Is New Business in Bali Worth It?
- Thread starter stan
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Steve,
Yes, that second approach sounds best to me too. (yes, it was Roy, not me, that cast doubt on formal MBA training) I used to be involved in a small entrepreneurial company that developed "tension member termination technology" and other spin-off ventures, and we always took that second approach. First you identify your target market, and only then do you develop a product that addresses the needs of that targetted market. It's the only way to do it.
I still maintain that the market the two of you should be looking at is the high-end handicraft export market. This plays to a distinctive strength of the Balinese. The Balinese are extraordinarily talented in this area. They are the world's best.
It also plays to one of your inherent strengths: knowledge of the American and, by extension, Western markets.
Tourism in Bali has hit a brick wall. The last thing you should do is "another tourist bungalow show".
There is no reason that you should limit yourselves to a single product. Start four lines of products, and stay with the one that works. Then start another three, and go with the winner there too. And just keep doing that, over and over again. That's what I'd do....
Ken
Yes, that second approach sounds best to me too. (yes, it was Roy, not me, that cast doubt on formal MBA training) I used to be involved in a small entrepreneurial company that developed "tension member termination technology" and other spin-off ventures, and we always took that second approach. First you identify your target market, and only then do you develop a product that addresses the needs of that targetted market. It's the only way to do it.
I still maintain that the market the two of you should be looking at is the high-end handicraft export market. This plays to a distinctive strength of the Balinese. The Balinese are extraordinarily talented in this area. They are the world's best.
It also plays to one of your inherent strengths: knowledge of the American and, by extension, Western markets.
Tourism in Bali has hit a brick wall. The last thing you should do is "another tourist bungalow show".
There is no reason that you should limit yourselves to a single product. Start four lines of products, and stay with the one that works. Then start another three, and go with the winner there too. And just keep doing that, over and over again. That's what I'd do....
Ken
Thanks Ken,
I like the thought of trying different things, and I will certainly begin researching the craft angle. I guess we stayed away form the export angle after reading about all of the corruption issues that exist. It seems that if we were to export, we would need a darn good reason to be in Indonesia. However, your, "best in the world", description makes it a serious candidate in my mind.
As long as you have a fair amount of capital, you can try a lot of different angles...
As far as our zest for hospitality, it is based on my perception that Americans (non-Kuta-type) are an untapped market. I would be interested in your thoughts on the level of marketing you have seen geared toward the 45-65 age group by businesses in your area. I have done a fair amount of walking and do not see a lot of commentary of age demographics. I do not think I should assume an older crowd just because Ubud is quiter than other places.
As always, thanks for everyones thoughts.
Your neighbor (over the horizon)...steve
I like the thought of trying different things, and I will certainly begin researching the craft angle. I guess we stayed away form the export angle after reading about all of the corruption issues that exist. It seems that if we were to export, we would need a darn good reason to be in Indonesia. However, your, "best in the world", description makes it a serious candidate in my mind.
As long as you have a fair amount of capital, you can try a lot of different angles...
As far as our zest for hospitality, it is based on my perception that Americans (non-Kuta-type) are an untapped market. I would be interested in your thoughts on the level of marketing you have seen geared toward the 45-65 age group by businesses in your area. I have done a fair amount of walking and do not see a lot of commentary of age demographics. I do not think I should assume an older crowd just because Ubud is quiter than other places.
As always, thanks for everyones thoughts.
Your neighbor (over the horizon)...steve
Roy, Pongken, Bert,
First let me reply with a huge Thank You. I left town last week with the feeling that our next step in this project we're working on would be another encylopedia version of Bali prettied up by our knowledge of real estate deals and making projects work. As corny as it sounds, you guys have taken us to a better level. Steve and I talked a bit tonight. Our original plan and approach to this project has changed significantly from a couple weeks back, because of you guys. Again thank you.
Hopefully my comments don't conclude the thread that's going. I agree with Roy that this is the first I've read on the board that gets down to the real "nitty gritty".
But I want to make an offer to you guys. In case I can't be there to buy drinks, I'd love to mail you a copy of all our work. If you drop me an email with an address sometime, I'd enjoy knowing that you guys got to look over what we've been doing.
Stan.
First let me reply with a huge Thank You. I left town last week with the feeling that our next step in this project we're working on would be another encylopedia version of Bali prettied up by our knowledge of real estate deals and making projects work. As corny as it sounds, you guys have taken us to a better level. Steve and I talked a bit tonight. Our original plan and approach to this project has changed significantly from a couple weeks back, because of you guys. Again thank you.
Hopefully my comments don't conclude the thread that's going. I agree with Roy that this is the first I've read on the board that gets down to the real "nitty gritty".
But I want to make an offer to you guys. In case I can't be there to buy drinks, I'd love to mail you a copy of all our work. If you drop me an email with an address sometime, I'd enjoy knowing that you guys got to look over what we've been doing.
Stan.
Now a more related thought. I don't really buy into the notion that Steve and I could ever become locals in the timeframe that we would need to be fairly successful (again, success as defined by Steve was make enough profit to support ourselves, family, and part of the local community we're in and to create a business that can last for us to give to someone else)
Data Point 1: I was just in Akumal, Mexico. I met an American expat restaurant owner. He's got a really good grasp of what he's doing there. The community, the locals, the tourists. He's lived there for over 10 years, in a tourist community, and he is still "The American that owns the Turtle Bay Cafe".
Data Point 2: I was born in Texas, raised by Texans. My extended family is all Southern. I understand a Southern way of life. But before living in South Carolina (where I've lived now for 3 years), I spent a lot of time in Pennsylvania. To most southerners, those years in Pennsylvania have "tainted" me. I know confidently that if I lived here for another 35 years I will never be considered a true South Carolinian or Southerner.
Two points don't make a trend, right? (Sorry for the geeky analogy) But add the comments that Roy (and probably most of you guys that consider yourselves locals) are the exception, not the rule, about being accepted as a local, and there's my trend that says it's not very likely we could do this and become community citizens. You guys have been here longer, and have earned your status.
Although our strategy has always been to become locals, my gut says that a pair of geeks from South Carolina with just a year or two to make it work don't have too good a chance. We would have get in bed with someone to make any kind of project (tourism or crafts) work.
Data Point 1: I was just in Akumal, Mexico. I met an American expat restaurant owner. He's got a really good grasp of what he's doing there. The community, the locals, the tourists. He's lived there for over 10 years, in a tourist community, and he is still "The American that owns the Turtle Bay Cafe".
Data Point 2: I was born in Texas, raised by Texans. My extended family is all Southern. I understand a Southern way of life. But before living in South Carolina (where I've lived now for 3 years), I spent a lot of time in Pennsylvania. To most southerners, those years in Pennsylvania have "tainted" me. I know confidently that if I lived here for another 35 years I will never be considered a true South Carolinian or Southerner.
Two points don't make a trend, right? (Sorry for the geeky analogy) But add the comments that Roy (and probably most of you guys that consider yourselves locals) are the exception, not the rule, about being accepted as a local, and there's my trend that says it's not very likely we could do this and become community citizens. You guys have been here longer, and have earned your status.
Although our strategy has always been to become locals, my gut says that a pair of geeks from South Carolina with just a year or two to make it work don't have too good a chance. We would have get in bed with someone to make any kind of project (tourism or crafts) work.
Stan,
I was in Acumal about 20 years ago and thought the place was "perfect". After being stuck in Cancun, (we couldn't get a rental car) I thought we had arrived in heaven in Acumal.
Okay, back to the subject of being a local in Bali. Roy fleshed out my original point quite well. Your can become a respected member of a community by "paying your dues", but you never will become "a local villager".
But I really don't think that "being a local" has all that much to do with running a business. Sure it helps, but it's not a necessity.
Steve,
Corruption has little to do with "exporting" and a lot to do with "importing". Exporting is a pretty smooth business.
Having respect for local Balinese culture and values oddly coincides with the tastes of the 45-65 age group. In that sense the targetting of that group is already being done by the Balinese by just following their own cultural directives.
Ken
I was in Acumal about 20 years ago and thought the place was "perfect". After being stuck in Cancun, (we couldn't get a rental car) I thought we had arrived in heaven in Acumal.
Okay, back to the subject of being a local in Bali. Roy fleshed out my original point quite well. Your can become a respected member of a community by "paying your dues", but you never will become "a local villager".
But I really don't think that "being a local" has all that much to do with running a business. Sure it helps, but it's not a necessity.
Steve,
Corruption has little to do with "exporting" and a lot to do with "importing". Exporting is a pretty smooth business.
Having respect for local Balinese culture and values oddly coincides with the tastes of the 45-65 age group. In that sense the targetting of that group is already being done by the Balinese by just following their own cultural directives.
Ken
So we have been getting pretty in depth around here, and Stan and I have been walking around to get a better understanding of Bali and its culture. What a journey it has been!
I have a few technical questions surrounding taxes and corporate structure.
(1)There is a lot of good information out there about PMA. There was a great post on Balilife.com describing it. My question goes beyond the basic description. I understand one can have a citizen/entity own 5% now or allow for at least 5% citizen/entity ownership after 15 years. I can think of some benifits of both. I suppose you could sell out within 15 years and keep all of the profits if you were 100% owner. I see where it would be beneficial to have vested local ownership. What is the real intent of mandating one of these two structures? I am trying to understand the risks involved that are specific to Bali.
(2) Corporate income taxes in Indonesia appear to be set up the same as over here in the US, but the truth is that companies effective tax rate has gone from 15% to 7% over the past twenty years due to tax credits/loopholes that have become prevalant over here... Are similar tax deferral tools used over here, or is your code fairly straightforward?
I would say, "that's it", but it probably is not, and heaven forbid I would borrow such an awesome tag line from our moderator...
As always, thanks folks...steve
I have a few technical questions surrounding taxes and corporate structure.
(1)There is a lot of good information out there about PMA. There was a great post on Balilife.com describing it. My question goes beyond the basic description. I understand one can have a citizen/entity own 5% now or allow for at least 5% citizen/entity ownership after 15 years. I can think of some benifits of both. I suppose you could sell out within 15 years and keep all of the profits if you were 100% owner. I see where it would be beneficial to have vested local ownership. What is the real intent of mandating one of these two structures? I am trying to understand the risks involved that are specific to Bali.
(2) Corporate income taxes in Indonesia appear to be set up the same as over here in the US, but the truth is that companies effective tax rate has gone from 15% to 7% over the past twenty years due to tax credits/loopholes that have become prevalant over here... Are similar tax deferral tools used over here, or is your code fairly straightforward?
I would say, "that's it", but it probably is not, and heaven forbid I would borrow such an awesome tag line from our moderator...
As always, thanks folks...steve
Taxes? Cough, cough, cough, ahem and excuse me. :shock: Well, what the dickens are taxes? Indonesians don't file 1040 forms on April 15, that is for sure!
Indonesia's coffers are filled by their profits, owning controlling interests in virtually all companies that comprise the GNP. Taxes? That's something paid by tourists when they check out of their hotels!
All kidding aside, yes. All businesses in Indonesia are required to pay a tax, but it is nothing like what this issue means in the US. Taxes are for certain the last concern about doing business in Bali.
Indonesia's coffers are filled by their profits, owning controlling interests in virtually all companies that comprise the GNP. Taxes? That's something paid by tourists when they check out of their hotels!
All kidding aside, yes. All businesses in Indonesia are required to pay a tax, but it is nothing like what this issue means in the US. Taxes are for certain the last concern about doing business in Bali.
Roy,
Yes, taxes are a minor concern, but to avoid an inevitable shakedown, they are a concern. Bungalow operators do get visits from the tax people. My bungalow landlord has issued detailed instructions for all of his residents on what to say and what not to say in the event of tax people questioning. One of his concerns is that we all say that we just moved in yesterday and will be leaving soon. He takes this seriously, and by extension so should Stan and Steve.
Ken
Yes, taxes are a minor concern, but to avoid an inevitable shakedown, they are a concern. Bungalow operators do get visits from the tax people. My bungalow landlord has issued detailed instructions for all of his residents on what to say and what not to say in the event of tax people questioning. One of his concerns is that we all say that we just moved in yesterday and will be leaving soon. He takes this seriously, and by extension so should Stan and Steve.
Ken