Why expanding into Indonesia is hard work, but worth it for Aussie startups
Monday, May 6, 2019/
Politicians and business have been saying it for decades: establishing a sound Indonesian-Australian bilateral relationship is imperative for this country. The reasons are obvious, with Indonesia being one of our nearest neighbours, populated by nearly 270 million people, the largest Islamic country in the world, and an economy that’s growing apace.
With the signing of the Indonesia-Australia Comprehensive Economic Partnership Agreement in March, which Trade Minister Simon Birmingham hailed as “a new chapter of co-operation” between the two countries, the relationship between the two nations is much stronger than many Australians understand or appreciate.
But it can be thrown off course. Prime Minister Scott Morrison’s thought bubble about moving Australia’s Israeli embassy from Tel Aviv to Jerusalem during the Wentworth by-election last year was one such example. Now we have the recent Christchurch massacre that prompted Senator Fraser Anning to tweet this inane comment: “Does anyone still dispute the link between Muslim immigration and violence?” These comments, widely followed on social media in Indonesia, gnaw away at the relationship, making it that much harder for Australians to do business with our largest neighbour.
Yet, the benefits of doing business with Indonesia are self-evident. In terms of merchandise trade, Indonesia ranks 10th, while for services, it’s only 14th. Indeed, in the 2017-18 financial year, services took a backward step, retreating 6.5%. Clearly, there is room for growth, with pluses for both countries.
What still seems to cloud Australian business thinking about Indonesia is the perception it’s a mysteriously difficult country in which to operate. By adopting this approach, it’s my experience that what Australian business is really saying is Indonesians don’t think and act the same way as we do, with the consequences being they exclude themselves from a market with huge potential.
Just consider these numbers.
Indonesia, which unquestionably still has its issues, has made enormous strides following the Asian financial crisis in the late-1990s to modernise its economy and lift its people’s standard of living. Department of Foreign Affairs and Trade figures show real GDP per capita growth has averaged 5.1% over the past six years to June 30, 2018, where it topped out at $US13,176 ($18,862).
It’s estimated there are more than 55 million in the consumer class alone in Indonesia, a figure set to grow to 110 million by 2030. To use another measure, in Australia, Facebook has about 17 million monthly active users – in Indonesia, this figure is more than 130 million and growing.
These numbers should excite Australian business — especially fintech companies. Although it’s a challenging market where bureaucratic hurdles, in particular, can be daunting, it’s also an aspirational market where people are working to enhance their education, lifestyle, and wealth, all of which dovetails with the fintech story.
My key learning is you must remind yourself we are trained to do business in a certain way in Australia — this particularly applies to financial services — so what appears like hurdles in Indonesia is just a different way of doing business.
This is why it’s imperative to have a good business partner and people to help you navigate your way through the regulations.
But make no mistake, patience is required. Nothing moves in a straight line, and sometimes all seems to be lost. But persistence, firm relationships and a good product should triumph in the end. Humility, too, is an important part of the equation. The notion the ‘Australian way’ must be duplicated in Indonesia can only be self-defeating.
Indonesia is an exciting market, as too Malaysia, Thailand and other markets in South East Asia. The rewards will come — it just requires time, effort and patience.
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