The history of American business interests in Indonesia effectively begins in l897… After years of struggling to gain entry into the market, the Standard Vacuum Oil Company of New York (precursor to Mobil Oil) established in that year a foothold in Palembang. By 1920, the United States Rubber Company (eventually known as Uniroyal) had established a large plantation at Kisaran in North Sumatra that became one of the largest in the world. Goodyear soon followed with their own large concession. With the entry of Caltex (a joint venture between Chevron and Texaco) in 1930’s, colonial Indonesia eventually became a leading exporter of oil to China and Southeast Asia. Before 1900, occasional shipments of spices, coffee, and tobacco entered the United States via Holland. By the time of the Second World War, largely as a result of the efforts of Uniroyal, Caltex, Standard Oil, Indonesia ranked third among American total direct investment in Far Eastern countries.
While oil and rubber were the main foci of American involvement during those years, American businesses were active to a lesser extent in the manufacture of margarine and palm oil. Also during this period, Singer and American Standard established factories in Indonesia to produce sewing machines and bathroom fixtures for the general Asian market. Still, it was not until after the war – after Indonesian independence – that American companies began to be a larger presence in the Indonesian market.
When Ladd Johnson (left) oversaw the birth of the Chamber in l949 – four years after the war for Independence – it was no more than a loose agreement between a handful of American businesses, including those mentioned above. What clearly distinguished them was their desire to support Indonesia’s independence that was still very much in dispute. One key member, Robert Delson, began his involvement with Indonesia in the mid-1940s when he acted as a voluntary legal counsel to several hundred Indonesian seamen claiming to be citizens of Indonesia.
These brave men were threatened with deportation because the US government had not yet recognized Indonesia’s independence. Had they been deported, they would have been sent to an area of their homeland then under colonial power where they would have been faced with incarceration. Mr. Delson’s firm, Delson, Levine & Gordon, an early Chamber member, persuaded a senator from North Dakota to introduce a bill in the U.S. Senate to stay the deportation, which granted the seamen asylum as a matter of senatorial courtesy.
After that victory, Mr. Delson (left)and other early AICC members became extremely active in America in the Indonesian struggle for independence. From 1947, when the Indonesian Delegation to the United Nations led by Dr. Sumitro Djojohadikusomo first came to New York to argue its case, Mr. Delson acted as legal counsel for the Republic. Aside from advising the Indonesian delegation, Mr. Delson strove tirelessly to enlist the support of many American organizations in Indonesian independence activities. Together with many early members of the Chamber, Delson was instrumental in raising substantial amounts of money to finance the independence movement’s representation abroad.
Another early AICC member, the American Indonesian Trading Company, imported products from West Sumatra and other areas of Indonesia under the nascent Republic’s control, thereby helping to finance the independence movement.
The Chamber’s early activities also included hosting the first trade and investment missions of the newly independent Republic of Indonesia to the United States. In the l950s and 60s, the Chamber facilitated many direct contacts between Indonesian and American business concerns, a pursuit that later proved to be instrumental in dramatically solidifying relations. With the establishment of President Suharto’s government in 1965, firms such as American Trade Sales, Inc. (precursor to The ATSGlobal Group), Continental Grain, Connell Rice and Sugar, and Cargill, were able to send emergency shipments of rice and wheat to Indonesia. The US Agriculture Department’s PL-480 program was an important pillar of the United States – Indonesia partnership throughout the 60’s, 70’s, and into the 80’s.
(left-Joseph Harari, President of AICC, an early investor in Indonesia, and founder of American Trade Sales, a group that stabilized rice and wheat markets in Indonesia after President Suharto re-opened relations with the US)
In recent years, the Chamber has taken continuing interest in improving the quality and price of Indonesian commodities, and developing solutions to problems of commercial law, arbitration and claims resolution. As the Indonesian economy has developed, questions of free access and reciprocal trade relations have remained high on its list of concerns.
Beginning in the 1980’s Indonesia unilaterally began a series of unprecedented deregulation packages that facilitated a substantial increase in the volume of trade and investment between the two countries. Capital markets were opened and America’s leading US investment houses, jumped in.
Although it continues to be a large consumer of Indonesian rubber, oil, spices, wood products, and coffee the US is now Indonesia’s largest market for manufactured goods. Today several hundred US firms regularly do business in Indonesia representing a wide range of sectors. Most maintain a representative office or joint venture operation in the country. It is estimated that several thousand other American firms have at one time or another sold a product or services to Indonesia in the past few years either directly of through their agent in Southeast Asia. Unlike a decade ago, Indonesia is now on the radar screens of most American companies.
The 1990’s saw the first benefits of deregulation and the Chamber responded by sponsoring a series of 15 trade and investment program across the United States in 1990-1991. Two way commerce between the two countries doubled during the period 1991-1996.
In 1995-1996, AICC and its Indonesian counterpart, KADIN, developed two major awareness programs: Opportunity Indonesia 1995 and the Scholastic Ambassador Program for Indonesia. The first was aimed at the American business community, the second at high school social studies students and teachers. 70 Indonesian CEO’s met American business leaders at 4 programs across the US and 77,000 American social studies teachers received free maps and curriculum materials for use in their classrooms. A unique feature of both programs was that only private funds were used.
As a result of the Asian economic crisis of 1997, AICC developed the “Indonesian Relief Education Campaign: Preventing a Lost Generation” which provides funds for CARE and UNICEF projects in Indonesia. The campaign initially raised over $1,000,000 and is on going.
Beginning in 1998 Indonesia renewed its democratic roots and is now undertaking a political and economic transition of dramatic proportions. US companies continue to see strong long-term opportunities in Indonesia’s market. Some of the best opportunities for American firms are related to: power, telecommunications, mining, oil and gas, construction, financial services, industrial and agricultural chemicals, food products, health and environmental products and consumer goods. Indonesian firms will be able to develop significant exports to the United States of electronics, toys, sporting goods, house wares, minerals, wood products, processed foods, garments, and shoes. Even with all of that has been accomplished in commerce between the two countries, hundreds of opportunities await development. As it has since 1949, the American Indonesian Chamber of Commerce continues to assist new entrants as well as established players.