In thick or thin, Van Zorge is here for the long run

By Edith Hartanto and Budiman Moerdijat

JAKARTA (JP): For American James Van Zorge, home is where he makes it. After 11 years' residence in Indonesia and marriage to an Indonesian, it is now here.

An independent strategic consultant on economic and political advisory services, the 40-year-old has witnessed the nation's ups and downs in the past decade.

He worked with several of the country's most prominent economists, including Radius Prawiro and J.B. Sumarlin, when he arrived here in 1987 with the Harvard Institute for International Development.

He has also been a consultant for the United States Agency for International Development (USAID), and worked with the UN Food and Agriculture Organization in setting up projects for forestry companies.

His report, Indonesia into the 21st Century: Setting the Stage for a Post Soeharto-Era, was published in book form in May last year by the Economist Intelligence Unit of Hong Kong.

Van Zorge shared his knowledge of the country in a recent interview.

Question: Has the crisis affected your life?

Answer: Certainly. Momentarily in a lot more demand for my services, but I think that as the crisis deepens, I will be affected as well.

No one can escape... a lot of expatriates have been affected, a lot of companies are sending back home their expats. They are converting dollar-denominated salaries into rupiah. Every business' expectations have to be lowered.

Q: How do you view the crisis?

A: There are two ways to look at the crisis; the short term and long-term outlooks.

In the short term, we are all pessimistic. Unlike the oil crisis in the early 1980s, this will most likely be a much longer and deeper crisis, looking at some very fundamental problems in the economy.

The international investors are not just looking at the excessive lending by the banks but also other issues, such as corruption, transparency issues and the short-term debt problem.

But since I have been here for a long time, I tend to take a longer perspective as well.

I am optimistic about the long run -- if you look at the country's productive assets... the country can recover... you just have to be patient... if you have the entrepreneurial type of spirit, I think you will do very well.

Q: Are you paid in rupiah or dollars?

A: Various. Because I have different types of clients... some pay in dollars. I don't have any objection to being paid in rupiah because most of my expenses are in rupiah.

Some say the important issue for expatriates is that they have overseas commitments in terms of money.

Well, my commitment is to my family here. But other expatriates have their children going to school overseas. They convert their income from dollars to rupiah, and back to dollars again. Of course, some of them have encountered financial problems due to the rupiah depreciation against the U.S. dollar. It has become very expensive...

Q: Does the economic crisis affect your lifestyle, your family?

A: Yes, I'm a little bit more careful about spending money. (I'm) saving for a rainy day... It hasn't affected my business yet, but it could eventually...

Q: Some people here believe expatriates live in luxury, because they are usually paid in dollars and this crisis has been a windfall for them. Have any of your expat colleagues been adversely affected?

A: Actually, I had a client who will leave in one week. Next week, the internal office will be closed and all the expatriates will be sent back home.

...A lot of foreign companies have reassessed their possessions and seriously downsized their operations here. And they have converted the salaries into rupiah.

If you're talking about expats' lifestyles, let's say that as an expat you have a wife and two kids, and you have to send your children to school. It's a very expensive proposition.

...At least you have to pay for a one-year (house) rent at very high rates. Schools are very expensive, like the Jakarta International School. So the companies are covering those costs because they are unbearable to take as an individual.

I can understand why some people here think that expats live in luxury. But ...the company is trying to provide for them by giving some sort of protective web to make expats comfortable.

Usually, expats stay here temporarily. They won't speak the language. After two or three years, they're gone.

You can't expect expatriates to live at the same standard as the average Indonesian. They won't come to that point.

If they lived the average life, no expats would come here.

Q: You have lived here for 11 years. What made you stay? What attracts you?

A: Well, I'm never bored here... things are always changing. Up until recently, it was one of the fast-growing economies. It is a diverse country with different kinds of ethnic groups. It is fascinating.

Once I'm back in the States, I feel bored very quickly and I just want to come back here because it feels more like home. I'm used to this "temple". But I keep my American citizenship.

Because I have spent most of my life outside the States, like many other expatriates, I have lost my sense of belonging. Your home is where you make it.

Q: Let's talk about your report on Indonesia...

A: It's written specifically for foreign multinationals, overseas markets, investment banks to give them a perspective on prospects for political change in Indonesia.

I did it because I had spent 10 years in this country. ...

I interviewed about 50 Indonesians, like Amien Rais, Megawati Soekarnoputri, some people inside the Armed Forces, government officials, some political scientists.

I tried to find out what the thinking is on prospects for political change. Is there any different succession scenario? Will it affect the political change here, and also the economy?

So it is mostly the Indonesian perspective. But I found the common thread of thought, that Indonesian political life comes from a very far left and a very far right in politics. Starting from people like Megawati, all the way to ABRI (Armed Forces) generals.

I think most companies appreciate the perspective they were offered because it was coming from a wide majority of Indonesians.

I think that all the issues have been in the mind of the international communities for a long time, and are even more relevant today because of the current situation.

It is not meant to be a commercial book, it is not an expose, it is not a political thriller.

It is a serious attempt to look at different scenarios for political and economic change in Indonesia by talking to Indonesian players, and I brought it to the foreigners' perspective sitting outside of Indonesia...

Q: You have included the potential possibility of social unrest in your report...

A: I've been asked so many times about social unrest. My comment is that social unrest here has been a problem in Indonesia for over a century.

It's not unusual to happen here. Especially the anti-Chinese sentiment... Of course, with the hike in present food prices and, closely down the road, the fuel prices, electricity prices.

People with limited income, especially lower-middle class and lower-income class people, will certainly feel the pain. Especially in rural areas, where they are in very close proximity to ethnic Chinese shop owners who are running the small shops.

Who else is the target for the Indonesians? They will feel the pinch more than the upper-income class.

Most of the money is being spent on food. And the prices of food are going up and up ...at least 20 percent to 30 percent. In some cases, a lot more.

If you're only, for instance, making Rp 300,000 income per month which mostly has been spent on food, of course you will be hurt.

So for people to vent their anger, as they have many times in the past, they take it out first on the Chinese community.

But I think the important thing to realize is that this is not some sort of organized, antigovernment protest. It's not going to pose any serious threat to political superiority in Indonesia.

These are people venting their anger at the situation. There are no visible enemies out there. It's not the government; people are confused... They've lost their jobs, they're facing food price hikes... This is just the kind of action for people to let off the steam.

Yes, it's very unpleasant and I empathize with the people's position. But ...to say that it is an anti-government movement is a little bit exaggerated...

Q: Your personal opinion about the future of the country, regarding the current pressure for economic and political reform?

A: It is a very serious crisis... and I think there is the best man... (to help deal with the crisis), Widjojo Nitisastro, the president's advisor. The IMF is also sending a team with the best economists from the U.S.

And Soeharto has proven before that in a time of crisis he turns to the "best" qualified people. I am sure that he will listen to his advisers.

Right now (the important thing) is how to restore confidence and ...if they can effectively address the short-term debt problem, a lot of investors will start coming back in.

Q: Do you think Soeharto will get through the March's General Assembly?

A: I think the military supports Soeharto. We have to consider ABRI as probably the strongest organization in the country. They believe that in times of crisis, they cannot afford to have succession...

Yes, most definitely he will be successful in March -- then the next question is "who will be the vice president?"

But whether the next VP will be the next president, no, I do not think so... People are assuming so, but it is not really the case.

I think what is more important than that is who is in the cabinet. There should be a very strong cabinet. People should be respected by the international community. There should be new blood injection into the cabinet... Indonesia must convince the IMF and international banks that Indonesia is serious with the reforms, without any backtracking.

Q: Do you think President Soeharto has chosen the right team to cope with the crisis?

A: Oh yes, of course. People like Widjojo Nitisastro have been around for decades. He is one of the most respected figures in the country and outside Indonesia. He solved crises in the early 1970s, early 1980s. He's an excellent economist.

Q: The IMF has been criticized for being overly optimistic about Indonesia in the past...

A: I think no one could foresee exactly the cause of the crisis. ...everyone was optimistic back then... People should focus on how to solve the crisis, rather than blaming the IMF or the government...

Q: Do you think the city is secure enough for expatriates to stay?

A: The military forces have doubled their troops in Jakarta, they have put surveillance here. I think some of the best trained troops in Indonesia are stationed here in Jakarta. Number one troops, ya? And you have to be prudent of course. If you see crowds staying together, just stay away.

Q: Will you leave this country if something bad happens?

A: No, I don't think so. The key is really just for the government to stabilize the rupiah so the lower-income people will be saved...

Q: What would you do in a riot?

A: The best thing to do for me and my family is to stay home. It's the best defense. Running to some place else will only make things worse.

Q: You have met most Indonesian figures here for your report. What do you think of Indonesian political figures?

A: I think the so-called prodemocracy activists here, like Megawati Soekarnoputri and Amien Rais, are very vocal.

But there are a couple of things like, one, we need a detailed platform for reformation and change... They all talk about corruption, cronyism, but I don't see any blueprint here. How will they lead this country?

Number two is lack of leadership.

So I think we are not going to see people empowerment, as we saw in the Philippines. The people power is good because it opens up a dialog between the government and the people.

I believe since the July 27, 1996, riot, the government has not allowed people like Amien Rais or Megawati to share some of their pieces of mind... The important thing is to set... an avenue to run people's aspirations...

But I don't believe there are political forces in this country ...changes will come from within the government and especially from within the Armed Forces.

...I don't think we will see any political reform yet because we have to get the economy straight first.

But if you talk with people inside ABRI, the young generation officials are very reformative-minded. They have to wait for the economic crisis to be over and then make some blueprints for changes.

The bottom line is dealing with the economic crisis first... So clamoring for changes and asking Soeharto to step down is very unrealistic at this moment. It will only make things worse. He is the strongest leader we've got, who hopefully can bring Indonesia out of this crisis.