Indonesia, with its more than 250 million people, is a vast market. Although the country spreads over 17 thousand islands, the majority of economic activities is made in Bali and Java. To run a successful business on one or the other island means to be aware of some important distinctions.
No wonder most of the companies and individuals that have decided to enter the Indonesian market are heading to Java or Bali.
The capital city, Jakarta, located in the western part of Java, houses most of the authorities, government offices and is a natural headquarter for international companies.
The island of Bali is, on the contrary, a holidaymakers’ paradise and everything revolves around tourism. The big international companies are present here too but besides that Bali has recently become a significant start-up incubator.
Although it might be tricky to compare the world’s most populous island, a home to over 140 million consumers with its relatively tiny neighbor, we will try to discover pros and cons of both places.
Interested in overviews of local markets in Indonesia? Continue reading our newer post to Understand Differences between Semarang and Jakarta.
Anyone targeting potential buyers in Java needs to get familiar with the domestic market. Consumer behavior of mostly Muslim and to some extent conservative population differs greatly from western markets preferences. For instance, it is vital for many businesses to acquire halal certification in order to become competitive in some areas of food processing industry.
In addition, all new businesses should consider the socio-demographic aspects as well. Due to a significant disparity in income levels between regions the offer must reflect the purchasing power of targeted groups.
Relatively young population with median age of 28.6 years (as per 2016) also requires applying slightly different marketing strategy than in many western countries with significantly older consumer groups. To overcome all the pitfalls, it is crucial to have a quality market analysis at your disposal before taking any strategic decision.
On the other hand, both locals and foreigners created the demand in Bali; they are more promising in terms of its economic power. However, the tourists and expatriates form two entirely different sub-categories when it comes to their needs and motivation.
The tourism industry has been around for a couple of decades now. Businesses that tried to get their share of it found themselves in a highly competitive environment. Therefore, it might be tough to set up a brand new company. Again, many entrepreneurs choose collaboration with local distributors and partners instead. Despite the obligation to secure product registration in several industries, it is an easier way how to penetrate the market.
Java, and its commercial and financial center Jakarta, is the big players’ ground. Any well-established company coming to Indonesia will most likely set up its main branch in the capital city for a range of reasons.
It is a fast developing city with a huge market, and new opportunities arise every day. Services such as accounting, auditing, project management, payroll processing and HR in general, could be easily outsourced. Trustworthy legal assistance, indispensable in the complex and fast-changing Indonesian regulatory and bureaucratic environment, is also widely available.
The mentioned pros of doing business in a megapolis such as Jakarta and the densely populated island of Java do not work for everyone though. Rents and prices tend to be high and medium and small-size companies without sufficient turnover could hardly benefit from the large base of consumers.
Bali is a safer choice in terms of funding for small firms and sole entrepreneurs without a well-established product or those who came to Indonesia with a brand new idea.
Even though being one country, Bali and Java are remarkably different business environments. Therefore, businesses should target it differently. To be able to provide our clients with tailor-made services, Cekindo has two offices focusing on various Indonesian regions.
For a legal help and support related to Java (Jakarta and Semarang especially) don’t hesitate to contact us. On the other hand, our specialized office located in Kuta, Bali is entirely at your service in terms of legal issues related to Bali.