This has led to us vastly underinvesting in our Indonesian cultural and language skills, Hill says.
Hill recently worked on a government review of Indonesian language education in Australian universities.
“There is a relatively low knowledge of Indonesian language within the business community,” he says. “As companies move away from the low-hanging fruit in Jakarta, towards the regions, finding people with high-level English-speaking skills becomes more a challenge. So it’s very important for companies to have as part of their team strong Indonesian-language speakers.”
It isn’t just about basic communication. With a familiarity of Bahasa Indonesia comes a familiarity with Indonesian culture, society and business practice, which Hill says can pose difficulties for unwary companies.
“Businesses do operate differently there. Companies that don’t have Indonesia specialists among their staff find it a bit bewildering.”
Corruption is one aspect businesses can find difficult to navigate.
“There are sometimes practices which require, or are based on the assumption that unofficial payments will be made to officials for certain services,” Hill says.
“Of course this is a very difficult issue for Australian companies to face and respond to in an appropriately ethical and legally correct manner. They need to ensure they aren’t drawn into practices that are illegal in both Indonesia and Australia.
“Having the language skills to be able to interrogate the circumstances and to find out precisely what is and isn’t legal is necessary to ensure Australian companies continue to be regarded as ethical and correct in their business practices.”
Another difficulty lies in recent bills presented to the Indonesian parliament, Taylor says, which would make foreign companies divest the controlling stake in their assets after 10 years – and it is retrospective.
“Of course, these sorts of things we don’t think are very good. If Indonesia wants to open up, they need to have clear rules. It’s about the mining companies; they want to take control of them. It’s very nationalistic, but uncertainty frightens businesses away.”
Another problem lies in the bureaucratic decentralisation of Indonesia. For more than a decade, the central government pushed regional autonomy.
“There are pros and cons to this,” Tabalujan says. “The government was trying to shift the wealth and taxes back to the regional governments because of a view that Java and Jakarta in particular has been overdeveloped compared to the rest of the country. But on the flipside, there’s been a lot more red tape generated.”
Taylor says the policy was implemented too quickly, with not enough thought given to how it could enable corruption.
“Now you have fiefdoms around the country, where the federal government could give approval for a company to operate, and then the local mayor will come in and block it. It causes confusion.”
The opportunities
Taylor stresses these are not insurmountable problems.
“This is how I look at it,” says Tabalujan.
“Even if you just look at wealthy Indonesians, the top 10% of the population, it’s as big in population as Australia [24 million]. If you think, in the next 20 or 15 years, you have another 10% joining that, that’s a doubling of the market.”
“And so, if Australian companies are smart, they will be looking towards Indonesia as one potential region for growth.”
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
