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DOING BUSINESS IN INDONESIA
Executive summary
Doing business in Indonesia is a report which evaluates business environment and
opportunities in Indonesia
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Country’s economic growth projects 6
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(Source: Indonesia investment coordinating board, 2014)
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It emerges as global capacity in Asia
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7 percentages and during 2012 to 2014 economy grew by 6
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Indonesia is world’s most stable economy during past five years
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Despite of rapid economy growth Indonesia under goes with challenges
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According to
World Bank deficient workforce, regulatory burden is high
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1
Chapter 1
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0 Introduction
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1 Purpose of report
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2 Brief back ground of case study
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4
2
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4
2
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4
2
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4
2
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5
2
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5
2
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5
Chapter 4
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1 Uniqueness of Indonesian culture
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2 Unique Characteristics of Indonesian workplace
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3
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7
Chapter 5
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0 Social dimension of Indonesia
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1 Location
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2 Income
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3 Religion
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4Politics
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9
6
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9
6
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9
References
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0 Introduction
According to collier and dollar (2002) globalisation is significant economic integration or
marginalisation for a nation
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J, 2005)
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According to
international labour organisation globalisation is a process of frequent integration in
economy between various countries which drive industry towards international trade,
liberalisation and foreign direct investment
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Also the flow of international technology accrues
due to globalisation (Berghman
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1
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This report
will discuss about the globalisation and culture, uniqueness of Indonesian work place so
that foreign investors can gain profit from their investment
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1
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This case study evaluates the
cultural context of global management
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It suggests the Australian and New Zealand investors and managers
about how to deal with Indonesian culture and be successful business leaders
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Chapter 2
2
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Hofstede’s study is based on the values and perception of the work situation
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Most of the time society’s culture affects the values of its members
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P
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1 Power distance
In relation to the nature and learned capacity each individual differ in the terminology of
power followed by wealth, status, social prestige
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Power distance is an extent to which a society can accepts the truth that
power in organisation is shared unequally (Robbins
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S, 2009)
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This shows that the
inequality among the population is acceptable
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When Chinese businessmen are gathered for meeting
they has to be greeted by the higher ranked employees
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It shows the tolerance of the
Chinese in equal power distribution
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Employees anticipate their managers look after their interest
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Yet power is
centralised and managers wait for respect
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2 Uncertainty avoidance
It expresses the degree to which the society is discomfort with uncertainty
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Some societies interact its member into accepting uncertainty as
a result people will not be pressurised by uncertain behaviours
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P
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For example: Chinese managers have high control but less approachable and less
delegation of authority
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China applies public execution
law
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Indonesia preferences are Javanese cultures of detachment of internal and external self
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No matter how angry the
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people inside they have to pretend to be positive
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2
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In contrast collectivism refers to tight knit framework where
expectation is high for care from one another ((Robbins
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S, 2009)
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Germany people strain for their personal
rights
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As mentioned in case study by the national response of recent natural disaster in Areh and
Nias it is clear that Indonesia practices collectivism framework and national tie is strong
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2
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Women and men’s value differs in society
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Attitude, roles,
stereotype effects owns identity (Katz 1986; Spence and Sawin 1985)
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Denmark was the feminine cultures which focus on the good relationship, co
operation, charity and modesty
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In contrast Ireland has high score of
masculinity, male achievement, control and power is high and gender differentiation is high
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People focus on working for living
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Managers seem supportive and decision making can be
reached by involvement
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5 Long term/short term orientation
The fifth dimension is long term orientation which invokes how much social values long
standing in contrasted as opposed to short term values
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For example, china and South Korea have high rank of long term orientation scale
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Nevertheless, Mexico, US, Egypt target on short term profits, ethics are concerned and
personal freedom and recreation is valued (Samovar
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5

As other Asian countries, Indonesia accept long term orientation framework to acquire
profits than in New Zealand and Australia
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They are concern about how contracts will be set, how and when deals will be closed
which will enrage westerners
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1 Uniqueness of Indonesian culture
As an island nation Indonesia links with Asia presents a span of linguistic, ethnic and
genetic diversity
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Despite
of ‘Bahasa’ is widely spoken throughout the archipelago yet indigenous language hosts the
country (Tumonggor
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M et al 2013)
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Indonesia
is shaped with incredible cultures and unique art forms with mixed cultural expression
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Even though of foreign influence Indonesia, still protects its unique customs, rituals,
cultures and traditions
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Artistic painting is also well known tradition of Indonesia (V
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4
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Indonesian
employees favours on harmony, mutual understanding and respect
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While working with westerner partners Indonesian managers
concerned about various factors
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More importantly they should consider religious
aspects like prayer times, wedding or funeral time off, Ramadan visits and so on
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In comparison to Indonesia, western country gives priority to productivity,
work efficiency, effectiveness and performance while employee’s requirement should be
involved in Indonesia work place
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‘Wearing mask on the face’ taboo is applied while dealing with people
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Thus Indonesian work place accepts hiding true feeling to solve
general problems
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The reason why these circumstances are necessary
in Indonesia is that Indonesian business relationship are paternal or maternal
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Supervisors should understand this value and are responsible for it
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The metaphoric phrase ‘don’t shoot
the messenger’ also applies in Indonesian work place however some employees fire the
squad to managers while reporting the breakdown
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In brief, Indonesian work place
characteristics is unique than New Zealand and Australian work place
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4
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Handy’s type of culture and Indonesian work place
As analysed by Charles Handy a dominant power on business culture describes four major
cultures (Riley
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Source: (Riley
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Chapter 5
5
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However the social classes functioned in 1992 is
yet controversial
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W and Worden
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Indonesia subsists three
major social structure first is wealthy elite below that is demanding middle class and at the
bottom needy majority
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Society practices feminine culture where female traders control
their business and strong women movement applied and the literacy rate is 92
percent(New internationalist, 2013)
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1 Location
As world’s large archipelago nation Indonesia is surrounded by oceans, seas with more
than 17,500 islands
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Indonesia linked with
Asia and Australia
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Indonesian territory
covers 1
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5
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According to World Bank Per capita income of Indonesia is 3,475 in 2013
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3 Religion
As reported in census 2010Indonesia is the world largest Muslim population country
consisting 87 percent Muslims, 7 percent protestant, 3 percent catholic, 2 percent Hindu
and 1 percent Buddhist (new internationalist, 2013)
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4Politics
Indonesia holds partly prosperous conversion from an autocratic dictatorship to democracy
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Chapter 6
6
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Blaine (2009, p
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’
Considering various factors such as secure consumer market, constant economic growth,
exceptional consumer demand and growth, huge consumption base and ample natural
resources bestowed foreign direct invest opportunity in Indonesia
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Investment policies objective is to compensate country’s
economy by direct investment
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Indonesia permits foreigners to invest without
restriction depend on the size the investment even if the products are produce for exports
or for domestic sale unless the investment in not for negative listed products
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Within prosperous democracy and being largest economy of south East Asia and in fact 6
percent annual economic growth rate provides great opportunities for foreign direct
investment
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Not only that the two hundred forty
eight million populations but also fifty percentage of young population age of twenty nine
contribute possibly enormous labour force and potential customers
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Likewise, domestic consumer expenditure is also high
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Similarly economically strong as well for this reason country is ‘emerging
global powerhouse (Siddharta and Widjaja, 2013)
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6
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Indonesia is in the list
of sound economy and most attractive place to long – term investors due to glowing
demographic profile
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Foreign managers
should put effort to adjust with the culture
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General acceptance on development of capital,
managerial and technical skills of foreign investors is essential factors
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Corruption,
regulatory risk, foreign investment laws, variety of beliefs, cultural variation can be
challenges for foreign direct investment
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Berghman
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2
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BKOM- Indonesia investment coordinating Board official website 2014 online available at
http://www4
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go
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U85h1PldWSo
accessed
ndJuly 2014
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H
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5
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2014
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com/Indonesia
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(Accessed 22 July 2014)
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Indonesia
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Indonesia (online) available at
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us/indonesia/
7
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org/columns/country/2013/05/01/country-profile-indonesia/ accessed
19thJuly 2014
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Power distance and uncertainty avoidance in china/ the blog worth spreading
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Online available at http://jasonkim29
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com/2012/10/09/power-distance-anduncertainty-avoidance-in-china-2/ accessed 21stJuly 2014
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Power
distance
index/
clearly
cultural,2014
(online),
available
at
http://www
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com/geert-hofstede-cultural-dimensions/power-distance-index/
accessed 20thJuly 2014
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R
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tutor2u
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html accessed 22nd july 2014
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Robbins S P, 2009, organizational behavior , global and southern African perspectives,
2nd edition, south Africa, Pearson education
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Samovar
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R, McDaniel, E, Roy
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13
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kpmg
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pdf
accessed 22nd July 2014
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Stets
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P,
feminity/
masculinity,
2014
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ucr
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pdf
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Online

at

available

15
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M, karafet
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B, Lasing J
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H, Hammer
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M,
2013, the Indonesian archipelago: an ancient genetic highway linking Asia and the Pacific
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16
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2014
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undp
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id/general/about indonesai
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Accessed at 21st July 2014
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V
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T
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google
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uk/books?id=4Z05AwAAQBAJ&dq=indonesia+unique+culture&sour
ce=gbs_navlinks_s accessed on 20thJuly 2014)
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World
bank,
2014,
Indonesia
overview
online
available
http://www
...
org/en/country/indonesia/overview accessed 21st July 2014
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Zajda, J, 2005, International handbook on globalisation education and policy,
Netherland, Springer

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