Introduction

This report provides information about Indonesia economic, political, legal, foreign
direct investment, finance and sociocultural factors, along with the forecast. Endless
Wave Pty Ltd started its business in Australia in 1980s and since then it has been
manufacturing high quality surfing products and related accessories in the
Australian market. Other than Australia, Endless Wave expanded its business in
almost 20 different countries across the world and has a turnover of about $250
million. The principle aim of the report is to examine the response of Indonesia over
the years concerning business system with a purpose of starting up a business
venture. The information to prepare the report is gathered mainly from government
source such as U.S department of state and various report of doing business in
Indonesia published by consulting Companies like KPMG, PWC, Deloitte and data
related to GDP and FDI is mainly collected from Trading Economics. The limitations
that we faced while preparing the report are finding accurate data related to GDP
and import export statistic for 2016 and 2017, lot of data regarding FDI was
available but because of word limit constrain we added main element.
 Legal scenario in Indonesia

Legal system and how it works

In Indonesia the judiciary is based on the Supreme Court and there are distinct
courts for religious and civil matters, defense and public administration. Indonesia is
a democratic republic with a presidential structure, and mainly supports the civil law
system, mixed together with Roman Dutch law and customary law. The President
function as the Head of Government, Head of State and the commander-in-chief of
the Indonesian National Armed Forces, and has the authority to appoint his/her
cabinet members. Additionally, there is a vast range of rules and regulations refined
and imposed by government departments (HSBC Global connections,
2016).However, there are many laws and regulations in Indonesia that conflict with
each other due to corruption between nation's judiciary and law enforcers.

Government rules and regulations for establishing a foreign business

In Indonesia Foreign Direct Investment is managed by Law 25/2007 (The Investment

Law). Beneath this legislation, any kind of Foreign Direct Investment in Indonesia
should be in the format of a limited liability company which is known PMA, along
with the overseas investor possessing shares in the company. Moreover, a
registration letter approved by the BKPM is required for setting up the PMA
Company and Registration approval is lawful until 6 months since the date of issue
and Accounting and local transaction is done in local Currency. In addition, the
authority contour limitation on FDI in presidential decree 39/2014, often call
attention to as the Negative List. The Negative List focuses to stiffen FDI restrictions
in specific sectors from many decrees and regulations to generate considerable
certainty for foreign and domestic investors (U.S. Department of State, 2015).

Ownership of business, land and office

According to the negative list released in 2016, to open any foreign Company in
Indonesia it should be located within the mall, In addition, the floor size must be
between 400 m2 to 2,000 m2, to get 67% ownership of the business (Mathur,
Kirschner and Hutapea, 2016).Furthermore, In Indonesia Foreign company can take
possession of land holding the label hak guna bangunan (right to build on the land)
with period 30 years depending on the business. With the matter of fact, for certain
timeframe foreign companies are allowed to set up their authorized office of varied
types. There are different kinds of representative offices currently licensed in
Indonesia such as Trading Representative Office (TRO), Foreign Representative
Office (FRO) and Construction Representative Office (Badan Usaha Jasa Konstruksi
Asing BUJKA). The TRO and FRO are not allowed to conduct commercial projects
or provide profit in any manner (roedl, 2017)

Labour/employment law

Indonesian employment laws are comprehensive and hold clauses that entail
employers to pay undeniable benefits during the course of employment, and upon
curtailment. It should be important to note that any termination, except in the case
of voluntary resignation, usually necessitates advance agreement of the Ministry of
Manpower in Indonesia. An employment contract possibly limited in time or to a
certain project. As a result, apart from base salary certain benefits such as
transportation and food which is updated annually need to be provided and also
religious allowance which is almost equal to one month salary, medical insurance
for worker & its legal family members and other social benefits, so called Jamsostek
are compulsory as per the employment laws(roedl, 2017).

Key values and traditions

Indonesian culture is a very high context culture, understanding the modulation of

Indonesian customs and culture is crucial for healthy business relationships and
consequently for the success of any business in Indonesia. It is essential to adapt
the Indonesian culture in both manner and speech. For Australians, business
dealings with Indonesian could be time-consuming and very frustrating. Moreover,
Relationships in Indonesia should be permitted to bloom over time, and a lot of
visits are often necessary to accomplished business transactions. Furthermore, In
Indonesia Personal visits, as contrary to telephone calls and emails, are always
cherished. It is important to note that Indonesians are not impulsive decision
makers, usually Australians perceived this as not giving the subject requisite
thought (Kwintessential UK, 2017).
 Sociocultural

Key values and traditions

In Indonesia Business relationships are establish on trust. It is indispensable to build

personal contact with possible partners while doing business in Indonesia.
Furthermore, business cards must be printed in both Bahasa Indonesian and
English. Generally dutiful Muslims pray five times a day so, it is important to note
any meeting or lunch date with Indonesian Muslim should not be scheduled during
prayer times. salat prayer times are recorded on the Islamic finder and also at the
mosques. In Australia everyone is expected to be on time for business meetings
whereas for Indonesians it is common to arrive late in meeting which could be
annoying for westerners (Internations.org, 2016).

Religion and social stratification/ Language

Indonesia is a predominantly Muslim dominating country where 80% people are

Muslim, followed by smaller minorities of Protestants, Roman Catholics, Hindus and
Buddhists, therefore, it would be rational for any foreign Company to get
familiarized with the important Muslim vacations and practices. For example,
carrying alcohol as a present to a practicing and dedicated Muslim is unprofessional,
as drinking alcohol is forbidden in Islam (Internations.org, 2016).Also Indonesia is a
diverse country with over 300 distinct cultures dwells within its boundary. With each
culture comes a distinct dialect or language. However, Bahasa Indonesia is the most
commonly used language in the country, unites everyone. In tourist areas and
population centers the second most commonly used language after Bahasa
Indonesia is English (Shamshad, 2017).

Communication style and how business is done in the Indonesia

Indonesians are not direct communicator, this means that while dealing with
Indonesians it is essential for listener to read between the lines or pay attention to
body language and gestures to understand their view point because they dont
always state what they intent. Moreover loud people are considered brash in
Indonesia and they usually prefer low tone while speaking to anyone. Whilst,
Australians generally speak at higher pitch, which can create misunderstanding.
Furthermore, in Indonesia first step to build a strong relationship with business
partner is to share personal thoughts which can only be achieved through face to
face communication. Indonesians loathe confrontation due to the potential loss of
face. For instance, to be civil, they may inform us what they believe we want to
hear. If we dishonor them, they will veil their sentiments and maintain a mask of
politeness. So, if an Indonesian starts to ignore you or acts coldly, then there are
high chances of some serious problem (Shamshad, 2017).

Hofstedes dimensions on the country in comparison to Australia

The Geert Hofstede analysis shows Indonesia has high power distance, low
uncertainty avoidance, masculinity and collectivism. At the same time, the country
cultures of Australia are low power distance, low uncertainty avoidance, high
individualism, and masculinity. This means that in Indonesia authoritarian structure
is followed where position and rank are very dominant. With the majority of the
population Islamic, in Indonesia religion and faith enter into decision making on a
more subjective basis as compared to Australia.
 References
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