How Market Entry Service Firms Are Really Helping Foreign Investors

Estonian expat, Lauri Lahi, shares insights into the work of market entry service firm Emerhub in helping foreign investors and companies secure their place in Indonesia.

Hi Lauri, thank you for taking your time to do this interview with us. Why don’t we start with an introduction about yourself?

Sure, it’s such an honour to be interviewed by a newspaper I’ve been reading the entire time I’ve been living in Indonesia.

I’m an expat originally from Estonia. I’ve been living in Jakarta for the past six years and for most of it I’ve been starting and building my businesses. Besides Jakarta I’ve also lived in Yogyakarta for a couple of months to establish an office there. Most of my time has gone to building market entry services company Emerhub, but I’ve also started and sold local online media Hipwee and a couple of other companies.

Can you share with us your journey before ending up in Emerhub?

After I graduated from university in Estonia I got a position in Cambodia to set up the national branch of an international student organization called AIESEC. Once that was done I applied for an internship with Fortune PR in Jakarta and quite soon I realized that the business opportunities in Jakarta were a lot bigger than just staying here for a few months.

What is the best thing about working in market entry services like Emerhub?

You get to see companies from all around the world and from various industries. This means that everyday you get to learn new things. Also Emerhub is not a typical agent like most of the ‘market entry services’ firms – we do a lot of business model consulting and also sometimes invest in local businesses. I get bored easily so a job that requires me to constantly learn and travel is perfect for me.

What are the most common issues that foreign companies face in Indonesia these days? And how does Emerhub try to tackle them?

As with most emerging markets foreign companies struggle to find accurate information about the licenses, legal entity formats, payroll et cetera. They feel like every consultant gives them different advice and in the end they don’t know who to trust. Our entire business is built around tackling that issue – since we work with a few hundred companies each year we can stay on top of the changing regulations in most of the industries.

Emerhub offers a number of services that aim to make it easier for market entries to succeed. Can you describe these services and which are the most popular among your clients?

Basically we let our clients focus on what they are good at – building and delivering their products and services. We take care of all the bureaucracy starting from company establishment until payroll and tax reporting.

We also often start from market analysis and distributor search and sometimes the right answer can also be that a particular company is not ready for the Indonesian market – the faster and better intelligence the company has the less money they will spend on bad market expansions.

Another popular direction is that companies outsource staff management and invoicing to Emerhub. This way many foreign companies don’t even need a company in Indonesia since everything is administered by us. We currently have four offices in three countries (Jakarta, Bali, Ho Chi Minh City and Manila) and by using our services companies get access to the biggest markets of ASEAN.

What makes Emerhub different from other market entry service agencies?

First of all, we have a bigger international reach. Foreign companies can get the same service in each of our four offices and expand to the entire region without having to find new advisors in each market.

Secondly, if you are a market entry company you need to have a large volume of clients or otherwise it’s very difficult to stay on top of all the changes in laws and (informal) regulations. Sometimes we meet companies that have been advised based on information that was valid maybe three to five years ago. The consultant may have had the best intentions but if you don’t go to BKPM (the Investment Coordinating Board) or Ministry of Law and Human Rights you will have gaps in your knowledge.

Emerhub serves hundreds of companies and while it’s hard to tell whether we are the biggest in terms of revenue (none of our local competitors have done an IPO), we are definitely the most contacted if you look at the website statistics.

What are some of the most important facts that foreign markets need to know about Indonesia nowadays?

Indonesia is still one of the most exciting emerging markets in the world, even if the economy is growing a little bit slower than it used to. I’ve been here for six years and in that time alone the Indonesian population has increased by 30 million and the middle class is growing massively. Just take a look at any of the malls in Jakarta and you see that people are young and optimistic about the future.

Foreign companies should keep in mind that Indonesia has become a much clearer place to do business in terms of regulations. When I arrived in Indonesia most of the market entry consultants were advising foreign companies to start businesses in the wrong classifications (because it was easier) and without putting up the required capital (because they didn’t have to). Nowadays the regulations are much more strongly enforced but it also means that companies that come to Indonesia for the long term have a much more reliable regulatory environment.

My personal advice would be: don’t come to Indonesia to start a small business – it’s a market where you either go big or you start a lifestyle business where you are always hands on, the latter being especially popular in Bali. If you have the resources and local knowledge then this country provides amazing business opportunities.

I arrived in the country with a suitcase and few hundred dollars in my pockets. I took a kopaja and angkot until I got my business running and now most of my time goes to growing my business and looking for companies to invest in or acquire.

 

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Caranissa is an editor at Indonesia Expat. She occassionally writes, dances and performs on stage.


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