Understanding Indonesian Business Culture

Understanding Indonesian business culture
This is a guest post by Christian Hainsch from Indoconsult Munich

Indonesian business culture is very different from western style of doing business. When doing business in Indonesia the differences in cultural and business behavior are among the biggest challenges for every businessman.

The following article will give you some useful information when interacting with Indonesian partners and show you some common mistakes westerners often make

Key elements of Indonesian business culture

Relax and don’t be pushy

Time is relative in Indonesia. As in many countries in South East Asia, the recognition of time is based on a cyclic interpretation whereas the western cultures recognize time based on a linear interpretation. In particular, this means that for westerners it is important to have a defined start, a result and work steps to reach the result.

In Indonesia people use the thinking of the “right time” for important issues. Some topics do not need to be finalized on a fixed date or deadline, but at the right time to do it.

Especially for Europeans this makes business quite confusing because some of the factors which influence the right time are not always logical for European thinking. As a foreigner you may lose patience and become pushy to move the deal ahead (e.g. signing a contract).

Indonesians mostly become confused and even frightened by such behavior because it contradicts the local culture. Westerners are well advised to keep calm if things seem not to go ahead. Try to find out the reason and even if they do not seem logical for you try to accept it. Being too pushy may result in losing your Indonesia partner.

(Indosight’s Note: we offer company registration and representative office service. Check out our company registration page.)

Reaching consensus is important part of Indonesian business culture

Always try to reach a consensus

Indonesia is having a consensus based discussion culture. One of the constitutional principles is to make decisions based on consultation and consensus (“musyawarah dan mufakat“).

This principle is also quite common in Indonesian business culture. Decisions are made based on long lasting discussions and consultations between business partners. It is not that important to find a solution which might the best one.

A solution either if it is a contractual relation or any business deal must meet the agreement of everybody involved. For westerners this kind of negotiation style is sometimes exhausting and might seem counterproductive. But keep in mind that the Indonesian Culture is based on a collective principle where everyone needs to agree in order to have a working solution.

Yes is not always Yes

When Europeans say: “Yes”, they normally show that they agree with something or signalize that they accept what they are told to do. In Indonesia there is a difference in showing an agreement.

First you should know that Indonesian will very rarely say: “No” or openly show their disagreement. The local culture is based on the principle of harmony and consensus and thus a clear “No” to something would contradict those principles.

When talking to Indonesian business partners you may get the feeling that everything you say is absolutely right and everybody agrees to your ideas and proposals. Be aware that there are different levels of “Yes”. Those levels range from:

 “Yes, I hear you talking.”

“Yes, I understand what you have said.”

“Yes, I agree with you.”

Until the final “Yes, we can do that!” Do not take the first “Yes” as an overall agreement.

(Indosight’s Note: business visa is the fastest and easiest type of visa for foreigners to stay or frequently visit Indonesia. Check out our business visa page.)

Building personal relationships

Friends first – business later

One of the most important issues in Indonesia is building up good relation with business partners. This process is time consuming and requires you to present yourself more as a person rather than a businessman. This will set the baseline for a good business with your partner.

From the first contact with your partners and beyond you will have to answer a lot of private questions regarding your life, family, network, hobbies, food preferences and so on. For Indonesians it is very important to have a good and solid friendship with somebody before doing business. If a good relation is established you will also make good business.



Market entry services in Indonesia

Indosight provides legal and payroll services to companies entering and expanding in Indonesia. Get in touch with our consultants regarding our company registration, payroll, compliance or visa services.

The information provided will remain confidential to Indosight and will only be used to schedule and prepare for the meeting.

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