Sat, 14 Feb 2009
Proof shows in shrinking cargo volume, growing number of expelled workers

TANJUNG PRIOK PORT, Indonesia - Customs officer Tiko Murtiadji is no economist, but as he watches a truck-size X-ray machine inspect a cargo load of car tires here, he knows evidence of the global economic slowdown is standing just outside his window.

"Before the crisis, we had four or five stories of containers stacked up there," Murtiadji said, pointing to the huge metal boxes with the names of Chinese, Korean and only a sprinkling of American shipping companies painted on them. "Now they're only two or three high."

When Hillary Clinton visits Indonesia next week during her first overseas trip as secretary of state, she will drive past other signs of trouble on her way from the airport to downtown Jakarta, the capital city.

Near the airport, hundreds of migrant workers cast about, evicted from Malaysia and other countries where palm oil plantations and parts factories are gearing down. As Clinton passes through Jakarta's business district, she might spot a few buildings that remain unfinished a decade after the Asian financial crisis ended in 1999. Today, real estate developers are putting a new cohort of projects on hold.

Indonesia could emerge this year as test case for the growing debate over whether the full-fledged embrace of globalization - encouraged by the U.S. and other major economies for at least a quarter-century - has damaged the economies of several less-developed countries.

Indonesia is fairly well set, the thinking goes, because it focused on developing its domestic economy in parallel with its export sector. Other regional powerhouses such as Singapore and Malaysia focused almost exclusively on exports. The value of exports from those two countries nearly doubles their actual domestic production, while Indonesia's exports amount to only 25 percent of its gross domestic product.

Will Indonesia be insulated from the global crisis? Not quite. Private forecasts put the country's growth considerably below the nearly 5 percent target set by Indonesia's government. But even growth in the consensus of about 3 percent would put Indonesia ahead of trade-heavy Singapore, which could see its economy decline 1 percent this year.

Malaysia, meanwhile, has laid plans to send 100,000 Indonesian migrant workers back home, as palm oil plantations and export-based manufacturers cut operations. Malaysia's economy is expected to grow only about 1 percent this year.

Indonesia is taking measures to build new barriers against the global economy. The government recently imposed registration requirements on the import of some 500 key product categories.

Trade minister Mari Elka Pangestu, in an interview with the Tribune and other journalists on an Asia reporting trip sponsored by the East West Center in Hawaii, called Indonesia's registration requirements "an effort to reduce illegal imports." But it's clear the government is seeking to protect Indonesian jobs by erecting non-tariff barriers to block imports.

Indonesian mining executive Beni Bahta said Indonesian industry can succeed even without new tariffs. He is optimistic enough, he said, that he is scouting for new mineral resources to buy on behalf of the Brazilian mining conglomerate that owns his company.

"I'm keeping very busy" looking for prospects, Bahta said. Even so, Bahta is guarding against the slowdown by cutting shifts at the gold, silver and copper mines his company operates.

For the remainder of the year, Indonesia will face a tough balancing act. The government's heavy debt load will limit what officials can do to stimulate the economy. Investment bank Morgan Stanley says the high debt makes Indonesia the most fragile economy in southeast Asia.

Chairul Hadi, a human rights activist, has opened a shelter for migrant workers expelled from countries where the economy is slowing. Hadi once believed Indonesia was insulated, but the tide of financially broke, worn-down immigrants at his shelter each day has convinced him otherwise.

"It's the effect of the global crisis," Hadi said of the swelling number of returned workers. "It's a global problem. Indonesia is not alone."

Indonesia tried harder than most in this region to steer an independent course. In a global crisis this powerful, it may not be possible to keep trouble at arm's length.



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