Exchange of lessons between neighbors

On Monday Malaysian Deputy Prime Minister, Abdullah Badawi led a large delegation of political leaders and businessmen and women to Indonesia.

The trip itself was a rare display of team-spirit and good will in the upper echelons of UMNO (the delegation included....) It is important for the party-leaders to show that they can put aside personal ambition and work together. Malaysians (and especially the opposition) watched closely. Kuala Lumpur is a city driven by rumors; witness the extraordinary interest sparked off by the anonymous web-letter writer called Kesatria. As such the trip gave Pak Lah (Badawi) and the Vice Presidents, a chance to disprove the gossip-mongers. A positive impression, a sense of unity and shared purpose will be good for business and good for Malaysia.

The size of the delegation (over 70 business figures) is an indication of the importance Malaysia attaches to Indonesia. Kuala Lumpur recognizes that the regional grouping's future has been stalled because the largest and most important member has been engrossed with its internal affairs.

The two nations are natural partners -- economically, culturally and politically. This has not escaped the business community and the level of Malaysian foreign direct investment into Indonesia has sky-rocketed. In 2001, Malaysia was the republic's largest investor. Natural resources have been the main focus (palm oil and petroleum) with Guthrie and Petronas leading the way. Financial services have also emerged as an area of interest -- Bumiputra Commerce Bank was an unsuccessful bidder in the sale of Bank Niaga.

With over two million Indonesian workers (or to 10 percent of the population), Malaysians have a shared interest in Indonesia's prosperity. The only way to stem the increasing tide of "illegals" (as well as the attendant security risk) is by strengthening the country's domestic capacity to provide jobs and opportunities.

Business and politics in Jakarta have changed dramatically since: Power has been diffused. Clearly Malaysians (after over 20 years of Dr Mahathir's administration) are more familiar with a top-down system. During the 30 years of Soeharto's ascendancy, the entire archipelago waited breathlessly for the taciturn leader's rare pronouncements.

Well, those days have passed. Yet the dramatic reversal of fortune for the "Cendana" family has made business in Indonesia more complicated -- some would even say impossible. The republic has lost a strong, centralizing force. Business now requires painstaking negotiations.

Instead of one set of stakeholders (the first family, generals and cronies), foreign businessmen are now forced to face a myriad of competing claims. Decentralization has created a set of regional elites with little understanding of international commerce: Rent-seeking and gouging are now commonplace at all levels of government. NGOs and the labor movement are feisty and outspoken.

Malaysians are not used to such a "free-for-all" and they must learn about the new players and the environment. "How" you conduct business will be infinitely more important that "who" you deal with.

Further Malaysians must guard against arrogance and high- handedness when dealing with Indonesians. In the wake of Dr Mahathir's international rehabilitation many Malaysians will be inclined to boast about their "achievements". Bragging will not win friends in Jakarta -- and will alienate many key decision- makers.

Indonesians are justifiably proud of their language, their cultural and their history. In the broad sweep of civilizations their achievements eclipse our own. Accordingly, the dramatic fall from grace has been a terrible humiliation.

The American-led "war against terrorism" has tarred the republic unfairly as a center of extremism. As a consequence Many Indonesians are sensitive and easily offended. A weakened nation does not want to be lectured. The republic requires assistance, discreet advice and support.

Finally there areas in which both countries can profitably learn from one another. Indonesians should acknowledge the role of discipline and orderliness in public life. Whilst democracy is important -- good governance is critical. Unfettered freedoms can lead to chaos in the absence of strong responsible leadership. Corruption, civil service incompetence and mismanagement have to be addressed.

Tragically, the country's leaders have been profligate. Ibu Megawati Soekarnoputri has remained silent at times of great national uncertainty, paralyzing the nation with her inexperience and indecisiveness. Unfortunately Vice-President Hamzah Haz has also failed miserably. His flirtation with extremism has revealed a shocking degree of political irresponsibility. The man has shown his manifest unsuitability for the highest office. Needless to say ASEAN trembles at the prospect of his elevation.

Indonesians should also acknowledge the extent to which economic "openness" has contributed to Malaysia's current prosperity. For many in Jakarta, Malaysia is summed up by Proton, the Bumiputra policy and currency controls. The reality, of course, is more nuanced. For example, foreigners are allowed to buy land in Malaysia and trade constitutes over 125 percent of the country's gross domestic product.

Malaysia would do well to find out more about Indonesia's remarkably moderate Islamic practices. The largest religious seminary IAIN Syarif Hidayatullah is a major center of religious scholarship. Malaysians should try to find out how and why such practices have taken root in the republic. Are these models replicable?

Secondly Indonesia has become a dynamic, plural and at times unruly society. Public debate is open and the media is free. Malaysians should learn from the Indonesian experience. In time to come Kuala Lumpur is going to have to loosen up.

The original version of this article appeared in Singapore's The Business Times and Malaysia's The Star.