Export of goods - Getting into the market
The key route into Indonesia is via agents or distributors and businesses are strongly advised to invest time in checking out which are most suitable for their products or services. Appointing the right local partner is the key to success in Indonesia. Meeting that partner face to face is seen as crucial in order to judge their level of interest in what you have to sell. All this can be time-consuming.
Generally speaking Indonesians prefer personal contact rather than written means of communication. They like to be courted and prefer to establish a personal relationship before a business one. If you send material to an Indonesian customer don’t expect a response. You yourself will need to follow this up with a phone call.
Some companies prefer to set up their own representative office in the country but beware that such offices are not allowed to carry out profit-making activities – only market research, sales promotion and work with agents or distributors.
Another option is the joint venture company using an entity known as a "Penanaman Modal Asing" (PMA) which is required for overseas firms under the country’s investment laws. These can be publicly listed or privately owned but take the form of a limited liability company known as a “Perseroan Terbatas” or PT.
Although English is widely spoken in business circles you are likely to need an interpreter if travelling outside the capital Jakarta. Business decisions tend to be made largely on the basis of price (normally quoted in US dollars) and this can be more important than quality. Using a Letter of Credit for payment is advised.
There are import restrictions imposed by the Indonesians, for example, on goods restricted to state-owned companies such as fuel and lubricants. Other goods are restricted to sole agencies which must be approved by the government. This list is constantly changing and up to date information can be found at the National Agency for Export Development (NAED) (www.atpf.org).
Pharmaceutical, food and cosmetic products need to be registered with the Indonesian Food and Drug Authority (www.pom.go.id).
Indonesia has a Double Taxation Agreement with the UK and duties are charged at between nought and 150 per cent on the customs value of goods.
Other potential hurdles for exporters are a complex bureaucracy, unpredictable legal and regulatory environment and tax administration.