Podcast (TEST)

Doing Business in Indonesia

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Release Date: 27-Jul-2012
Size: 92.2MB
Length: 9mins 08secs
Organisation: Export Council of Australia
iTunes Link: Coming Soon.

Transcript

Interviewer

Hi everyone. I’m Melissa Baker, the Export Council of Australia. In coordination with the upcoming event series, Unleashing Opportunities in the Global Markets Turmoil hosted by the Export Council of Australia and EFIC, I’m here today to discuss with Ian Murray, the bilateral relations between Indonesia and Australia and the potential opportunities for Australian exporters to benefit from this emerging economy.

Ian Murray is the Executive Director of the Export Council of Australia with an extensive background in management, marketing and international business. Prior to his position with the Export Council of Australia, Ian has held senior general management positions with private sector companies including Johnson & Johnson and has lived and worked in Indonesia, Malaysia, Singapore and Pakistan.

During 25 years of service with Johnson & Johnson, Ian was marketing director of J&J Indonesia and group marketing manager of the Australian company. Ian’s major focus at J&J was new product development, market research and marketing strategy. Great to have you here today Ian.

Respondent

Thank you Melissa.

Interviewer

Having worked for three years as the marketing director for Johnson & Johnson in Indonesia, explain how Indonesian business practices differ from Australian business practices?

Respondent

I think the first thing people have got to think about is the culture of the Indonesian people and the Indonesian business people in particular. I mean they do look at business differently to the way that we do.

We seem to be driven by large margins and smaller volumes, their view on life because they’ve got such a large population tends to be on large volume and much smaller margins. But also, the whole decision making process is different to the way we look at things.

So even if you’ve come into a classic international business, you tend to look at the strategic approach to businesses the way in which we are taught in the Western world to do.

Well, Indonesia seems to be very different to that particularly in so far as they are relatively small number of very wealthy entrepreneurs who drive the bulk of the business outside the resources sector and those sort of things.

They drive the business and they are big businesses, they’ve got lots of money and you got to understand the way they think.

Interviewer

People smuggling drugs, terrorism and natural disaster are just a few of the problems that have threatened to divide Australia and Indonesia in the past. How has this problematic history between the two the countries affected trade relations?

Respondent

I think there’s two different aspects to this. First of all, business is very different to diplomacy. Business will operate - if diplomacy is going ahead on one track, business is always quite likely to go down another track.

The people that are doing business there are not the people that are involved with the diplomacy. They are a different group of people all together. Usually it’s the business opportunities that drive the likelihood of a good business outcome as opposed to any sort of diplomatic reasons.

I mean obviously in the past where there’s been, I guess, religious based issues in Indonesia, that has been a problem because that has put fear into people. But I think that some of the other issues that you just mentioned are really more of a diplomatic nature and not driven by and will not affect the business outcomes.

Interviewer

How would you advise Indonesia and Australia to deepen their trade relations that are less dependent on political leaders?

Respondent

Well, I think trade relations are quite good actually. It’s all about our building up trust. Australia has got a lot to offer Indonesia. By the same token, we’ve got to appreciate that trade is a two way thing and we’ve got to accept the fact that we’ve got to give Indonesian organizations and companies the opportunity to participate in our market as well.

Not quite – I’m not sure whether everybody always thinks that way but it is in fact, a fact and there’s got to be a sort of a two way operation. I think from Australia’s exporters’ point of view, we are pretty well received in Indonesia as opposed to some other nationalities around the world.

We have a lot, as I said, to offer Indonesia in terms of food, in terms of a lot of technology based and services based businesses including that in the resources sector and I think over time that will develop pretty substantially.

Interviewer

You recently wrote an article about Australia not taking advantage of this market despite it being so close to Australia. What should we be doing to support companies looking to expand their operations into Indonesia?

Respondent

I just think as I’ve always maintained, it’s a much bigger opportunity than people give it credit for. I mean we’re talking about a country that’s got 240 million people, a very, very large middle class.

They are earlier doctors, they do now, in the middle class sector in particular the upper middle class sector, have lots of money. A lot have had a western education and I think that Australia’s focus has been heavily on China and heavily on India.

I guess what I’m really saying is let’s not forget the Indonesia opportunity where there is such a massive population and its right next door.

Interviewer

Yes, many people forget about Indonesia when thinking of emerging markets. In fact, Indonesia has joined several nations in becoming a member of the G20 group after posting positive growth during GFC in 2009. How can Australian exporters take advantage of the recent growth seen in Indonesia?

Respondent

Look, I think it goes right across the board. I think we’ve been pretty strong in the resources sector. Obviously it’s a resource rich country and there’s going to be huge wealth driven from that in the future.

I think also in the technology associated with the resources sector, we’ve got lots of opportunities there because Australia pretty much leads the world in a lot of the technical aspects and a lot of the service aspects associated with the resources sector.

So obviously we can continue to work with Indonesia in helping them develop their industries and doing it in a very professional and internationally competitive way.

I think areas of water resources and those sorts of areas where we can work closely with Indonesia. I also think food – again, with a strong middle class, the whole aspect of cuisine is changing. So there’s lots of opportunities for us in that particular area.

I think it obviously doesn’t goes right across the board but certainly in the food sector, in the technology sector and I think in the services sector. Services in particular, we’ve seen very, very strong development in the banking sector from one or two of the Australian banks which has been substantial.

Interviewer

Now, there are several current economic and geo-political struggles facing Indonesia that Australian exporters are likely to incur including poverty, inadequate infrastructure, complex regulatory environment, corruption and unequal resource distribution. How would you suggest Australian businesses work around these issues when exporting to Indonesia?

Respondent

Well, I think we got to appreciate it’s a third world country, number one.

Interviewer

Indeed.

Respondent

But it’s a no more third world country than China in a lot of respects. It’s a no more third world country than India or even Malaysia. It is what it is and I think that the fact that there is a very, very large number of well educated people in Indonesia, there is a lot of people that have moved into the middle class over the last 15 or 20 years, there’s been enormous amounts of expenditure on education and the education levels have improved in Indonesia enormously.

I don’t think it’s any greater challenge than really anywhere else, that is, I guess, deemed at the upper end of the third world countries. It’s not any more difficult to do business in Indonesia than it is to do business in China or India or a whole range of other countries around the world including those in South America and in Africa. So it’s as good an opportunity as you’re going to find anywhere.

Interviewer

Ian thank you so much for your insight today. It was lovely speaking with you.

Respondent

Thank you very much.

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