Exchange of lessons between neighbors

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.