Expatriates set sail as economy sinks

Indonesia may be no comparison to the immigrants' dreamland of United States, but it had a high growth in foreign workers during the economic boom. Now that the wheels are reversing and the economy is ailing, expatriates are losing their jobs or being forced to adapt. The Jakarta Post's team -- Budiman Moerdijat, Devi M. Asmarani, Edith Hartanto, Ridwan M. Sijabat, Stevie Emilia and Oka Budhi Yogaswara -- covers the issue.

JAKARTA (JP): On a quiet afternoon in one of the city's many malls, Plaza Senayan, two Korean housewives stroll about solemnly. They enter a designer clothing store, one that has for weeks been empty of customers, and begin what they call a "homecoming shopping".

"I will miss shopping in Indonesia among other things," says one of the women, both of whom request anonymity.

Within a week they will be heading back home to Seoul with their children, while their husbands, both engineers for a joint venture company, finish up the numbered days of their jobs here.

The families are being forced to leave their luxury houses in Kemang, South Jakarta, their BMWs and their dollar-denominated prosperity which they enjoy in shopping sprees in plush shopping malls.

The economic turmoil, it seems, has gobbled a large piece of the pie that used to belong to expatriates.

While grand-scale economic skimming has practically closed the door on employment opportunities for millions of Indonesians, it has also scraped the economy of nonessential, large spending. And in some cases that includes foreign workers.

The currency crisis has slashed the value of the rupiah against the dollar by over 70 percent, resulting in a crumbling economy. Virtually all sectors have been hit.

Companies which enjoyed high prosperity before are now being haunted by foreign loans, burdened by rising costs and slowed down by lower revenue.

They have no choice but to let go of their foreign workers.

Like the husbands of the two Korean women, foreign engineers and consultants are among those badly hit by the meltdown, as the crisis has forced companies to shelve development and expansion projects, as well as halt ongoing ones.

Public works minister Radinal Moochtar said recently that many private companies had fired their foreign consultants because they could no longer afford to pay their mostly dollar- denominated salaries.

Foreign consultants from Europe or the United States receive monthly salaries of between US$5,000 and $15,000. Those from Asia receive between $1,000 and $4,000 a month.

Last July, one dollar was equal to about Rp 2,500, but it has now surged by over 300 percent to about Rp 8,000.

Compare that to the salary of a local consultant, who earns an average of Rp 7 million a month.

Since the crisis deepened, the government has repeatedly urged companies to let go of their foreign workers as they are a major cost in foreign exchange.

Manpower minister Abdul Latief claims the country previously spent about $3 billion a year on expatriates' earnings.

In the current situation, that is almost like a self-inflicted wound on an infected sore.

Advertising and public relations companies, another badly hit sector, have also been forced to fire their foreign employees.

One of the country's most prominent public relation companies, Nama Network Communications, has become inactive and some of its staff have joined its competitor Indo-Pacific Public Relations.

Perwanal DMB&B advertising agency's general manager, Yusca Ismail, says many advertising companies are not renewing their expatriate workers' contracts.

But, perhaps the sector is not as badly affected as the country's financial sector.

Major companies such as DBS Securities, PT Lippo Securities, PT Sasson Securities Indonesia and PT Credit Lyonnais Capital Indonesia started laying off key personnel, who were mostly paid in dollars, as early as last November.

Hotels, which were known to employ many expatriates, have also limited the number of foreign staff to three to five people.

The Sheraton ITT Corporation in Indonesia streamlined their staff before the crisis.

"We're moving towards employing three expats per hotel, consisting of a general manager and one or two chefs," says Angus Maclachlan, the company's marketing director.

Maclachlan says Sheraton now employs 25 expats in its 12 hotels in the country.

The manpower ministry recorded 48,417 expatriates as of last December. Last month alone, 17,000 had been repatriated, and this month an estimated 15,000 others have left.

The data says less than 16,000 foreign professionals are employed in the country now.

But not all expatriates are paid in dollars.

Some advertising and public relations executives receive rupiah salaries but get other earnings in dollars, while some foreigners earn only rupiah.

Erik Schmitz, a former copy editor at an English publication, packed up his belongings and led his Indonesian wife back to America after less than a year of married life.

"The value of my salary has been more than halved against the U.S. dollar, and there's no point for me to live here," Erik says.

"I have school loans to repay at home," he says.

International moving companies are raking in profits with the mass exodus. Reports say business was 50 percent more last month than the same period in 1997. This month is expected to be as busy, although normally February is a slow month.

Compromise

Some expatriates have compromised and agreed to accept salaries in rupiah instead of dollars.

"I think there are two kinds of expatriates: those who are paid in rupiah and have less money, and those who are paid in dollars and possibly face dismissal because their companies cannot afford to pay them anymore," says Angus Freiser, a technical advisor for Indo-Ad.

Many of those who still receive dollars have agreed to receive a salary at a pegged exchange rate which is lower than current the rate.

"I don't think they have any objections nor choice, and I think they realize this is short term," Yusca says.

"Within a short period of time, we will come out of this better and they'll receive the same package they previously enjoyed," he adds.

There remains optimism among some expatriates.

Some who have lost their jobs remain in the country to shop around for another job before actually packing it in.

The talk around town is that many foreign companies will invest in the country's industries, as the government pledged to the International Monetary Fund that it would open up the market and economy to international investors in exchange for a $43 billion bailout.

Many acquisitions will take place soon, and employing expatriates may become affordable again.

"There's a lot of uncertainty in the economy at this point and companies may have to increase staff, and then reduce them for a while," says Scott Coffey, former director of Internet website provider Indo Exchange.

"But this is just a little hiccup and a temporary rough-up," he says.

Indonesia is a focus of Europe and the United States because of its strategic location.

Once foreign investment comes flowing into the country again, expats are going to return, he adds.

Coffey resigned from his job as president of his own company, Indo Exchange, a website operator which provides business, financial and capital market information.

He will soon join a U.S. company which is considering buying an Indonesian company.

"I want to take part in restructuring Indonesian companies, it is very exciting," he says. (team)