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January 15 2014

Mitigating the Risks of Doing Business in Indonesia

In an increasingly competitive environment, multinational companies continue to expand and move into new and unfamiliar territories, either to take advantage of lower operating costs, a cheaper workforce, access to untapped natural resources or what is perceived as a potentially large market. In their haste to take advantage of these 'attractions ', companies often fail to carry out the necessary due-diligence and research to identify the potential risks and pitfalls associated with such a venture. Indonesia, like many other developing countries, aside from presenting attractive opportunities also presents a variety of potential risks to which investors may be exposed and vulnerable. These risks range from six years of political and economic turmoil, a history of civil unrest, religious conflict and the threat posed by Islamic extremist groups, socio-economic issues and the resulting effect of increased unemployment. Organisations seeking to enter and do business in Indonesia need to mitigate these risks by putting in place a well planned risk management strategy to ensure from the outset that they have carried out not only an assessment of the risks, but are also well positioned to manage any situation that may present a threat to their assets be it people, proprietary information, property or reputation. Doing so naturally reduces the chances of a company becoming a victim, but also minimizes the likely fallout in the event an incident were to occur.