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;JP;bkm; ANPAa..r.. Germany-EKONID-interview EKONID chief examines RI's offbeat potential JP/ /Ekonid

EKONID chief taps into RI's offbeat potential

Berni K. Moestafa The Jakarta Post

If deep black is how investors describe Indonesia's short-term prospects, then one has to look hard for the proverbial silver lining. "I won't say it's hopeless, but it's extremely serious, negative," said Fritz Kleinsteuber, the president of the Indonesian-German business forum Ekonid who, with more than 30 years in Indonesia, knows when to tell German investors to come and when to stay home. His experience has also taught him the resourcefulness of Indonesians in facing up to troubles. "The most impressive asset of the Indonesians, for me, is their way of creative thinking," he said. "There's a lot of creativity, of fantasy, of ingenious ways to improvise if the means are incomplete, they (Indonesians) always get it together somehow. So this is something in their nature." Unlocking this underlying potential is, as with most other matters involving economic potential here, not simply a matter of polishing up and presenting what is on offer, but of enforcing drastic reforms to ensure investors get their money's worth. These days, Indonesia's huge population and its abundance of natural resources are not enough to win over investors seeking a better investment climate since the economic crisis struck the country in 1997. But while economic reforms are under way, few take note of Indonesian creativity as a potential booster of the economy. Kleinsteuber said Indonesia could be like India in "exporting brains" if only it knew how to tap into and exploit its people's creativity. Such a goal would inevitably entail tackling the entrenched rote learning education system. "In my view, in the mid and long term, the greatest problem of this country is, if you allow me to say so, the school system." Kleinsteuber said students could hardly develop creativity in a school system that discouraged them from open debate with their teachers. "Never question the teacher, (that is) very uncreative," he said, terming the educational approach one of the worst legacies of the Soeharto era. "I have been running companies, (and know) how difficult it is to find staff, who after a short time, have the guts to stand up in front of the boss and say: 'Look, mister, this is what I found and this is not OK, and I think we should do it this and this way.' They would never do that," he said. Attempts at "protest" are most often half-hearted or unconstructive, and the old ways persist. "They always leave it to the boss, this is a tradition and history. It is of course asal bapak senang (as long as the boss is happy), but this is not the way the world works in 2003 anymore." Although the government has set aside a greater portion of its state budget for education this year, Kleinsteuber advocates a complete overhaul of the system. He acknowledged it would not be easy due to budgetary constraints, but warned it is imperative for Indonesia to compete for investment. "This is one of the reasons why other countries are developing faster ... the growth rate in China is not only because foreign money flows in, but they can make use of the money in a much more efficient way than Indonesia can. This is because of the education system and the people," he explained. With Indonesian creativity still buried under the vestiges of the Soeharto system, investors may need to take a closer look at the labor situation here. Or perhaps not: Dealings with labor have been nothing short of a nightmare for many. The 1998 reform movement that brought an end to Soeharto's authoritarian was followed by the emergence of militant labor groups. Analysts attributed the phenomenon to the country's transition into a democracy, and Kleinsteuber said some labor unions had to be aggressive in order to attract new members and compete against other unions. The EKONID chief looks beyond the alarming image of labor protests and demands to argue that Indonesians are in fact loyal employees. "As long as companies take care of the people, the people are -- (and) this is my experience after 30 years, I am not just talking lightly on this subject -- the people are very loyal, very loyal." Loyalty, he explained, worked best with small to mid-size firms, which make up the bulk of Indonesia companies. Kleinsteuber also noted the huge potential consumer spending power, that he said is "much more than people believe". The number of consumers in the middle income bracket has almost recovered to its pre-crisis levels of about 50 million people, he noted. "I could imagine this bracket is already in the 40 million range again, which is maybe 25 percent (of the population)," he said. "Once that has reached 40 percent to 50 percent, than Indonesia is in very, very safe waters again on consumption power." High-end consumer products from German companies, such as DaimlerChrysler Mercedes cars, Siemens' cellular phones and Wella hair-care products, continue to enjoy brisk sales in Indonesia, he said. Although it's not such a bright story for the industrial sector, he added that the "business year for German companies in this country, in 2000, 2001, 2002 on the whole, has been good". He also knows it's a revelation unlikely to make headlines. Investors will search instead for hard evidence of those trusted guarantees of long-term investment rewards: lasting political stability, legal certainty, security. Still, the little valued potential of employee loyalty and creativity may be worth looking at in sizing up what Indonesia has to offer.

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