Indonesian business culture

The differences between Western cultural styles and Indonesian cultural norms become very apparent in the business environment. Understanding the business culture in Indonesia and adapting your business strategy accordingly will help you effectively navigate the local market and build a thriving business in the country.

Hierarchy is very important in Indonesian society. Much attention is paid to respecting the status of people. This forms an overarching framework within which business etiquette is modeled. There are certain subtleties in Indonesian culture that are important to know.

Greeting

A light and loose handshake is preferable when greeting people. The respectful bow is also popular when greetings are addressed primarily to the most senior member of your local contact group. These people are usually introduced to you and the greetings may be formal. Handshakes are accompanied by a sincere “selamat”, meaning “peace”. It is recommended to avoid using your left hand or reaching out as unnecessary touching is frowned upon.

Some Indonesians have only one name, although it is increasingly common for people to have a first and a surname, especially in the middle class. There are several ethnic groups in Indonesia. Most have adopted Indonesian names, while some retain naming traditions specific to their ethnicity. Many Indonesians, especially those from Java, may have very long names that are shortened to a sort of nickname for everyday use.

When addressing Indonesian colleagues, use formal titles such as "Bapak" (lord) for men and "Ibu" (Ms.) for women followed by the last name, unless you are asked to use just the first name.

Although the official language of Indonesia is Indonesian (one of the Austronesian languages), English is often used in business. Learning a few basic phrases in the official language can be seen as a sign of respect.

Meetings

Personal connections will form the basis of your business relationships in Indonesia. Indonesian way — spend time before making business decisions, so be prepared for leisurely lunches. Business is rarely discussed at the first meeting with a partner. Indonesians do business with those they know and trust. Friendly relationships must be established before starting a business — this means that the deal is rarely sealed at the first meeting.

Time is flexible. Since you are in the Asian tropics, business is conducted on Indonesian time, as are meetings. A slower pace of life, group thinking and hierarchical decision making can lead to delays.

Hierarchy is key. Indonesians value respect, and "bapak" (fatherly image) or “ibu” (maternal image) serve as a reminder that nothing happens without the approval of the boss.

When scheduling meetings during the holidays, please note that Indonesians tend to take extra days off during Eid al-Fitr and Christmas.

When meeting with government officials, you must prepare a letter to them in advance. After the meeting, send a thank you note or email to express your appreciation for the opportunity to meet.

Business cards

Business cards are mostly exchanged after the initial handshake, introduction and greeting. Your business card represents you and your business and can be considered the face of what you offer. Therefore, in Indonesia, as in most other Asian countries, business cards should be handled with great care. Be sure to present and receive the card with both hands. Business cards are treated with great dignity and respect — It is advisable that you show genuine interest in the cards being handed to you. If you are in a meeting at a table, it is recommended to spread out the cards in front of you. While business cards in English are acceptable, the Indonesian translation on the back of the card is considered an additional sign of respect for the local language and culture.

Communications and negotiations

Indonesians rarely say “no” to avoid conflict. You need to be aware of this and understand what your business partners are actually saying — try to find out if there are any hidden concerns. It is important to understand when an affirmative answer means “I hear you” and not “yes” so that your partner does not lose face. To avoid this, it is recommended to begin serious business negotiations after establishing rapport with your Indonesian colleagues. If you receive a vague answer, carefully clarify the answer by respectfully returning to the question.

Doing business in Indonesia — It's a long-term commitment and the benefits in themselves are clear. Decisions are made at the top and there may be a significant wait before a conclusion is reached. Strong relationships are of paramount importance, and price and other small details are secondary to negotiations.

Compromise is key and everyone is expected to give a little to reach an agreement. Consensus is sought from everyone before a decision is made to maintain harmony and respect within the group. When closing a deal, it is important to convince everyone on the other side of the table.

Indonesians value politeness. It is important to be respectful and personable in conversations and discussions, to speak softly and to avoid confrontational or aggressive language. At the same time, give your Indonesian colleagues a chance to speak and don't interrupt them. This will be disrespectful and may intimidate them, making them reluctant to share their opinions.

Indonesians would prefer to do business with individuals rather than with legal entities. Thus, establishing trust and good relationships is critical. In addition, you may expect questions about your family and personal life. Indonesians consider getting to know you on a more personal level a sign of respect.

According to Indonesian business culture, good relationships and harmony are the key to success. They do not necessarily adhere to the concept of “time— money." You need to remember that it will take longer to negotiate and actually complete things. Therefore, doing business in Indonesia becomes an art in itself.

One of the things you also need to know is — this is that you don't need to be assertive as this may show aggression towards the other party and make them hesitant to continue the negotiations. Indonesians generally take a non-aggressive approach to business negotiations. During negotiations, it is advisable to speak softly and with little emotional stress. Mirror your colleagues' communication method. You can count on bargaining during negotiations. However, do not use high pressure tactics as this will backfire.

Most Indonesian stakeholders now prefer to communicate via WhatsApp rather than email. Indonesian businessmen often ask for contact information to initiate connections.

Unless your product is niche, Indonesian buyers generally prefer to buy from familiar brands rather than focusing solely on product quality.

Start closing deals once you have established strong local connections with your business partner. Trust and strong relationships are essential for successful business relationships in Indonesia.

Dress code

The dress code for first meetings is quite formal. If your partner is dressed less formally, then you can follow his example. Traditional Indonesian clothing is considered acceptable in the office. Women should be aware of Muslim subtleties regarding women's clothing.

Business lunches

Lunches with Indonesians are often casual, with shared dishes. Forks and spoons are often the only cutlery available.

Hierarchy is very important to Indonesian food culture, so you will need to wait before you are seated. This also translates into conversational etiquette. Conversation over food — a great way to build the long-term relationships needed to successfully continue your business endeavors. Try to understand your partner's family and culture before moving on to more serious topics.

Gifts

Gift giving is common in business settings, especially during holidays or special occasions. It is important to understand that this largely depends on the ethnicity of the recipient.

Gift-giving etiquette for the Chinese:

• It is considered polite to refuse a gift verbally before accepting it. This shows that the recipient is not greedy.
• Items to avoid include scissors, knives and other cutting tools as they indicate that you want to end the relationship.
• Exquisite packaging expected — gold and red, which is considered auspicious.
• Gifts are not opened upon receipt.

Gift-giving etiquette for ethnic Malays/Muslims:

• Alcohol is prohibited in Islam. Give alcohol only if you know the recipient will appreciate it.
• Any food must be “halal” — Non-halal is anything that contains alcoholic ingredients or anything that contains pork derivatives. Halal meat means that the animal was slaughtered in accordance with Islamic principles.
• Gifts should only be given with the right hand.
• Gifts are not opened upon receipt.

Gift Giving Etiquette for Ethnic Indians:

• Gifts should only be given with the right hand.
• Wrap gifts in red, yellow, green paper or other bright colors as they bring good luck.
• Do not give leather goods to a Hindu.
• Do not give alcohol if you are not sure that your partner drinks it.
• Gifts are not opened upon receipt.
• Gifts should be given with both hands, and it is the thought that matters, not the value of the gift.
• Avoid giving gifts in white as it symbolizes death and anything associated with pigs or dogs.

Public holidays in Indonesia

Indonesia embraces a mixture of different cultures, with various religious and public holidays celebrated. They make up quite a long list:

• Eid (Lebaran)
• Christmas (Natal)
• New Year
• Indonesia Independence Day (Hari Merdeka)
• Chinese New Year
• Balinese Hindu New Year (Hari Raya Nyepi)
• Vaisak Day
• Easter
• Labor Day
• Idul Adha
• Isra Miraj
• Pancasila Day