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The Jakarta Post
Features - March 05, 2000

Virtual offices are here for real
By Rudy Madanir

Virtual and serviced offices are still relatively new in the country, but there is a growing demand for the service. The Jakarta Post's contributor Rudy Madanir takes a close look at the trend.

JAKARTA (JP): Be a guest of Michael Sinjorgo. This means that you will be warmly welcomed by two beautiful, smiling receptionists as soon as you step into the reception area. In a minute, you are seated in the spacious hall with a cup of tea or coffee, enjoying the comfort and luxurious atmosphere of an office located in the Jakarta Stock Exchange building on Jl. Sudirman, a prestigious business address in town.

"Wow, you have a huge office," said Sinjorgo mimicking the frequent comments made by his guests. "They think I am the big boss for the whole place," he said, laughing.

To the guest's surprise, Sinjorgo explains that the office is not his, it is only partly rented for the purpose of meeting with his guests.

The white-haired Sinjorgo, 59, a Canadian national, is the president director of an insurance risk management consulting company, PT Usaha Tepat Guna. He runs his business with only five local staff and his company practically has no need of permanent office space throughout the year. Because of the nature of his company's work, it is more practical for Sinjorgo, who works with large companies, to have office space within his clients' offices. "Our staff are very mobile, they can spend four hours in one company and then move to another for another three hours. This means we don't necessarily need our own office space," he said.

Sinjorgo is a client of a serviced office center that applies a concept of virtual office - "an office when one does not have a physical office."

By paying approximately Rp 1 million a month, Sinjorgo has a basic virtual office service, including a dedicated telephone line, a receptionist answering the telephone under his company name, an hour a day of using the office, and most importantly, the use of the serviced office center as his business address.

The number of companies sharing the same address with Sinjorgo could reach 140 as the center does not only cater to virtual office clients but also serves 40 in-house clients.

There are currently eight main operators with international affiliation in the market, spread throughout the city from the Ascot building, BNI Tower, Menara Kadin, Menara Mandiri to Bapindo Plaza. If small operators are included, the number of serviced office centers could reach 20, according to property expert Panangian Simanungkalit.

Occupying a half or a whole floor at some of the newest buildings along Jakarta's main thoroughfares, the centers are now waking to the needs of the business community, providing corporate image and cost efficiency among other services.

Coincident with the recovery of the Indonesian economy, more and more companies are now flocking to centers seeking help, either to start a new business or to keep an existing one alive.

No matter what the size or industry, the centers try to provide the general and specific needs of each client.

Clients could include a new foreign investor who just arrived, seeking a business opportunity, or it could be another downsizing company that has been forced by the economic crisis to move from the prestigious business district.

A newly arrived multinational corporation can rent a small furnished office within a center with shared secretaries, receptionists and boardroom, before setting up its own office or factory. That way it can focus on its start-up operations without being bothered by the hassle of establishing its own office and recruiting employees. After several months, the company can leave its temporary office to set up of its own, or it may set up a representative office and remain with the center, or if it has not been successful, leave the country.

A downsizing company can still maintain its business image by becoming a client in one of the virtual office centers. Being a client does not mean that the company must rent an office in the center. The company can rent the address of the center including a personalized telephone answering service in its company name. As a result, the company saves the cost of renting office space in the expensive area. And more importantly, it can save its image by not showing its ruko (shophouse) address in Tangerang or Bekasi as its representative office.

Be it real (in house) or virtual, the demand for serviced offices is growing.

CEO, one of the main serviced office operators, has reached its full capacity both for in house and virtual office clients at its center in the Jakarta Stock Exchange building. Consequently, the operator has opened its second center at the GKBI building, by the Semanggi cloverleaf.

"Since our grand opening in January, our new center has already reached 45 percent occupancy," said CEO president Mee Kim.

Another operator, The Executive Center, has more than 90 percent occupancy of its 37 serviced offices available for in-house clients.

"There are very few rooms available here, so we are looking for a second location at this moment," said Stephen Chatam, an executive consultant of the center which uses the whole 19th floor at Aetna Danamon Building on Sudirman.

In addition, Chatam said that his center recently made five to six virtual office sales in a week, a record that has never happened before.

Unlike traditional offices, the centers provide some flexibility to their in-house clients in terms of rent payment, from monthly to hourly, if necessary.

The room sizes in the two centers varies from as small as 12 square meters to 70 square meters. Some rooms are designed for expansion or downsizing with just a connecting door and partition, as requirements change overnight.

As the centers compete to offer one stop service, every need of a modern office is available within the centers. They offer support facilities such as various sized meeting rooms and boardrooms combined with top of the line offices and high technology equipment (only the latest models and best brands). Services vary from web site design, translation, payroll, bookkeeping down to hotel and airline reservations. These functions are supported by well trained staff from secretaries and receptionists to office boys. And if needed, accountants and IT specialists are available.

Young

Chatam, who has been with the Executive Center since 1997, said that the serviced office industry is quite young for Indonesia as well as for some other countries in the region. Even though many people still do not fully understand the concept, the business is developing well.

Simanungkalit said that the high demand for serviced offices has nothing to do with the economic crisis. Because the demand for the service existed before the crisis hit the country.

However, he admitted that people became more aware of the service after the crisis because of the drive to be efficient in running a business.

He predicted that in the long run there will be more buildings with floors divided into smaller rooms run by many serviced office operators.

This positive trend is triggered by the drive to pursue efficiency, he said, "the risk will be more distributed, since it is shared by the operators and the users."

When the Indonesian economy is no longer dominated by big business players, he added, there will be more small and medium companies needing less than 100 square meters of office space because of support from Internet and high technology.

"At that time, serviced offices will be at its peak demand. And it need not necessarily be in prime business areas anymore," he concluded.

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