Tue, 23 May 2000

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.