American, Indonesian businesses enjoy long-standing relations
American, Indonesian businesses enjoy long-standing relations
Rendi A. Witular, The Jakarta Post, Jakarta
It was Standard Oil that pioneered the arrival of U.S. companies
in Indonesia during the Dutch East Indies days in the late 19th
century.
After years of trying to gain entry here, the company finally
managed to start oil prospecting and production in Pelembang,
South Sumatra, in 1897. The production facility it established
was its first in Southeast Asia.
Following in the footsteps of Standard Oil, the United States
Rubber Company -- which later became the Uniroyal Tire Co. --
came to the Indies and established a vast rubber plantation at
Kisaran in North Sumatra. The plantation eventually became one of
the largest in the world.
In the 1930s, tire company Goodyear Tire & Rubber Company came
here to establish rubber plantations, and Caltex arrived to
prospect for oil.
With the establishment of these companies, the Dutch East
Indies became the third most important destination for United
States direct investment in Asia before the Second World War
erupted.
After Indonesian independence in 1945, U.S. companies began to
play a dominant role in the country's economy, expanding into a
wider range of activities, including the manufacturing, financial
and service sectors.
In today's Indonesia, it is common even in the villages to see
instantly recognizable icons of U.S. business, such as Coca Cola,
Pepsi, McDonald's, Kentucky Fried Chicken, Starbucks, and many
more.
While the United States has become Indonesia's main trading
partner, its companies have been investing less and less since
the 1998 Asian financial crisis and the 2001 terrorist attacks on
New York and the Pentagon.
Based on a report from the Investment Coordinating Board
(BKPM), the United States came ninth on the list of the biggest
investors in Indonesia in 2004 and in the first five months of
this year.
The American Chamber of Commerce in Indonesia (AmCham), a
lobby group which represents over 300 U.S. companies in
Indonesia, has said that the high level of economic risk and
uncertainty have reduced the appetite of foreign investors to
come here.
The risks and uncertainty include problems such as corruption,
policy inconsistency, weak law enforcement, and poor coordination
among government departments, as well as between central,
provincial and local governments.
"From an investor's point of view, major concerns in Indonesia
are transparency and the quality of regulations, the control of
corruption, the rule of law and regulatory certainty, as well as
overall government effectiveness," AmCham president Joe C.
Bartlett said in a presentation last year.