Jun 12 2017
Often overlooked by the international media, Indonesia is the world’s fourth largest country with a diversified economy underpinned by a dynamic private sector and has experienced years of positive economic growth. Its geographic position between China and India sometimes masks the scale and dynamism of this South East Asian behemoth, but the shifting sands of globalization are drawing this giant out of the shadows. AESC recently hosted a session in Jakarta on the future of executive search in Indonesia. What are the opportunities and challenges that Indonesia offers senior executives? Let’s take a look at some key points made during our Jakarta visit and what this means for executives considering positions in Indonesia.
Indonesia is a healthy environment for start-ups
A large consumer base with rising incomes alongside free and open Internet access has created a healthy environment for tech start-ups. US News ranked Indonesia as the fifth best country to launch a start-up in Asia, with Jakarta and Bali being the key hubs for new businesses. GO-JEK is the most famous Indonesian start-up and the first to reach ‘unicorn’ status. Originally a motorcycle hailing app, GO-JEK has expanded into logistics and payments and coordinates 200,000 drivers across 25 cities in Indonesia. GO-JEK may be the most well-known, but the country is home to scores of tech start-ups including online marketplace Tokopedia, fintech startup Investree, and hybrid media portal Kumparan, to name a few.
Talent is in high demand
With an economic growth rate of 5.2%, huge domestic market, and positioning at the center of the ASEAN region, Indonesia is set to continue its upward trajectory for years to come. Free press, vibrant social media, and increasing incomes create space for a healthy private sector. Indonesia relies heavily on domestic consumption and this has led to the growth of a mixed business environment made up of SMEs, start-ups, globalizing conglomerates, and multinational firms. The rate of growth exceeds the supply of talent in many areas. Aviation is a case in point. Passenger numbers are growing at 15% per annum, that not only places pressure on the supply of pilots, but also those involved with the construction of infrastructure to supply that level of growth. Given the pace of change and rate of growth, foreign talent is needed to supplement local talent.
‘Glocalization’ is key
Indonesia is growing and talent is needed, but to excel in Indonesia you’ll need to leave at least some of your Western mindset at the door. Glocalisation is key. Gone are the days in Asia where an expatriate leader can simply be dropped into a local company, or a multinational company, for that matter. The Asian talent pool is getting deeper and the consumer-base is more sophisticated with seemingly unlimited choices. To be a successful leader Indonesia you’ll need to listen, learn and adapt your thinking to take advantage of local opportunities. It’s also important to adjust to the local business culture. Take business attire, while suits are the norm in the West, Indonesian business leaders prefer to wear Batik shirts and dress trousers. It’s well-suited to the weather and reflective of the vibrancy of local life.
Business too needs to adapt to take advantage of local opportunities. Again, GO-JEK is a good example. A big part of its success is based on its focus on motorcycles as a key form of passenger and good transport. The ability to rent agile motorcycles as oppose to cars is highly relevant for consumers in a country with traffic problems as severe as Indonesia.
Too Big to Fail?
An obvious benefit of big countries is the size and complexity of their internal market. Their scale means the country can afford to look inward and ultimately be the engine room of its own growth. The size of the domestic market creates opportunities for growth. Yet this introspective view can also be a source of challenges. Whether it be politically, culturally, or economically, Indonesia tends to look inwards.
When Karen Greenbaum, President and CEO of the AESC, and I recently visited AESC firms and clients in Indonesia, many individuals we met with commented that Indonesia’s education system hasn’t kept up with the pace of change. This is particularly so at the tertiary level where foreign universities are shunned in an effort to support their local institutions. The effect is that young Indonesians are often excluded from access to the very global knowledge base and skills that the country is crying out for. The domestic focus also affects many businesses and sometimes hinders them from being benchmarked against or adapting global best practices. However, this creates an opening for globally-minded executives to take key roles in rapidly growing Indonesian firms.
This set of opportunities and challenges creates demand for a particular type of talent and an increase in executive search in Indonesia. Individuals who are globally minded, yet locally connected and who demonstrate the ability to succeed in an era of disruption and change, are well placed to succeed. In that way, Indonesia probably isn’t too different than the rest of the world.
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