It's time to support businesses

It's time to support businesses

By T.N. Machmud

JAKARTA (JP): In a country where politics are of paramount
importance and keeping political groups happy is the number one
priority, it is not surprising that the plight of the ordinary
businessman and what it takes for him to turn a profit or what
prevents him from turning a profit, is a low priority among
government officials.

Yet, the private business sector to whom that businessman
belongs, provides the only real support for what is left of the
economy.

The government looks to the business community as a source of
funds for taxes and other levies, official and otherwise.
Politicians will readily admit that corporate profits are
important and that most of the funds that fuel the political
machinery come from the business sector.

It is shocking, though, how few among the politicians and in
the government realize or care how tough it is for the average
businessman to keep his ship afloat these days.

Fortunately, the majority of the medium to large scale
enterprises that constitute the core of Indonesia's cash
generating private business sector are owned and staffed by hard
working, deeply worried, regular folks like you and I.

Yes, there will always be a number of less scrupulous business
people looking for a short cut to higher profits and willing to
resort to unethical practices to get there.

Corruption, collusion and nepotism (KKN) exists in that latter
category. KKN is now the battle cry of those forces trying to
stamp out corruption in this country once and for all. And surely
we should applaud and support that effort.

However, Indonesia is a country where people are apt to swing
from one extreme to the other. While we attempt to stamp out KKN
we should also dispel the notion that all business is bad and
that successful business can only be a result of KKN.

That notion, albeit very subtle, exists just under the
surface. When one listens carefully to questions from the floor
in the many televised talk shows, seminars and panels, some
reflect a widespread belief that all business is bad and that
business is really what corrupts this country.

That notion further entails that Big Business just corrupts in
a bigger way. Foreign investment, according to that opinion, is
the worst. They contend that those money grabbing multinational
corporations, often conspiring with national entrepreneurs, are
capitalizing on the unfortunate economic situation now existing
in Indonesia to carry off our national resources.

Some allege that in fact the monetary crisis was caused by
those same multinationals and by speculators, aided and abetted
by the Zionist conspiracy.

The panelists then mumble some kind of answer, generally
neither clear nor to the point, sometimes even apologetic,
leaving the audience and television viewers confused and under
the distinct impression that there must be something to that foul
conspiracy theory after all.

Very weak arguments are presented about the positive role of
foreign investment, about how much we need fresh investments to
lift the economy out of its current stagnation, about giving
business, especially big business, some space to get some major
projects going.

Instead of support, the harassment level against big business
has gone up a few notches. Panelists, like our leaders, have not
come out and taken a firm stance in defense of business.

Is defense of business indeed needed at this time? I think the
answer is a resounding yes. As a former chief executive officer
and retired executive, this writer strongly believes that at the
highest level of our government, preferably by the President
himself, a stronger stance should be taken to defend business in
general and in support of our investor community in particular.

It is most alarming to our business community including the
foreign investment community, that large investors take turns
being harassed.

Consider recent harassment of companies like Freeport, Rio
Tinto, Indorayon, Newmont Mining, Roche, Sony, Caltex, etc.
Smaller business people are now saying: "If it can happen to the
large multinationals and the government seemingly stands by and
allows it to happen, what about small fry like us?"

It seems that business is at the mercy of any group that for
whatever reason decides to mount an attack against them, whether
that reason makes sense or not.

That attack may take the form of a loud and vocal declaration
at the House of Representatives, or the blocking of the entry to
a plant or labor action or some other disruptive form of
harassment.

Of course there are institutions like the courts to bring
these disputes to a satisfactory solution but these avenues are
often not being utilized because the courts lack credibility and
success seems better guaranteed if the street is chosen as the
venue for settling the issue.

We are at a dangerous juncture. If the government allows such
groups to get away with settling their problem (whether contrived
or real) in the streets, business will conclude that they have
been abandoned.

Business is not always right and those that are guilty of a
violation should be brought to justice. But those that are not
guilty and who find themselves subjected to spurious claims and
harassment should be entitled to government protection.

Government protection of business must be demonstrated at the
highest levels, be part of official policy, be transparent and
fair and be designed to lead the parties that have a dispute back
to the proper legal channels.

Translated this means that the courts that have jurisdiction
should decide the issue -- despite the courts' current lack of
credibility. If not handled in this manner, the mobs in the
streets will have a field day with business.

Business will be at the mercy of lynch mobs and the law of the
jungle. In such an environment local business will eventually
succumb and foreign investment will withdraw to countries which
offer better protection.

Granted, investors do not lightly walk away from an
investment, especially if they have sunk billions of dollars in a
project. However, if their outer limits of endurance have been
severely put to the test, they will walk.

This writer would take very seriously Sony's statement that
they will relocate their business to Malaysia, if the current
level of harassment continues.

On a final note, this writer does not subscribe to the
conspiracy theory -- that supposedly these money grabbing
multinationals are capitalizing on our monetary crisis and
conspiring with local businesses to rob the country of its
riches .

Having spent 36 years working in multinationals, I consider
them just like most businesses, trying to make a decent profit
while trying to conduct business ethically under a usually very
strict code of conduct.

They are run by executives who are also human. They make
mistakes like any other human being. To the extent that they are
wrong they should be and are prepared to be held accountable.
However, there is nothing they like less than having to operate
in a climate of uncertainty, where they can not plan or forecast
with a reasonable degree of accuracy.

Their only protection is their contract. If that contract
itself is not properly protected and the investor, local or
foreign, is forced to operate in a legal twilight, he may just
close his shop.

The bottom line is that a strong stance at the highest levels
of government is now needed to send the right signals to a
nervous business community.

But just to say the words is no longer enough. Real protection
in the field is now required. What business now needs is action
in terms of having the roads to the factory unblocked, by getting
the protesters out of the lobby of their office building, by not
allowing any arbitrary plant closures and by redirecting the
disputes to the courts where they belong.

Business needs a conducive environment, we all know that.
Surely this government can provide that while also guaranteeing
due process to those who need it. Admittedly, to do so, will be
unpopular.

It is always unpopular to stand up in the defense of business
and politicians do not like to do what is unpopular. A wise man,
however, said that a sign of true leadership is the ability to do
the unpopular. Resolution of this matter calls for leadership,
not politics.

The writer is a retired chief executive officer of PT Arco
Indonesia mining firm and a lecturer at the business schools of
the University of Indonesia and IPMI in Jakarta.