Business Partner Indonesia: 5 Important Points before Entering a Partnership

5 Important Points to Remember before Entering a Business Partnership in Indonesia

InCorp Editorial Team

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Have you ever wondered why businesses – big or small – form a strategic business partnership when doing business in Indonesia? This is because it has been evident that finding a good business partner in Indonesia will not only increase the bottom line but it will also expand your network and open the door to many opportunities.

However, not all business partnerships in Indonesia work out as planned. Some companies have faced all sorts of minor or major problems when they work with business partners who fail to bring anything to the table.

Therefore, before you seal a deal with a business partner in Indonesia, consider these 5 important points we are going to discuss below.

5 Important Points before Entering a Partnership

1. Prepare in Advance

Before establishing business operations with your partners, both parties should prepare a framework in advance. This framework should include details on the financing options, financial responsibilities, profit sharing, and others.

Money is an important factor in this partnership and that’s why you need to be very meticulous and clear on financial issues upfront. This can prevent the fallout from a business partnership.

2. Ensure You Are Ready for a Long-term Commitment

A business partnership is not for the faint-hearted. It is a long-term commitment for all partners just like marriage.

If this is not something that you see yourself in for the next five or ten years, you should probably give up the thought of forming a business partnership.

This is because breaking up with a business partner in Indonesia is not cheap when you have a contract that holds all parties responsible legally.

Dissolving a partnership in Indonesian takes a significant amount of money, time, and other resources.

Therefore, it is best to work with a business partner in Indonesia with whom you can last for many years.

3. Communicate Clearly

Effective and clear communication is pivotal for you and your business partner to thrive together. Sometimes it may not be easy to agree on the same page all the time.

However, a great, two-way communication allows partners to understand each other’s viewpoints. A mutual understanding enables both parties to achieve shared business goals.

4. Conduct Due Diligence

A lot of business owners overlook the importance of conducting due diligence on their business partners in Indonesia.

Due diligence is a deep screening and investigation toward the partnering individuals or organisations.

Before signing a contract and establishing a partnership, due diligence is imperative as you want to do a credibility assessment of the company or business partner in Indonesia you want to join forces with.

5. Prepare a Partnership Agreement

All partnerships in Indonesia require a partnership agreement. It is considered illegal if you work with a business partner in Indonesia without a partnership agreement.

Furthermore, a partnership agreement is one of the critical factors to its success because it serves as a guide on how this partnership operates.

It lays out all terms, responsibilities, rights, regulations, ownership percentage, capital contribution, profit percentage, dispute resolutions that serve both parties, and prevent future legal complications.

How Cekindo can Assist with Due Diligence and Agreement

Cekindo’s due diligence and agreement services enable you to obtain all the required information to make informed decisions when collaborating with business partners in Indonesia. Our extensive experience meets your investment and regulatory compliance objectives.

Our accurate due diligence or background check reveals both historical and current information relating to a company’s financial, administrative, performance, and litigation matters.

Cekindo’s team of professionals with immense experience and capabilities helps you prepare for what’s next in a partnership including drafting a contract.

Take advantage of our comprehensive due diligence and agreement drafting services now. Fill in the form below.

Tjhia Edy Tarlesno

Legal & Compliance Manager at InCorp Indonesia

Edy Tarlesno holds various certifications and a respectable degree to be an expert on internal and external legal compliance in Indonesia. His experience starts from bankruptcy and insolvency, leading to a prominent social foundation consultancy in Indonesia.

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