Indonesia: A fertile ground for consultancy business

Rudijanto, Contributor, Jakarta

The country's far from perfect legal system, complex business environment and need for corporate good governance and transparency, highlight some fertile ground for consultancy businesses, from simple law consulting and accounting firms up to risk-control consultancy businesses.

While consultancy companies don't necessarily consider the economic conditions of the country ideal, they say global trends are influencing the business climate here.

"No, we do not see any (negative) impact from domestic factors such as the economic crisis and the general election on our business. We believe that our business is improving due to the global trend for good governance in companies," said Ernst & Young's director of marketing Bernardus Djonoputro.

Bernardus believes that his company's growth is affected more by the global change in the world's accounting field, than by domestic factors, especially after the famous U.S.-based Enron accounting scandal.

The U.S.-based gas pipeline company manipulated its reported earnings in an effort to fool investors and profit from higher stock prices. The case, that has triggered a big change in the accounting field, began to transpire in October 2001.

Such a scandal has raised the global demand for more transparency and good governance among corporations, including in Indonesia.

That is why, Bernardus said, Ernst & Young's growth is due to the global need for companies to audit and conduct better corporate governance, regardless of the country's specific situation.

"For instance, publicly listed companies always need our auditing services in times of crisis, as well as in normal situations. Those companies need public accounting firms for the attestation of their financial reports," he said.

With such a client base, he firmly denies that his company has benefited from the country's economic crisis and corporate restructuring programs, including privatization of state- controlled companies.

"Privatization of state-controlled companies is not yet clear. We don't see it as big opportunity in the short run. Our business is linked more with multinational companies," he said.

Ernst & Young assists businesses across all industries - from emerging companies to global powerhouses - to deal with a broad range of business issues.

Another consultancy company PT ROH-Control Risks Group (CRG) claims it can find business opportunities regardless of the situation. Though admitting that the economic crisis provided various opportunities, PT ROH - CRG's technical advisor Martin Hugher says that his company can survive in normal times as well.

"I look forward to the return of investors to Indonesia. We want people to come here. We have services that can help them, including those who come for the first time to this country," said Martin.

CRG is a London-based international risk consultancy that has assisted clients from various sectors, including those from oil and gas, and manufacturing and financial sectors. The company provide its clients with pre-project due diligence, cross management planning and problem solving.

"Here, we basically provide information about Indonesia, on contemporary issues and its security situation. Our clients have responded positively to this information," Martin said.

Not all consultancy companies benefited from the crisis. IndoTrade is one such company, with one of its focuses on providing consultancy to foreign investors who want to do business in Indonesia, the company is certainly not happy with the predicted flat-growth for this year's foreign direct investment (FDI) flow to Indonesia.

Not simply relying on the flow of FDI, IndoTrade has launched its Service Office, that specializes in taking care of companies abandoned by their owners for various reasons. Indotrade's managing director Johan Bukit says that the Service Office has a bright future.

"In Singapore, hundreds of companies are left by their owners. The demand for this service has also grown in Indonesia as more and more companies need this kind of service. Currently, we handle 20 companies," he said.

He explained that owners left their companies to IndoTrade for a variety of reasons. For such companies, IndoTrade offers corporate management facilities such as secretarial services and tax reports.

"This service enables those companies to run economically because they do not need to have their own offices and employees. We are the ones that take care of their needs," Johan said.

But Johan does not view companies left to IndoTrade's corporate-management services as sick companies. He reveals that some owners simply have no urgent need to open an office in Jakarta.

Aside from Service Office, IndoTrade also offers law consultancy for onshore and offshore companies. The company has also published a book A Brief Investment Guide & Regulations on FDI 2004.

In spite of the uncertainty caused by the upcoming general election and the country's first-ever direct presidential election this year, IndoTrade and other consultancy companies are optimistic about business in Indonesia.

"Having experienced the most troubling events, we see the present condition as much better than the outset of the economic crisis in 1997 and the elections in 1999. In fact, Indonesia's economic growth rate is forecast to be higher this year than it was in 2003," said Johan.

Consultancy businesses have proven that they can find opportunities amid any situation. Like the Chinese, who describe crisis in two characters, that mean "danger" and "chance", consultancy companies are able to see that every dark cloud passing over Indonesia does, indeed, have a silver lining.