"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)."
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.
"1. I'd think that importing bags made cheaply in Asia to sell in Bali is a bit like the proverbial coals to Newcastle."
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.
"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"
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.
"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!"
Yep we've done a lot of research on this, we know what the costs are for various size premises and locations.
"3b. Also because you're a foreigner, you'd be paying way more rent than your neighbour "
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.
"4. You'd be subject to onerous import duty rates (as mentioned)"
As answered above but who knows what the reality is!!
"5. Local taxes? (legitimate & under the table)"
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.
"6. So chances are that with 3a&b, 4 & 5 combined your retail price will be higher than they would be back home."
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.
"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."
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.
"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!"
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
