Kenssy Dwi Ekaningsih has been Indonesia's ambassador to Prague since June 2019. The Czech Republic is in fact her second diplomatic mission outside the ASEAN region. Although more than half of her current term has been impacted by the covid-19 pandemic, the Embassy under her leadership is very active and busy organising and supporting business and cultural events. Still, Ambassador Kenssy believes that when the pandemic is over, the two countries will be able to further build on the already close relations. The strength of Czech-Indonesian cooperation is also evidenced by the number of Czech companies who are already active in Indonesia.
Q: Which Czech companies have already succeeded in the Indonesian market?
A: Throughout the Czech Republic, you will find companies who already export to Indonesia or have business partners there. They include bigger corporations such as Home Credit, the engineering company DEL from Žďár nad Sázavou, ERA, radar manufacturer from Pardubice, or other companies from the defense industry, engineering, transport and financial services. But there are also smaller businesses such as Kopi Luwak roastery from Brno, importer of civet coffee from Indonesia, Mustika Ratu Spa franchise in Prague and a few travel agencies which specialize in Indonesia.
How can the Embassy help Czech companies that would like to set up closer ties with Indonesia?
That is what we are here for! We advise companies and entrepreneurs what to focus on, what to deal with, who to contact, and we give them all the information about Indonesia. Currently we are in touch with, for example, the manufacturer of laser technologies Narran or Hydropol, a renewable energy solutions provider. They are already present on the Indonesian market and preparing to expand their presence in Indonesia, and my colleagues at the Embassy are helping them find the most suitable partner for this project.
Patience and empathy are the key to success
What should Czech businesses look out for during their first contacts with Indonesian businessmen? Are there any specifics they should be aware of?
I always recommend everyone to get thoroughly acquainted with our culture and our values. It is quite different from Czech culture. Knowing and understanding your business partners and employees is extremely important to succeed in our country. Indonesians tend to think about things thoroughly, like to negotiate and are not very used to direct behaviour. It is key to be patient and act with empathy and emotion.
From a more practical point of view, the most important thing is to establish the right relationships, not only at the business level, but also at the government and local administration levels, and understand the differences in legislation and official requirements. A helpful and resourceful business partner can help with all this.
TRADE NEWS is the official magazine of the Association of SMEs of the Czech Republic. What is the position of SMEs in Indonesia? How does the government support them?
SMEs are the backbone of the Indonesian economy. Micro and small enterprises contribute approximately 43% to GDP, while medium and large business make up about 57%. At the same time, SMEs were probably hit the hardest by the covid-19 pandemic, but thanks to their resilience and also government programs, most of them have made it through the crisis. Lack of liquidity and cash flow difficulties are the most common problems for Indonesian SMEs. Therefore, as part of the covid measures, the government helps them with both financing and tax cuts if they register with government bodies. In addition to tax benefits, they also gain access to capacity building, international business forums, workshops, conferences and networking. I should also add that in Indonesia, SMEs fall under a dedicated ministry, Ministry of Cooperative and SMEs, rather than under the Ministry of Industry and Trade, which shows that the government considers them to be extremely important.
Easier business and foreign investment conditions
Your country is the fourth most populous in the world. Before the pandemic, its GDP grew by over 5% per year. Can Indonesia be considered the market of the future?
I think our country has great prospects for three main reasons. First, it is a huge market with an ever-growing middle class, which means high domestic demand and consumption. The second factor is the massive production capacity, not only for goods on the domestic market, but mainly for export. And the third reason is Indonesia's geographical location and its membership in ASEAN, making it an ideal base for expansion into other countries in the Asia-Pacific region.
In which sectors do you see the greatest opportunities for Czech companies?
Besides the emerging opportunities due to the pandemic, which are now a clear priority, the government finds it crucial to support manufacturing and modernization of industrial capacity, especially in the automotive industry, as well as construction and infrastructure development. Other important sectors are telecommunications and tourism. I also see a great perspective in green energy and technology. Škoda Auto has just launched its new Enyaq iV electric car, while Škoda Transportation is producing electric buses - and Indonesian industry is moving in a similar direction. I would like to see closer cooperation between our companies in these sectors, also because the demand for e-mobility is growing both in the Indonesian market and in neighbour countries, and the Czech Republic can apply its unique know-how here.
Conditions for doing business are improving in Indonesia, as confirmed by the Ease of Doing Business and Global Competitiveness indexes. What reforms, particularly in trade, business and investment, has the country recently adopted to further improve its business environment?
Recently, the government has launched two initiatives that have significantly helped facilitate business and investment. The first one makes it possible to set up a company or trade on the spot and online, instead of the lengthy bureaucracy of having to go to several different offices. It is called Online Single Submission (OSS) and One Stop Centre. In terms of foreign direct investment support, it’s a similar model, as the country has adopted the so-called Omnibus Law and created a new institution called INA (stands for Investment National Authority). This brings a significant simplification of bureaucracy for foreign companies looking to invest and employ people in Indonesia. So far, on the basis of this new legislation, the government has established cooperation with Japan or the United Arab Emirates.
ASEAN as the focus of the 21st century world economy
Indonesia is part of ASEAN and you now chair the Czech ASEAN Committee in Prague. What are the benefits of the membership for the country?
Personally, I have a close relationship with the ASEAN countries also because I have spent the most part of my diplomatic career in this region. The main goals of the association are to accelerate economic growth, strengthen socio-cultural cooperation and maintain political stability in the region. These three goals are closely linked, because for our countries, the key to growth is stability and cooperation. ASEAN has been largely successful: the member countries are politically stable, helping each other – now, for example, in the form of joint measures against the pandemic, including the establishment of the Covid-19 ASEAN Response Fund – and their economies were growing at an annual average rate of 5% in the pre-pandemic period. Thanks to this, the whole region has become one of the most attractive areas for foreign investment in the world, and I am personally convinced that this is where the focus for global economic development in the 21st century is located.
Text: Daniel Libertin
Photo: archive of the Embassy of Indonesia in the Czech Republic