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Friday, 9 December 2016

One million reasons to do business in Indonesia

No, this isn’t going to be a list of the one million things, but as my time in Indonesia comes to an end, I thought I would sit down and provide my perspective as to what it has been like working in the Indonesian market. Well put simply, it has been an amazing experience. Well of course I can’t just leave it at that! It has been an amazing journey and learning experience from both a personal and business perspective, learnings that I expect I will carry with me for some time.

Indonesia is an incredible place with high growth potential both for local businesses, as well as businesses and individuals from overseas looking to invest into Indonesia. There is so much happening in Indonesia and for the joint venture that Telkom and Telstra have established, we have had our own journey in navigating the business environment in this market. Like everything else, (including the traffic), establishing the joint venture in Indonesia was very much a journey, and to understand how best to navigate your path to maximise the opportunity, you need to first understand the market itself.

Indonesia is going through a significant growth phase at the moment, and Indonesia’s demographics are a great starting point to suggest they will continue to see this growth continue through a digital lens. With a population of more than 250 million people, and the average age being 28[i], there is a rapidly growing and eager young working population.

As such, this also means a growing desire to leverage new found purchasing power to determine lifestyles. This has been best represented by the penetration of mobile phones into Indonesia standing at 121%[ii] and Smartphones accounting for almost 1 in 4 of those. Indonesia, as of 2014, was the third largest “Twitting” nation and the second largest Facebook nation[iii]. This to me demonstrates a population that is highly connected and, with only a 21% Internet penetration rate, there is clearly further opportunity for Indonesia to expand the digital aspect of their lives for both public and business services.

The reason why I view these figures as important is that, as for any market to achieve success in our digital era, it needs to be connected and have a population which is digital savvy. Indonesia is clearly rapidly moving in that direction. With the fourth largest GDP in Asia (closing quickly on Japan),[iv] combined with a Government under President Jokowi, which is clearly striving to create a market open to investment and value creation, Indonesia is on its way in positioning itself as a growth centre for many years to come.

So Indonesia is a growth market and becoming highly digital, well pack your bags and head over, right? … Ok, well glad it sounds exciting but before you do head for the airport let me share my journey with you so as hopefully you can realise that success you seeking. Prior to moving to Indonesia, I had travelled to Indonesia many times - and no not just Bali before you ask – I believed I had experience in knowing what Indonesia would be like, the culture, what it meant to do business, and managing the joyous travel times between meetings. I was clearly only scratching the service when it came to understanding what it means to work in Indonesia.

Well one of my first learnings is that “jetting” in to visit and experience the working environment is simply not enough from which to draw experiences.  In fact it comes down to the actual experience of living and breathing the market, and connecting with the people to understand the real opportunity and likewise the challenges faced by the teams on the ground.

In establishing our business in Indonesia we knew there would be challenges, but we had underestimated the breadth of these challenges, as well as the amount we would need to adapt to ensure we established a path for success. As we landed on the ground to establish our business we quickly realized what we had hoped would be a few bumps in the road ended up being some obstacles in the road that would need to be navigated:

      1.       As we were working with the largest telecom provider in Indonesia, doing business would be easier. Of course we all knew it would be different to other markets, but that was why we were there to enter new markets and create new value. Shortly after we arrived however there was a change in Government, which led to a change in our partners’ leadership. This was apparently the norm given it’s a state-owned business.
      2.       The supply chain we were familiar with from Australia, or other parts of the world, would already be in place in Indonesia, with the recognition we would need to adjust some terms regarding language and local terms and conditions. The supply chain proved to be very different to our expectations, with vendors engaging with their distributors differently. In addition, the responsibility of managing the hardware supply chain proved to be very much the providers’ responsibility, especially given the proactive service that we were seeking to provide our customers.
      3.       Given we already had the support of our joint ventures partners executives, it would simply be a matter of being open for business would immediately start to drive the opportunity. Of course, given we were going to a new element of the partner’s business, there would always be some people not totally happy with our approach but that was ok as “they would simply adapt to us”.  We soon realised as the new kid on the block it was up to us to build those local relationships, establish trust and ultimately demonstrate our value to our partners and customers to encourage those partners to collaborate with us instead of seeing us as a new threat to their existing business models.
      4.       Business engagement would be transparent as it would be the same as many other places in Asia. It would simply be a matter of re connecting with the local representatives of our global partners and we would be ready to go. We quickly learned that many of our technology partners already had their own local partnerships established with in country System Integrators and telecom divisions, and in matter of fact, we were disrupting a model that was believed to already be working well.

      Now with all of this said the path to securing our business license took longer than we had expected, but this ended up being a hidden benefit in as it gave us the time to understand these challenges and many others as we were establishing this business. That proved invaluable as the time we gained gave us the window to understand how we could set ourselves up for success. Whether it was building one of the largest stakeholder management maps I have ever seen, or establishing a supply chain across a nation from zero, through to redefining the localised product set we would need to demonstrate relevance, all of these developments helped to shape what our business is today. Through these learnings, and the business’ ability to adapt to them, we have realised the results that I have previously shared in earlier blogs.

      The message I hope you take away from this blog is that there are a few key critical considerations when establishing your business in Indonesia:
      1)       Ensure you have a clear target and plan – don’t assume you know what it is as soon as you step off the plane but make sure you understand the environment you are looking to operate in and then start to shape your plan.
      2)      Make sure you have a solid partner you can work with who understands the market you are seeking to address and more importantly is able to help you navigate through the challenges, and equally help you to identify new opportunities you may not have originally identified in your plan.
      3)      Be agile. Things won’t work out the way you expect them to, so you can sit there and get frustrated, or actually look at what you can do differently to navigate the challenge or incorporate the new challenge into your plans and make it part of the goals you are looking to address.
      4)      Lastly, - and in my view this was one of the hardest things I had to do personally - be patient. There is a different sense of urgency in Indonesia, what I learned was that whilst I can get frustrated that things weren’t moving fast enough. I needed to find a different approach, share the goal that I was trying to achieve, and leverage the local team around us to understand how we can best reach that outcome in the fastest time possible without the traditional voice like the kid in the back seat of a car, “Are we ready yet?”
      I am sure other people who have worked in Indonesia will share other challenges from their experiences in Indonesia and ultimately some of their own critical considerations but for me this is what gave me increased confidence in our ability to succeed. With these considerations in mind, I believe businesses have a great chance to realise the opportunity that is Indonesia. An opportunity that has over one million registered businesses of different sizes, an opportunity that if approached with eyes open can result in businesses being part of an exciting growth market, all of which surely must be enough of a reason to want to do business in Indonesia … right?

[i] Source:
[ii]  GSMA Intelligence
[iii] Sating Silang & BBh Asia Pacific
[iv] CIA Factbook 2015

1 comment:

Matt said...

Hi Nathan,

Interesting Blog and very topical for me as I'm trying to work out how to expand our business into Indonesia at the moment. I think the points you raised will give me a bit more focus.

thanks for sharing.