Indonesia - Joint Ventures/Licensing Indonesia - Joint Ventures/Licensing
Indonesia continues to maintain a Negative Investment List which includes some sectors that are closed entirely and some open with conditions. Unless otherwise stipulated under the Negative Investment List or other regulations, 100 percent foreign ownership is allowed. As a practical matter, a local joint venture partner is often essential for success in this market, for the same reason that an active Indonesian agent or distributor has advantages over a foreign trade representative office. The choice of an Indonesian joint venture partner is critical for many reasons, especially for knowledge of the local environment and contacts. A few firms provide background and credit-type reports on Indonesian entrepreneurs and firms.
A partnership in Indonesia is difficult to dissolve. Consequently, the first choice has to be the right choice. Business sense is as crucial to any commercial endeavor in Indonesia as it is anywhere else; contacts alone, while important, cannot substitute for business skills in an Indonesian partner.
Because Indonesians place great importance on personal relationships and mutual understanding, partnerships tend to be based primarily on genuine accord, with the written contract playing a less significant role. It is therefore important that any agreement be well understood by both sides. A contract over which there are conflicting interpretations is certain to cause future problems. In any case, a soundly written legal agreement is strongly encouraged, despite the weakness of the Indonesian legal system for enforcing contracts.
In some cases, licensing arrangements for products and services are more cost-effective options for U.S. companies doing business in Indonesia, but firms should apply the same cautions recommended for joint venture partners.
For more information please visit: www.bkpm.go.id