Understanding RI business culture

By Rob Goodfellow

WOLLONGONG, New South Wales, Australia (JP): Indonesia is often criticized in the international press for what are loosely identified as "corrupt practices". The truth is, as in most things, "it takes two to tango", and Indonesia is no different from any other country in that business, and business culture, is essentially an exercise in quality improvement. Old ideas give way for new as both Westerners and Indonesians look for better ways of doing business together.

It is difficult to identify just what is Western business culture. It is equally impossible to stereotype all "Asian business" into one homogeneous cultural identity. Like the nations of Europe, the countries of Asia, and for that matter the islands of the Indonesia archipelago, have different histories, cultures, languages and ways of doing business.

This notwithstanding, there are identifiable, general but fundamental characteristics which when explained help put Indonesian business into cultural perspective and context.

The key issue is that our two business communities approach the pursuit of profit from diametrically opposite positions. While one is preoccupied with objectives, outcomes, goals, targets and ends, the other is equally preoccupied with relationship building, process, strategy, networking and means.

This is an important distinction. The application of these preoccupations determines the basic "complexion" of business conduct.

By looking at experiences of several Western businesspeople in Indonesia, I want to suggest that an appreciation of Indonesian culture may provide a remedy to the negative perception that Indonesian business is basically "corrupt". They have so far weathered the Asian economic meltdown and have a long-term commitment to Indonesia and her people.

Angelo and Mary (all names are pseudonyms) are consultants for a major international company. They specialize in Indonesia and have been involved in setting up numerous joint ventures since 1980. The company they represent has a firm policy of never paying bribes, large or small. The question is, how does this enterprise prosper in an environment which is believed to thrive on "an imaginative show of respect and gratitude"?

Significantly, when Angelo and Mary set up their first joint venture between their multinational enterprise and a major Indonesian company, there were some problems.

According to Mary: "About 10 years ago we did a merchandise audit and found that the consumerables for our new company were four times greater than for a similar sized company in Europe or the United States. The idea of doing an audit was first to introduce our partners to the idea of accountability, and second to give them a bit of a shock. We flew a team of accountants up and they went through everything. We attracted some critical attention immediately because all of the Indonesian directors had shares in the consumerables network.

"It was obviously in their best interests to be very good consumers. They all got a percentage off the top. There was 6 percent each for the directors, 4 percent for the manager and 2 percent for the foreman. It took a long time to sort it out, but ultimately we sent a very strong message across to our partners that this type of behavior was neither ethically tolerable nor, more importantly, in the best interests of sound, steady profitable business. Now this company is riding out the Asian economic crisis and the message is getting through to the general business community here."

Jack's company recently entered into a joint venture with a large Indonesian firm to construct a coal-wash plant on one of the country's outer islands. Jack was the on-site project supervisor and company managing director for 11 months. This company has done well, establishing and maintaining an annual turnover of US$12 million. Jack is not at all comfortable with the idea of paying bribes. He is, however, concerned about the problem of what to do about it.

"Once a week I would take the company speedboat down river to the major regional center and catch a plane to Jakarta," he said. "I would usually slip a few rupiah to the man allocating seating. One day he put his hand out for more; apparently 'there were no seats left'. So I added another Rp 10,000. He wanted more again.

"I got really annoyed and said that not only would I take another flight but that I would report him to a representative of the airline company in Jakarta. I think this really frightened him because I didn't see his hand come out again. In fact I don't remember seeing him again at all. Maybe this is the best way to handle the problem."

With the words of Angelo, the international business consultant, I want to make a departure from just looking at "corruption" and rather make the important point that, at least as far as the following experiences are concerned, things are definitely improving -- and this is because "relationship" is at the heart of good business practice in Indonesia.

According to Angelo: "My Indonesian partner's wife called me one Saturday morning at home in the States on her mobile phone. She had just read about some new European fashion in a magazine and asked me to buy a garment for her. I just assumed that it must be a thing where I had to foot the bill and send it over as a gift. On my next trip to Indonesia, and at this stage I was virtually commuting, I was really surprised when she asked me 'how much do I owe you?' I said, 'It's a gift'. She replied, 'I ordered it in good faith, and if you don't let me pay for it, I will see it as an insult to our friendship'. Ten years ago everyone seemed to have his or her hand out. Now it's uncommon."

I want to reinforce the essential message that Angelo is conveying by drawing attention to the positive experiences of others such as Lionel, who has been trading internationally in silver jewelry, textiles and handicraft through Bali since the early 1970s. He has a definite appreciation of relationship building.

"I have invested half my life getting to know my Balinese business partners," he said. "Naturally this took a lot of perseverance and hard work. At first I went to a great deal of trouble to not only get to know the head of a particular company or producer community but also their families, friends and associates. I also made a practice of discovering accounting and billing mistakes in their favor. I did this regularly until I found that I could be trusted. Now I can place large orders on generous credit. Reputation is everything in Indonesian business."

Jeff is a successful international furniture designer, wholesaler and retailer. He moved his entire production team to Indonesia five years ago. Like Lionel, Jeff has developed an appreciation of Indonesian culture, and has subsequently used this knowledge to advance his operations. And, like Lionel, "corruption" is not an issue.

"I'm different from most of my competitors. I spend about 10 percent of my time in the office and the rest of the time on the factory floor in shorts and sand shoes working with my Javanese artisans. This has turned out to be very a creative and productive practice. We have been able to develop a number of innovative furniture design techniques involving not only wood but also mediums such as stone, clay, tin and papier-mache.

"In this it is essential that my workers, about 150 or so, know that I am delighted with their creativity. The pattern of paternalism is still very strong. Because of this the figure of Bapak or the 'father' of the company is absolutely important. And I'm the big Bapak."

Wendy is a higher education consultant. She has played a major role in negotiating joint-venture projects between Indonesian and foreign business colleagues and universities. She speaks Indonesian fluently and has been based in Jakarta for eight years. Wendy clearly understands Indonesian business culture.

She maintains: "One thing that people don't understand is that Indonesians have two faces, the public face and the private face. In my experience the one-on-one relationship is very personal, very private and very deep, and very important.

"Publicly it is different. It is shallow, all form and play, like the Hindu-Javanese Wayang shadow puppet play. Everyone has a role and is expected to act out that role. As a foreigner it is important to take a lot of trouble to make your associate, who might also be your close friend, look good. In an odd sort of a way, by understating my position in a negotiating situation I strengthen it. By putting myself down and my particular Indonesian associate up, I look better, really the opposite to the way it is done in a Western boardroom."

Angelo and Mary's consumable audit, Lionel's insistence on establishing his good reputation, Jeff's appreciation of "Bapak- ism" and Wendy's understanding of the difference between the form and theater of Indonesian business culture are all significant departures from the negative stereotypical view of Indonesia, or what some incorrectly believe constitute negative "Asian values".

And, in the spirit of good change management, the international media should encourage these positive reforms at every opportunity instead of just focusing solely on negative stereotypes.

The writer is a researcher and lecturer who specializes in Indonesia.

Window A: It is difficult to identify just what is Western business culture. It is equally impossible to stereotype all "Asian business" into one homogeneous cultural identity.