Expatriates set sail as economy sinks

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)