Indonesia is a nation of contrasts. It’s a relatively new country, yet it is based on ancient cultures. It’s geographically and ethnically dispersed, but it has a strong sense of nation.
Its’ a vast, tropical nation comprised of more than 17,000 islands.
Indonesia is comprised of more than 17,000 islands strewn across the South China Sea. These islands include the legendary Bali, Java, Sumatra, and part of Borneo. Indonesia has a land area about three times the size of Texas, and spans an area wider than the United States. Tropical forests and jungle cover two-thirds of the territory. It’s mountainous and has more than 400 volcanic peaks, many still active.
Its population is the world’s fourth largest, and has more than 350 ethnic groups.
Indonesia has more than 200 million inhabitants. Its people are comprised of more than 350 ethnic groups, many with their own languages and customs. Some experts say there is more diversity within this one country than, for example, in all of Europe. The largest ethnic group is the Javanese, who comprise about 45 percent of the population. However, the presence of hundreds of other ethnic groups creates a land of tremendous diversity. Indonesia has the largest Muslim population in the world, with about 90% of its people practicing the Islamic religion.
Much of the nation’s business is run by people of Chinese descent. They are a small minority, comprising about 3% of the population. The Chinese success has led to tension with ethnic Indonesians. The government has sought to diminish Chinese culture and encourage assimilation. For example, publications in Chinese characters are forbidden.
The island of Java is home to the capital of Jakarta and more than half the population.
The nations’ center is Java. This crowded island holds 60% of the population yet comprises only 7% of the land area. That’s a population of more than 100 million in an area the size of North Carolina. Java is home to Jakarta – the country’s capital – and much of Indonesia’s business and industry. This sprawling city is one of the largest in the world. It’s a dynamic, chaotic and polluted metropolis.
There’s a slower pace in Indonesia; budget more time to get things done.
When doing business in Indonesia, it’s important to have a lot of time and patience. The main reason is that Indonesians don’t view time as important as in the West. Locals refer to the expression “rubber time,” a flexible approach to schedules and deadlines. In remote regions, workers might consider themselves on time if they arrive within a few hours of the appointment. Thus, if you average five appointments per day in your home country, you might plan two per day in Indonesia.
Be prepared for a hot, humid climate, and check with your physician about immunizations.
Straddling the equator, Indonesia is humid and hot. Because of the climate, it’s best to schedule morning meetings. It’s rainy, especially during the monsoon season. It’s a good idea to have an umbrella handy. As in most tropical countries, vaccinations might be recommended or required. Check with your physician well in advance of your trip.
Indonesia’s early history saw the influence of a wide variety of civilizations, creating a unique culture.
Indonesia is a young country, barely 50 years old. But, positioned at the crossroads of the South China Sea and Indian and Pacific Oceans, a broad spectrum of people and civilizations have converged in the region for thousand of years. As a result, Indonesia’s culture has many influences. In the first century BC, traders from India brought their language and culture – as well as the Hindu religion. Buddhism followed shortly thereafter, and remains influential today. Islam landed as early as the seventh century, but did not gain wide popularity until the 1400s. Many Hindus resisted the Islamic influence and fled to Bali, which today is the only Indonesian island where the majority of the people are Hindu.
In the 10th century the long process of regional unification began during the Majapahit (Mo-joe-pah-heet) empire.
During the 10th century, the Java-based Majapahit empire cam to power, ruling for six centuries. This dynasty started to unite the islands that comprise Indonesia today. The first Europeans to arrive were the Portuguese, dropping anchor in the early 1500s.
The colonial period was marked by Dutch exploitation.
By the end of the century the Portuguese were displaced by the Dutch. In the early 1800s, the region became a colony of the Netherlands. Unlike the British in neighboring Malaysia, the Dutch did little to develop Indonesia and solely exploited the country. Indonesians struggled for independence for decades, and much blood was spilled. During World War II, Japan occupied the islands, another bitter memory. But today Japan is Indonesia’s largest trade partner, creating a relationship with mixed feelings.
Independence has seen struggles against communism and separatism, and a desire for greater democracy.
After Japan’s defeat in World War II, Indonesia proclaimed independence and a new nation was born. The Netherlands finally relinquished control in 1949. The early years of autonomy were rocked by instability, and the government sought to unify this diverse nation. In 1965 Indonesia’s communist party, with backing from China, allegedly sought to overthrow the government. The coup attempt was suppressed by General Suharto. The coup was followed by six months of civil war, during which more than half a million Indonesians died. General Suharto took control of the country in 1967, running the nation for more than three decades.
To this day, the military plays an important role in Indonesia. Many military officials are in important business positions. Suharto, who is sometimes described as a benevolent dictator, has generated controversy on issues ranging form democracy to human rights. Much of the nation’s business has been controlled by his six children, with the family fortune totaling billions of dollars. At the same time, his pro-business and pro-development policies helped write one of the greatest economic success stories in the developing world. Suharto also successfully unified this vast, diverse area, and is seen as the nation’s “bapak” or father. Looking to the future, Indonesia’s challenge is to remain unified, and effectively address violent separatist movements on various islands.
It’s a poor but growing country, likely to become one of the world’s largest economies.
Indonesia’s economy is a model in the developing world, growing an average of 6% to 7% a year for nearly three decades. One study predicts Indonesia will have the world’s fifth-largest economy by the year 2020. Nonetheless, it is a poor country. The per-capita gross domestic product is little more than $1000, less than 1/20th of the U.S. level. Nonetheless, Indonesia offers increasing opportunity, and has a growing middle class. For comparison, Indonesia’s middle class is larger than the entire population of developed countries such as Australia or Canada. As a developing country, its infrastructure needs improvement. Be prepared for problems ranging from transportation to telecommunications.
Key sectors include natural resources and agriculture, with a growing emphasis on manufacturing.
One of Indonesia’s greatest assets is natural resources, from minerals to forest products. It’s one of the world’s top 10 producers of oil and gas. In the early 1980’s, petroleum and liquid natural gas accounted for most of the nation’s export earnings. However, the drop in oil prices in the 1980’s prompted a move toward a more diversified economy. One important result has been the growth of manufacturing. Much of this growth has been in cottage industries. These small businesses – often with only a handful of employees – produce textiles, clothes, shoes and other consumer goods for the industrialized world.
Agriculture employs more than half of the work force. Indonesia is the world’s second-largest exporter of rubber and palm oil. It also produces much of the world’s spices, earning it the nickname “spice islands.” Other key commodities include rice, coffee, tea, soy and seafood. Measured as a percentage of the GDP, Indonesia’s top economic sectors include: mining (25%), manufacturing (22%), agriculture (18%), oil & gas (11%), and timber (7%).
Be prepared for bureaucracy, and hire local agents to navigate governmental obstacles.
The government has a strong hand in Indonesian business, from controlling prices to running industries. Visitors must be prepared for bureaucracy and paperwork, so bring a healthy dose of patience. The best way to deal with bureaucracy is to hire local agents. These agents can help the foreigner, who would otherwise have to wait in long lines for permits and licenses. As a growing player in the world’s economy, Indonesia is opening its borders to trade. It’s a founding member of the Association of South East Asian Nations or ASEAN, which has pledged to create a free trade zone by 2003.
Corruption is a widespread problem, and an issue that should be handled by local associates.
It’s important to know that corruption is part of life in Indonesia, which in a recent survey was named one of the most corrupt countries in the world.Bribery can range from a small tip to expedite a driver’s license to a million-dollar payment to secure a major permit. It’s important to judge carefully. At lower levels, corruption is often a product of poverty, such as a policeman or teacher seeking to support a family on $100 a month. Your home government might prohibit bribes in foreign countries, so it’s important to have local associates handle this issue.
Protocol is important, and strive to be friendly, modest and polite.
Indonesians are warm and friendly, and often dress casually. But don’t be fooled by this informal exterior. Proper etiquette is very important, in particular at higher levels. Indonesians are polite, humble and respectful and the visitor needs to be the same. They smile frequently, which is a desire to please. Modesty is highly regarded. The best response to a compliment, for example, might be a statement such as “thank you, but it was nothing.” Because of the history of colonial exploitation, it’s especially important for visitors to avoid acting superior or aggressive. Status is crucial. Meeting should be between people of equal rank. Dispatching a lower manager to talk with a top executive might be insulting.
Status and image are important, so choose only top-quality apparel and lodgings.
Because of the hot climate, businessmen generally do not wear a jacket. However, it’s best to err on the side of formality. Jackets should be worn to first meetings or appointments with government officials. In contrast to some Western misconceptions, Indonesian executive and mangers dress very well. Be sure to dress your best. Indonesia is hierarchical, and you’ll be judged by your clothes, shoes and accessories. Your accommodations are also part of your image, so stay at top-quality hotel. As in any Muslim culture, women should dress conservatively. Apparel should be subdued and muted, and cover a least the arms and knees.
Greetings and the exchange of business cards are formal and require proper attention.
Visitors should be prompt for appointments, although meetings often start late. Introductions are important and take time. Meetings usually begin with a handshake, which tends to be long and have a loose grip. Muslims sometimes follow a handshake by touching their heart, which is called a “salaam” and is a sign of sincerity. Subsequent appointments might start with only a slight nod. Traditional Muslims might avoid shaking hands with the opposite sex. In any event, always follow the lead of your local counterpart. After the introduction, a business card is offered to each person. Give the card using both hands, with the print facing the recipient. The card is studied sincerely for a few moments, and then filed away carefully.
Confirm the proper use and pronunciation of names and titles.
Names in Indonesia are tricky, and require special attention. Some people have only one name; others two or more. Sometimes the family name comes first, sometimes last. Generally speaking, people with higher status have longer and more complex names. Initially it’s best to address people by their family names. Respect is also shown through the use of titles. These include:
- Professional titles such as lawyer, accountant, or engineer;
- Business or political designations such as president
- Academic degrees such as doctor;
- Or honorary titles such as Your Excellency.
Otherwise, use courtesy titles. To show respect, men are called “bapak” or “pak,” which means father, and women “ibu” or mother. The best way to greet someone might involve a number of titles used in a specific order. Because of these complex guidelines, it’s important to confirm the proper form of address. Finally, it’s important to cover a number of subtle taboos:
- Avoid touching food or another person with the left hand, which is considered unclean
- Don’t expose the bottom of your foot, which can be insulting
- On Java avoid pointing with your finger, use your thumb instead
- Don’t touch another person’s head, considered the seat of the soul
- Avoid public affection between men and women
- Don’t stand with the hands on hips, which is aggressive
- And avoid pounding your fist into your hand