1 Chapter I Introduction How to become a successful entrepreneur. Of course, there are various answers to this question, especially if the faced challenges are not equal. The island entrepreneurs do not face the only day to day deficiencies, but also to some extent, ―comparative disadvantage.‖ That is why studying island entrepreneurs is necessary, especially for an emerging country such as Indonesia, where impartial development is still a big issue. This chapter will describe the background why this research takes the island entrepreneur as its context and subject, both from the perspective of the Indonesian Government and its legal regulations, as well as from the literature review of previous studies related to business and industrial development on the island. I.1 Background When we talk about Indonesia, two paramount considerations emerge. The first is that Indonesia is the largest Muslim country in the world, and the second is the world's largest country, solely comprising of islands. According to a 2002 survey by the National Institute of Aeronautics and Space, there are 18,307 islands in Indonesia, although the CIA World Factbook considers it to have 17,508 islands (Smith, 2018), and Dana (1999) mentions that the Republic of Indonesia comprises of 13,667 islands. However, officially, the Indonesia government noted 17,500 islands are scattering between 6 degrees north latitude to 11 degrees south latitude and from 9 degrees to 141 degrees east longitude (Ministry Of Industry of the Republic of Indonesia, 2017). As a developing country, entrepreneurs in Indonesia are still concentrated in labour-intensive systems, where commonly traditional methods are still the main choice (Dana, 1999). Nowadays, however, because of the industry revolution 4.0, there are 4.6 million enterprises has used the e-commerce platform, yet, only 5-7% are direct producers and the biggest portion are resellers (Data from Ministry of Economic Coordinator Republic of Indonesia, 2018). The entrepreneurs are also required to obtain a basic business permit. For various reasons, there are still many who have not registered their businesses. Some of the main reasons are trying to ―hide-away‖ from taxes, which 2 is 0.5% from total turnover (Government regulation no. 23/2018), or what Dana (1999) stated as some ―hidden cost‖ such as an abusive bribe before issuing a permit. This evasion make some businesspersons reluctant to comply. To overcome this, based on the Government regulation number 24/2018, there is an online single submission (www.oss.go.id) to support the entrepreneurs to obtain licenses in a safe, quick, and real-time way. Through this innovation, the Government of Indonesia hopes that enterprises will be well documented, and the documentation serves as a foothold in making policies related to entrepreneurship development in the future. Another recent ―hot issue‖ is the mandatory rules for halal (dietary standard for Muslim food) certificates for every food, beverages, cosmetics, chemical and biology products, as well as genetic engineering producers, that will be implemented starting October 17, 2019, according to Law number 33/2014 regarding Halal Products Guarantee. This certification is not free and must be extended every 2 (two) years. Certainly, this regulation is inconvenient for micro and small industries.