Doing business in Indonesia is never dull. Indonesia is rich in natural resources, including petroleum, nickel, tin, coal and gold, but the economy has grown well beyond extractives. Services make up the largest share of GDP. Manufacturing accounts for roughly a fifth of national output, and agriculture is still a major employer.
Despite the positive aspects of Indonesia’s business setting, an extremely complex bureaucratic environment can be frustrating for expats doing business in Indonesia. Changes occur frequently, and it can be difficult to keep track of these. Expats who bring patience and take the time to learn the local business style will find that the effort pays off.
Fast facts
Business language
Bahasa Indonesia is the main business language in Indonesia. English is common in business circles in Jakarta and other major cities, but far from universal elsewhere. Expats would do well to learn a few key phrases and how to greet their Indonesian counterparts in the local language – this marks a great sign of respect. An interpreter is a smart investment for meetings outside the capital, as hundreds of regional languages are spoken across the archipelago.
Business dress
Business attire is generally conservative. Suits and ties are appropriate for men in formal business situations, while long-sleeved batik shirts are also acceptable. Women should be well covered and not expose their shoulders or legs. Due to the heat, loose-fitting cotton fabrics are best.
Business hours
Office hours are usually 8am to 4pm or 9am to 5pm, Monday to Friday. Working hours are often shorter during Ramadan, and some workplaces close for an extended period on Friday afternoons for prayers. Some offices are open on Saturday mornings.
Greetings
A handshake is the standard greeting, but make sure your grip is light and brief. A long or crushing handshake would be an overstep. Always use the right hand; the left is considered unclean. A slight nod or bow of the head is also common, particularly towards senior colleagues.
Gifts
Gift-giving etiquette may vary according to the specific ethnic group you're dealing with. Gifts are not usually opened when received, and alcohol and pork products should be avoided if the receiver is Muslim. Offer and receive gifts with the right hand only.
Gender equality
Indonesia still has significant gender gaps in the workplace. Female labour force participation is around 50 percent, and women earn about 25 percent less than men, according to UN Women. Expat businesswomen are generally treated with respect.
Business culture in Indonesia
Business culture in Indonesia has been influenced by the country’s position as Southeast Asia’s largest economy. Cultural identities across the archipelago have developed over centuries, shaped by Chinese, Indian, Arabic, and European traditions. Identity in Indonesia is often formed by one’s ethnic group, family, and place of birth.
Religious and cultural traditions also play an important role in Indonesian society. This is reflected in Indonesia’s business practices. The ease of adapting to the business environment in the country can vary by city or region. The ethnicity of the individuals you're doing business with may also play a role.
Communication
The concept of saving face runs deep in Indonesian business culture. Indonesians tend to communicate indirectly to avoid causing offence or embarrassment. They are careful about how they deliver difficult messages and may say ‘yes’ to acknowledge they have heard you, rather than to signal agreement.
Time
Indonesia runs on what locals call jam karet, or ‘rubber time’. Punctuality is appreciated but not always practised. A meeting set for 9am may not get going until 9.15am or 9.30am, particularly if senior attendees are still en route. Expats are expected to arrive on time, but should build flexibility into their own schedules and avoid showing frustration when others are late. In Jakarta, brutal traffic is as much to blame as cultural habit.
Hierarchy
As with the wider Indonesian culture and society, Indonesian business culture is hierarchical, holding great respect for status. Decisions are made from the top down, although there are usually also group discussions. Titles are very important in Indonesian business circles. Indonesian associates should be addressed by their full title and name.
Meetings
Meetings in Indonesia rarely get straight to business. Small talk about family, travel or food is expected at the start and should not be rushed. It is how trust is built. Decisions can take time, and several meetings may be needed before any agreement is reached. Indonesians place great emphasis on trust and relationship building, and expats may find that their Indonesian counterparts want to get to know them personally before discussing terms.
A calm, polite demeanour is expected throughout. Don’t raise your voice or press hard for the close, as it will probably backfire. Harmony matters more than speed in Indonesian business culture.
Dos and don’ts of doing business in Indonesia
- Do exercise patience. Indonesians prefer to take their time and consider business propositions carefully.
- Do prioritise face-to-face meetings over email.
- Don’t give or receive anything with the left hand alone. Use your right hand or both hands.
- Don’t stand with your hands on your hips or arms folded, as these stances are considered aggressive and rude.
- Do leave plenty of time to reach meetings, especially in Jakarta.
- Do be respectful of Indonesian associates. Avoid applying pressure or being confrontational, and speak gently in business meetings.
- Do present and receive business cards with both hands, and take a moment to read the card before putting it away.
- Do greet the most senior person in the room first.
- Do follow up on meetings with a written summary of agreed action points.
- Don’t raise politics, religion, or Indonesia’s colonial past in early business conversations.