Remember America

August 2020

Commentary by Wayne Forrest

On the 17th of this month Indonesia celebrates the 75th anniversary of Soekarno and Mohammad Hatta’s audacious declaration of independence from Dutch colonialism.   With only a collection of militias and officers (some trained by the recently departed Japanese), an air force that consisted of one plane donated and flown by Bobby Freeburg, an American pilot, and a shortage of weapons, Indonesia’s revolutionaries chose its conflicts wisely, sat at the negotiating table when necessary, and 4 years later eventually achieved their goal.  It took time for the United States to recognize and support Indonesia’s like-minded decolonization effort.   We ended up being the prime broker/mediator of a series of negotiations that ended with the birth of the Republic of Indonesia.  But America’s diplomatic support for Indonesia wasn’t matched by economic aid, perhaps because our focus was on rebuilding Europe.   President Soekarno’s entreaties for development assistance and US investment (he was particularly interested to have GM build cars) fell on deaf ears.   It was only in response to early Russian aid that our own programs were launched but few US companies invested.    The exceptions were rubber and oil, two strategic commodities that US companies (Goodyear, Uniroyal, Caltex, Standard Oil) had begun developing prior to the Second World War.  But even these were challenged by Indonesian socialist and communist parties by the late 1950s.  When I joined AICC in the late 1980’s Uniroyal’s CEO, Norman Gouldin, was on the board and told me the story of how he had escaped as a young man from their Sumatran plantation to Singapore when it was overrun for a few months by Indonesian communists.   Richard Hopper, retired Caltex chairman and the geologist who discovered the largest oil field in Indonesia, Minas, told me a similar story. The company would have left Indonesia, its assets were also seized, had it not been for the presence of mind of Julius Tahija, one of their best Indonesian managers.  By the early 1960’s America, the giver of independence and the model of democracy, had given way to America, the imperialist, and Indonesia’s democracy (as well as its economy) was in shambles: Soekarno had ended free elections and declared himself President-for-life.  The affinity for American products and culture, however, never went away. Soekarno would remark to US Ambassador Howard Jones that his crisp white made-in-America Arrow shirts looked the best under his military-style uniforms. US corporate interest would only pick up after President Soeharto took Indonesia’s reigns in 1967, fed in large measure by oil/gas and mining.  But, in a repeat of the 50’s an initial flush of US investment would be followed by anti-imperialist sentiment and disinvestment. By the early 80’s well known names such as Weyerhauser, Georgia Pacific, Union Carbide, Westinghouse, American Standard, Singer Sewing,  National Semiconductor, to name a few, had all pulled up stakes and left.  More recently Newmont Mining, Ford, Metlife, John Hancock, Celanese, and GM have exited and soon Chevron will be gone, its contracts transferred to the state oil company, Pertamina.  Indonesians still love American brands (Starbucks, McDonald’s, Pizza Hut, Apple, Microsoft, Google, Coca Cola, Facebook, Twitter, P &G) but its an affection tempered by a persistent nationalism.  Especially if you are a resource company, you better have good margins to justify your upfront investment, as you could be asked (often illegally) to exit prematurely or be forced to make an uneconomic change in your business model.

I doubt Indonesia’s current leadership will acknowledge all that a company like Chevron did to train generations of workers, build local roads, ports, bridges, hospitals, establish downstream businesses, and create local suppliers when it leaves the country next year.  In fact, some may act as if they got back something that had been lost and is now theirs again, not understanding that if Dick Hopper hadn’t discovered Asia’s largest onshore oil field, it may never have been found in the first place. This same viewpoint infected much of the rhetoric a few years ago when Freeport was in the middle of renewing its mining contract. But Americans do not own or have not sought ownership of assets they develop, but yet the anti-imperialist thinking persists.

I continue to meet Indonesians who do remember that America helped their country jettison two colonial masters, educate their best and brightest, and developed world class assets that brought the country out of poverty.  But, as much as I love hearing their kind words, I can’t seem to persuade them that the import substitution “make it all locally” mentality, forced divestments, non-renewal of contracts, and the positioning of state-owned enterprises above the private sector, retards the investment climate, making it difficult to grow the US-Indonesia relationship, feeding a narrative of distrust.

Looking at the stellar list of departed US companies in light of President Jokowi’s recent overtures to Silicon Valley and his vision of attracting companies exiting China, I worry that Indonesia is attracted to new shiny objects, forgetting to create the local environment that will hold and keep them. I congratulate Indonesia on its 75th independence anniversary, and its marvelous development achievements, but let’s not forget the country, its people and companies, that helped get you where you are today.

(The writer’s opinions do not necessarily reflect those of the American Indonesian Chamber of Commerce or its members)