Expatriate businesses staying put
A'an Suryana and Robert S. Finnegan, The Jakarta Post, Jakarta
Multinational corporations in Indonesia have considered carefully travel warnings recently issued by several countries for Indonesia in the wake of the Bali bombing and have elected to continue operations, according to trans-national corporation executives interviewed recently.
This low-level impact is attributed in part to the readiness of multinational companies to deal decisively with turbulent situations in Indonesia, in addition to the already limited number of expatriates living here following the 1997 financial crisis.
President director of BHP Steel Rob Crawford said on Friday that his corporation has been here for 30 years and is not only staying, BHP is planning significant expansion projects.
"We made it through the 1997 financial crisis, it was difficult but we survived. There was also a downturn in dispatches in the month of October, about 20 percent as a result of uncertainty as to what was going to happen next and the exchange rate deterioration," he said.
However, Crawford sees this as a short-term impact and added that while people were stunned and saddened by this tragic loss of life there is also the realization that this could happen anywhere in the world at anytime in the future. He also anticipates the situation stabilizing now and does not visualize a long-term impact on business, while at the same time acknowledging that continuing terrorist activity would alter this assessment.
"If there were a string of terrorist incidents in the country, this obviously would affect our confidence. But the issues that have been impacting our business the most are the ongoing problems in dealing with certain government policies, corruption, security and legal certainty," Crawford said, adding that while the government has recently announced measures to protect the steel industry, they are yet to be tested in the marketplace and BHP would prefer to see consistent protection measures across the steel industry.
"The Bali bombing was a most tragic event against humanity that can never be forgotten and must be addressed, but in relation to our business environment these other issues can have a definite material and long term impact," he said.
Crawford also said that training is an integral part of BHP corporate policy.
"We have different levels of training and development, there is a BHP Steel-wide program where people attend programs in Australia, Singapore or the U.S., sponsored by the company. And of course we have our own local training and development, assisting our people in developing their skills, knowledge and capabilities," he said, in addition to corporate policy for the development and promotion of Indonesian nationals into senior positions within the company. In 1995 there were over 10 foreign nationals on the staff, now there are just three.
President director of BHP Steel Lysaght Indonesia, Willius Suwanda is an example of this policy.
"We are very optimistic and are looking for opportunities. While economic growth is not optimal at the moment, with the advent of regional autonomy and decentralization there is unlimited potential," he said. "It is a matter of us being diligent and pursuing market opportunities."
Both executives are cautiously optimistic on the future.
"I would like to emphasize that we are confident about the future," Crawford said. "We are very committed to Indonesia, our employees and our customers. There is no way we are going to leave them without support."
Nunik Maulana, spokeswoman of mining giant PT Rio Tinto Indonesia, said there was no evidence of a massive pullout of expatriates following the Bali bombing, which killed more than 190 people, mostly foreign tourists.
"The expatriates are working as usual, and they are quite confident in their decision to stay," Nunik said.
PT Rio Tinto has two expatriates, while its subsidiary PT Kaltim Prima Coal employs 23 expatriates, working in its coal mining operation in Sangatta, East Kalimantan.
Despite repeated warnings, the majority of expatriates are staying put.
According to Nunik, fears of insecurity among expatriates have been calmed as the company has prepared contingency plans to address the turbulent situation in Indonesia.
Their contingency plan includes evacuation plans and close cooperation with the expatriates' respective embassies, as well as coordinating with local security. In addition to the contingency plan, expatriates are apparently psychologically prepared for worst-case situations here.
Having experienced frequent social and political turmoil throughout the country following the onset of the financial crisis in 1997, expatriates appear to be "acclimatized" to these unforeseen events.
Some foreigners and in particular Westerners, may still be seen frequenting the malls and public places in Jakarta recently despite the incident in Bali despite a rash of bomb threats here.
The Secretary General of the Ministry of Manpower, Djoko Sidik Pramono maintains that there was only a slight decrease based on the expatriate taxs received by the government this month.
Every expatriate is required to pay US$100 per month to the so-called Funds for Skill and Expertise Development (DPKK) to the government.
"It indicates that only a few expatriates had left Indonesia following the bomb blast," he said, adding that the DPKK revenue dropped 3 percent.
Meanwhile, other multinational and local companies vowed that the impact of the travel warnings would not disrupt their operations, as the number of expatriates were indeed already limited here. Moreover, Indonesian professionals have been ready to replace their foreign counterparts, they said.
PT Caltex Pacific Indonesia, for example, has for years carried out training programs to accelerate the training of local professionals in oil field operations.
The oil giant currently has some 150 expatriates on the payroll. "It is a rule within the company that after three years, expatriates must be replaced by local professionals," PT Caltex spokesman Renville Almatsier said.
Indonesian conglomerate Bakrie Group, which has gone international, said that only several expatriates left the company after the 1997 monetary crisis.
Bakrie has gradually phased out expatriates -- which were previously paid by U.S. dollar -- after the rupiah significantly depreciated against the dollar in 1997.