When Australia and Indonesia signed the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) on March 4, it signalled a strengthening of the economic relationship between the two nations.
IA-CEPA has has been under negotiation for many years will allow Australia and Indonesia to unlock the full potential of two-way trade and investment that has already been established under our existing multilateral free trade agreement, the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) for goods, services and investment.
In fact, our total two-way trade in goods and services with Indonesia was worth $16.8 billion in 2017-18, making Indonesia our 13th largest trading partner. In 2018, our top four exports to Indonesia included Petroleum products ($682m), wheat ($408m), iron ore and concentrates ($213m) and live cattle ($114m).
Doing business with Indonesia requires a well-researched plan. Here are some tips to help you diversify into Indonesia and take advantage of this exciting stage of our bilateral relations.
Build relationships first
Creating and building worthwhile connections and relationships is the key to success in long-term business relationships premised on mutual respect, trust and a shared value vision.
When selecting the most suitable market and best aligned overseas partners or customers, you will need to invest time and resources in establishing the initial connections.
While revenue and profit generation are a financial driver to go off-shore, it should be seen as an outcome.
What to avoid
As is the case in most cultures including in Australia, conversations around politics and religion are perhaps best avoided initially, or until you really know the other person and their values or thoughts on these subjects.
Relationships are everything in establishing a good basis for doing business, however the Department of Foreign Affairs and Trade is well aware that corruption and bribery do arise.
When establishing relationships, always keep in mind the importance of doing the right thing by your company and not compromising yourself or your company by falling foul of anti bribery and corruption laws.
How you sell yourself matters. Potential business customers and partners will want to hear how it all began and telling your story gives a sense that you are committed to your product or service.
At the end of the day you want to entrust that to an overseas buyer or company, so these conversations form a bedrock of trust. Alignment of business philosophy and commitment says “we’ve put a lot on the line” and indicates you want them on the same journey.
It’s important to emphasise that you have a long-term commitment to developing the market, that you understand there will be challenges along the way but it’s a long game plan.
Visit the area of interest
How many trips you make can vary but go as regularly as you can to establish your commitment to the market and build that all important relationship with your partners or buyers.
It’s also important to have a broad understanding of the marketplace, so spend time with the potential partner and buyer and get to know their business.
Say for example you are selling beef. It’s important to understand the import and distribution channel, but also the end user, so the customers such as the restaurants.
You will be highly regarded for taking the time to understand their business model and commitment and by understanding all key elements along the channel you get a better understanding of how it is all going.
You should also visit Austrade and WA Trade Office while in the region.
Where to research
It’s imperative that you understand the market dynamics and demand for your product or services including market entry barriers, level of competition and how best to connect you to the most suitable market entry channels or platform.
These can vary from traditional B2B pathways through to innovative e-commerce B2C approaches and an area where advisers in our International Trade and Investment Centre have the expertise to guide you.
Whether you research a particular region or the whole country depends on the size and market segmentation of the market.
In a country like Indonesia, with 265 million people spread across a geography of 1.9 million sq km and more than 17,500 islands, you need to carefully target a location best suited to your product/service based on consumer behavioural appetite and a need for your product or service.
ITIC can assist in market segmentation focus and market entry strategy.
Be part of your new community
Once you have your foot in the door, it’s important to keep your position strong. You can do this through maintaining contact, regular trips, business engagement events, attendance at pivotal business programs, build rapport with the Australian Embassy, Austrade and WA Trade Office in Jakarta.
Michael Carter is the Manager of CCIWA’s International Trade and Investment Centre.