connections of you partners could also help seal your deals, as government officials are widely involved in business affairs. Frequent travel to Indonesia and meetings with government officials is also an important part of showing continued interest which must not be overlooked. Officials want to see your presence in, and commitment to Indonesia. Doing business with the government is different from the private sector. In dealing with the government, start with the relevant department and work your way to the top, rather than go straight to the man in charge. Building relationships along the way is essential. In general, the government tends to strike a balance by awarding contracts to different countries. In negotiation, be prepared for the informal nature, but be mindful of the power of the relationship.

Business is often done on a golf course, or over a meal, probably breakfast. Dinners are common for socializing and further developing relationships. The Chinese who dominate much of Indonesian business, however, tend to be more formal. Meetings with them tend to have a specific business focus. They are more shrewd and rely on fact and reason, as opposed the pribumi (native Indonesians) who are more emotional and intuitive. Of course, these qualities are not universal. As the business environment and negotiation tends to be informal and fluid, friendship and flexibility tend to override contractual agreements. Contracts are seen as too rigid, and thus deviations from a contract should be tolerated and expected. Parameters of the deal or negotiations may shift, and it may not be clear when deliberations have been completed. Patience and quiet persistence are rewarded.

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GIFT GIVING

Gift giving is common practice in Indonesia, and often essential to “grease the wheels” of commerce. This is an area that should be left to your local partner, who will most likely be able to win you a better deal and better negotiate the “gift” or “commission.” Gifts are especially critical to sealing a deal, and presented after the negotiation begins, but well before the conclusion of negotiations.

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SOCIAL NORMS

Indonesian society is very stratified and hierarchical. Decisions are made at the top (but by consensus) and are respected by those not in authority. Family life is of utmost importance, and respect for elders and political or social superiors transcends into all areas of life. Superiors are called bapak (father) of ibu (mother). Conversely, Indonesians may refer to you as tuan or nyonya, very honorific terms for foreigners.

While organizational charts or anatomy of Indonesian business may appear standard to the Western eye, one must look beyond the structure of the organization to see how it really operates. This patriarchal and hierarchical mindset flows to organizational structure. Subordinates do not question their bosses, but offer great loyalty to them as those responsible for their jobs. It is difficult, yet very important, to understand the complex relationships in an organization. A secretary, for example, may be from a prominent family and thus very useful for business intelligence and establishing contacts and meetings with government or business officials.

Beyond family, the power of community is essential to the Indonesian psyche. It underlies the diverse cultures of the sukus (ethnic groups) of Indonesia. Social obligation is very important in the community. Mutuality of help is a guiding principle which enforces social stability. General welfare is at the core of government and business activities; profit never takes precedence. Ethnicity is as important as national identity and is the primary basis for establishing relationships in the social order. The suku culture in which an individual was raised functions as the basis for personal character.  Most business will be done on Java with Javanese or ethnic Chinese, yet you should recognize differences between the various suku, as ethnic affiliations can cut across departments or organizations. The Javanese are masters at controlling or hiding their true feelings. They smile often in all types of situations. It can be difficult to know what they are thinking or saying. This ambiguity on their part may be necessary to save face. They dislike saying “no” and will rather leave things unsaid or say “belum,” which means “not yet.” While it is important to understand how your Indonesian counterpart acts, it is equally important to be mindful of your behavior.

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BODY LANGUAGE AND BEHAVIOR

Many western modes of behavior and body language are taboo in Indonesia. Be very aware of how you act in the presence of Indonesians in all situations. Some general rules to follow:

  • Use your right hand in all social encounters, never offer or receive something with your left;
  • Always give a soft handshake;
  • Slightly bow your head upon greeting a guest or host;
  • Keep both feet on the floor when sitting, don’t cross your legs;
  • Don’t sit on a table or desk;
  • Never show the sole of your foot or point your toe at someone;
  • When pointing, use a generalized gesture of the hand;
  • Never touch someone’s head or back;
  • Speak softly, without anger or aggressiveness;
  • Be calm and subtle and don’t rebut something or someone;
  • Explain things very clearly;
  • When invited to dinner, it is expected that your host will pay;
  • When eating or drinking, don’t start until invited to do so;
  • Generally, don’t show affection in public;
  • Allow superiors to precede you in doorways and at formal gatherings;
  • Inquire about family status, religion, education, and travel abroad;
  • Don’t discuss Indonesian politics unless you are invited to comment;
  • Be aware that how you do something is as important as what you do.

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COLONIALISM, INDEPENDENCE, & NATIONALISM

Indonesia was long under Dutch colonial control. Despite this long contact with outsiders, Indonesians remain an “island people,” like the English and Japanese. Traditional culture has survived and flourished. Indonesians are very proud of their heritage and especially the progress they have made since achieving independence, but the colonial experience has had a lasting impact. The various periods of Indonesian history, such as colonialism, the Japanese occupation, and independence have contributed to shaping and maintaining distinct characteristics and pride of the various “generations” of society. These include the “1945 generation” (those who fought for independence), the “Old Order generation” (Sukarno era), and the “New Order generation” (Suharto era).

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By Wayne Forrest and Matthew Bidgood

SOURCES:

Anonymous. “Business and Culture in Indonesia.” (paper)

Draine, Cathie and Barbara Hall. Culture Shock! Indonesia. (Portland, OR: Graphic Arts Center Publishing Company, 1986).

Dunung, Sanjyot P. Doing Business in Asia. (New York: Lexington Books, 1995).

Mann, Richard I. United States Investment in Indonesia. (Toronto: Gateway Books, 1994).

Tate, Sean and Karla Kaynee. “Cultural Cues: Indonesia Do’s and Don’ts” (New York, 1983).

Vroom, C.W. “Indonesia and the West: An Essay on Cultural Differences in Organization and Management” Majalah Management & UsahawaIndonesia. November-December 1981.