Fred2
If you don't mind me asking what price have you been quoted for rent.
But keep in mind, the free trade area in ASEAN is still ideal on paper, on the harbor or the airport, its a different law.
Not sure the ink has dried yet, maybe 2020 I hope.
gsw_76
I've been quoted anything from 65mil for 60sqm up to 120mil for 70sqm per year and that's in Ubud. The 120mil was prime location of course and a ready to go premises. These are the first prices given and i haven't done any negotiation for a price over a longer term than 1 year.
Yeah I understand that there is no guarantee of what will happen regarding ASEAN free trade area when any goods arrive here. The customs brokers that I have spoken to say that in the past when they have done this sometimes it works, usually when the paperwork is 100% spot on. Then depending on customs mood at the time they might decline the duty exemption or not give it in full, especially if some paperwork is not in order. i guess they can always find something wrong if they really want.
gsw_76
[B]"SHoggard - I've noticed, in many of these 'I want to set up a business' an amazing lack of real business sense from the OPs... certainly they may have run this or that type of business successfully wherever they live... but doing business in a foreign country (any foreign country, not just Bali) takes a degree of local knowledge that can't be obtained from a 'business consultant' (the OP didn't answer the question: just what kind of business consultant has he been talking to this far?)... or a forum like this: the Straits-Chinese have a saying "If I got lobang, why share it with you" (lobang= literally 'hole'.... gap in the market, quality low cost supplier, plot of land, etc etc)."[/B]
Hi SHoggard, thanks for your reply. I'll try to respond to your points from our side. Just what we have been thinking, not necessarily correct or even possible.
I agree with you about doing business in a foreign country - totally different to Australia. We have lived in Cambodia for 3 years in the past and done business there, this is where our products are from. The past 2 years we've setup our wholesale business in Australia importing these products. Of course Cambodia is different to Indonesia in many ways but we do feel we at least have experience doing business in Asia with similar challenges to Indonesia.
As for the business consultant - sorry I didn't realise anyone asked "what kind of business consultant we have been talking to", I didn't want to name them as I'm not sure if it's appropriate. We been talking to the type that advises on the whole package - business advice, company formation, contracts, tax, accounting etc. We've realised there is a cheaper way.
This past year we didn't have much luck meeting anyone else including notaris, we had a few no shows and they were hard to get in contact with.
We only got advice from one other person on one occasion.
[B]"1. I'd think that importing bags made cheaply in Asia to sell in Bali is a bit like the proverbial coals to Newcastle."[/B]
We're not talking about cheap bags here that you see all over Asia, we like to think they're quite unique. I haven't seen anything like this here in Bali. Having said that there is many bags available and very competitive.
[B]"2. You've been told that most products are made in Java & shipped in (no import duty) therefore there's an established trade channel for these products organised along family or long (very long-term) established trade systems, that you'd be attempting to insert yourself into"[/B]
As far as duty goes - hopefully our import will be duty free, coming from Cambodia it's part of ASEAN free trade agreement. The advice from various customs brokers is that it is possible with a "certificate of origin" which I can get. Whether or not this is actually the case who knows?? I don't think I will ever know unless we actually decide to go ahead.
I have considered a small trial shipment just to see what happens.
[B]"3a. Have you researched the rental cost of retail outlets in the main drag in Kuta, Legian, Seminyak, Sanur, Ubud etc? There's a reason they are so high, 'cos just like back home, location location location rules the retail trade!"[/B]
Yep we've done a lot of research on this, we know what the costs are for various size premises and locations.
[B]"3b. Also because you're a foreigner, you'd be paying way more rent than your neighbour "[/B]
As in previous answer, we know at leats what the "asking price" is for us. We understand that when the owner see's we are foreigner it probably doubles. Hope we would be able to negotiate a little.
[B]"4. You'd be subject to onerous import duty rates (as mentioned)"[/B]
As answered above but who knows what the reality is!!
[B]"5. Local taxes? (legitimate & under the table)"[/B]
Not sure if you mean import taxes, or company taxes or both.
As for import it's high but manageable from the quotes and research we have.
We've been advised on company and tax on earnings but as I said just from 1 consultant.
So need to get more advice.
[B]"6. So chances are that with 3a&b, 4 & 5 combined your retail price will be higher than they would be back home." [/B]
From the calculations I've done our retail price would be considerably lower than back home. It needs to be or we won't go ahead with any of this. From walking around and looking in every shop that we can and trying to gauge the price, we think we would fit in price wise, to different brands and types of products of similar quality that appeal to tourists. Having said that, my calculations are based on trusting quotes from freight companies and customs brokers and allowing for a few "mystery" increases. But the reality might be different.
[B]"7. Have you looked at what - tourists (mainly from your own country) actually do spend their money on in Bali? AND HOW MUCH (or little they spend).....Hint, it ain't good quality fashion items."[/B]
Well I might have misjudged this one, I did think there was a high percentage of people shopping for more than just your typical cheap market items. Our products aren't high fashion, but somewhere in between and I did think there would be a market. But I need to research this more.
[B]"8. Have you looked into whether you can get a 100% foreign owned PMA for retail? If it isn't possible (I suspect not) then you'll need a local 51% partner ... or No PMA = no KITAS!"[/B]
The advice we got was that it is possible for what we want to do, the one other notaris that we managed to meet did "go along" with this advice but I want to meet more people to make sure we will be doing things legally.
One of the main reasons I originally posted to be referred to someone.
It's early days for us on this, although we've been thinking about it for a while and we have travelled back and forward quite often over the past couple of years, that's why we decided to move here for at least one year to immerse ourselves in Bali and see if this is possible. We have not committed to going ahead yet.
We are not looking to make a million dollars, we see this as a way to get started in Bali and we also see this small showroom of our products as a sort of extension of our current business in Australia.
I am operating our business in Australia from Bali, with the help of a small team back there in oz. We have in our minds that it could work quite well that the many Aussies that will "hopefully" come in our showroom in Bali, will be able to return to oz after their holiday and buy from our website back there (at a special Bali price).
As I said just my wife and I's ideas, there is possible big holes in our plan and we would be happy to hear from anyone further. Anyway, that's enough from me.
Thanks for your time
Gareth
SHoggard
gsw_76 wrote..... Yeah I understand that there is no guarantee of what will happen regarding ASEAN free trade area when any goods arrive here. The customs brokers that I have spoken to say that in the past when they have done this sometimes it works, usually when the paperwork is 100% spot on. Then depending on customs mood at the time they might decline the duty exemption or not give it in full, especially if some paperwork is not in order. i guess they can always find something wrong if they really want.
See [B]Point 5[/B] (in my earlier post) also toss in some power 'connection fees' / 'fire inspection' & any other 'taxes' that someone with some form of uniform thinks they could hit you up for (you've been in Cambodia.. at least nobody's carrying AKs in Ubud)
Another 'point' that just crossed my mind.... you realise that you won't actually be able to [I]work[/I] in your shop without the correct visa type - so the PMA structure [I]IS probably[/I] the very 1st point to check out, [I]I'd be very surprised if 100% foreign investment in a retail business were permitted[/I] given the existing retail legislation :
- a Presidential Decree 2008, restricts foreign-invested companies to operate only in retail spaces that exceed 1,200 m2 and department stores of 2,000m2 or more.
- Other regulations include a 2007 Presidential Decree and 2008 Ministry of Industry Decree thar stipulate that hypermarkets can only be established on arterial roads or roads that can be covered over a high speed (hmmm... how many miles/Kms of roads can be covered 'over a high speed???")
Basically, the government is concerned that family owned stores (mom and pop stores) will be killed-off by the huge purchasing power of modern retailers, and in a populist move government it intervening to protect the small store-owners ( and promote nationalistic policies ahead of elections in 2014).
National governments recently passed a regulation that will restrict the number of stores that are directly owned and controlled by a single company to 150 outlets only.
OK, apart from the 2008 Decree, you could say that none of the above applies to you (correctly) I cite this here to point out that 'retail' is a very touchy political area, so I'm willing to bet that there is SOME provision that will prevent you owning 100%
.... you can check it online, but my research has only been into the impact on the big boys like Starbucks, Indomaret, PT Fast Food (owner of 400+ KFCs) some other kind soul will have to give you the link tot the restricted/banned list.... I've seen it posted here sometime in the past 6 months in the context of another type of business).
But... good luck
