Commentary by Wayne Forrest
Indonesia has always had an ambivalent attitude towards foreigners, foreign investment, and Indonesians educated abroad. I began thinking about this during the latest Cabinet reshuffle when several highly successful Indonesians returned from long stints abroad. 71 years after independence it still isn’t an easy transition for an Indonesian to return or for an American to take up a position in the country.
There are few Indonesians who would not jump at the chance to work for an American company (its not just the wages they are after but also the corporate culture that rewards merit) but yet latent suspicions remain among many that these companies are vessels for “dominating” Indonesia. Similarly, I am always fascinated by how difficult it can be for Indonesians to return to their homeland after time abroad. When I follow up with our Indonesian student interns once they return, they report on how they can be ostracized. I know of an American attorney who was recently brought in to a prominent Indonesian state owned enterprise by its President Commissioner yet months after he began his work there he is still waiting for a secretary and staff.
Only a handful of Indonesian universities have international standard programs but even these (i.e. University Indonesia, Bandung Institute of Technology, Gajah Mada University) are not ranked in the top 300 in the world by any of the half dozen ranking organizations (including US News and World Report). Those fortunate enough to qualify for overseas study (as well as locate funding) leap at the opportunity. Except for a small percentage, most do return and find gainful employment in business and government.
Some that stay abroad are eventually called back. In the 1970’s President Suharto recruited B. J. Habibie, a German trained engineer and executive at Messerschmidt, to come home to build an aeronautics company, PT Nurtanio, and become his Minister of Science and Technology. The company, now called Dirgantara, employed many foreign engineers who helped build local capabilities along the way. At the time there were rumors Habibie was a German citizen, given the length of time he was there. If there was criticism it was that the company spent way more money than it earned. But, overall the company was beloved as an early but expensive example of Indonesia’s capability to manufacture world class products (short haul turboprops) even if the main customer was the government itself and many of its executives were imported.
In 2005 the American educated economist Sri Mulyani Indrawati was recruited from her post at the IMF in DC by President SBY to be his Planning and then Finance Minister. Sri had also spent time working at Georgia State University for a US AID backed training program. Just about every economic minister since the 1960’s has had a PhD from either a US or Australian university. However, even in the Suharto years when the political system was basically closed and they had maximum cover, these technocrats were only given a free hand to exercise their natural inclination to build an open economy when times were tough. When they could not, they usually stayed and waited. So, Ali Wardana and Widjoyo had to allow the Japanese inspired protectionist, import substitution policies in the 1970’s even though their education told them they were not appropriate for Indonesia. The collapse of oil prices in the early 1980’s allowed them to spread their wings and convine Suharto to deregulate and open capital markets, applying the economic models they learned at places like Berkley, MIT, and Wharton. Sri Mulyani, having many more options and perhaps a stronger ethical bent, did not have her predecessors’ patience and left her post in 2010 when it was clear the President was not backing her policies to bring tycoon tax cheats to justice. She was attacked for being “a neoliberal agent” of the IMF and the United States.
Like his predecessors President Jokowi has been urging the educated diaspora to return home and contribute to national development. Its not so easy. I once knew an Indonesian graduate of Harvard Medical School who wanted to return to open a clinic until he learned that even an Indonesian citizen could not practice medicine if they didn’t have an Indonesian degree. (there is no reciprocal recognition) Searching for talent for a Cabinet in relative disarray, the President recently recruited two talented Indonesians happily working in the US. Archandra Tahar, PhD in petroleum engineering from Texas A & M, left the C suite of a Houston offshore oil and gas services company to be Minister of Mines and Energy. Sri Mulyani was persuaded to leave the #2 post at the World Bank to return for a second act as Finance Minister. After only 25 days as minister President Jokowi had to dismiss Tahar when it became clear he held a US passport. Although Cabinet members such as Luhut Pandjaitan leapt to his defense on the grounds of his competence as well as Indonesia’s need for foreign-educated talent, Tahar was attacked as a “foreign agent” too sympathetic to foreign energy and mining companies when his dual citizenship became clear. (He could return to his post if his citizenship is reinstated) Sri Mulyani, in her new role, is charged with implementing a tax amnesty/tax collection policy aimed at some of the same companies she fought with 10 years ago that were not paying their fair share. Although she has not yet been openly challenged, she has already ruffled the feathers of Parliamentarians when she turned down their request for funds to spend at their discretion in their home regions. It seems that its only a matter of time before her incorruptible will could force a confrontation somewhere.
Newmont Mining and Sumitomo, long term investors and partners to the Indonesian Republic, apparently have decided they had been hassled enough by shifting regulations and breaches of their contract and are in the process of selling their remaining stake in the Batu Hijau mine to Indonesian investors. It won’t matter that the company’s employees and local region want them to stay or that new demands to build smelters are uneconomic, not part of their contract, and Indonesian companies are not building them; the public sentiment and politicians will cheer as their counterparts did in the US when the Japanese sold Rockefeller Center after they had purchased it when the yen was high.
The rhetoric of President Jokowi’s government is pro investment, anti protectionist, and welcoming to foreign investors. He and his leading ministers seem sincere about it. But they remind me of a college that is so wrapped up in their marketing campaigns they fail to resolve problems with dormitories, dining halls, class sizes, that hurt them on the back end. (low retention rates). As former US Ambassador to Indonesia, Robert Blake, told an AICC audience recently: “Indonesia is making good strides to improve the investment climate but it could do more to resolve the issues that confront existing investors.” In that respect, I hope that the attitude to those who have lived abroad, whether they are Indonesian or not, improves.
(These views are the author’s own and do not necessarily reflect those of the American Indonesian Chamber of Commerce or any of its members)