Seafaring nation needs a merchant fleet

By Dirk Vlasblom

This is the first of two articles based on an interview with prominent shipowner Soedarpo Sastrosatomo.

JAKARTA: In the first months of 1996, which is celebrated in Indonesia as the Year of the Sea, the government announced several measures to boost the country's ailing shipping industry. A value-added tax on the importation of vessels as well as on vessel leasing and agency work was lifted. Furthermore the director general of sea transport was instructed to streamline or cut the licensing procedures for shipping and port services.

The declared aim of the measures is to develop the indigenous shipping industry, which has been loosing out to foreign competition. The market share of overseas shipping companies carrying Indonesian exports and imports in 1994 amounted to 96.8 percent and even in domestic transport activities foreign carriers have a share of 46 percent.

Soedarpo Sastrosatomo, 75, is Indonesia's most prominent private shipowner. He was actively involved in the independence struggle against the Dutch and in 1948 started a short-lived diplomatic career. Soedarpo founded his own trading company in 1952 and a year later became an international shipping agent. In 1964 he established his own shipping company, PT Samudera Indonesia, and now controls a merchant fleet of 40 vessels which serve inter-island as well as international lines. The late president Sukarno once called him a national asset. Pak Darpo, as he is affectionately called, has survived the ups and downs of the industry and knows it like no one else. Being a cofounder of the Indonesia-Netherlands Association, he told INA Magazine the story of his life and diagnosed Indonesia's shipping ailments.

Question: Mr. Soedarpo, you are the son of an Opium Authority supervisor, that is an Indonesian member of the Netherlands Indies' administration. Has this background influenced your life?

Answer: It certainly did. My father (Sadeli Sastrosatomo, who died in 1929) went to teachers training college in Yogyakarta. Before joining the Opium Authority he taught for a while at an elementary school.

At the time the Netherlands Indies' government was setting up local government outside Java. It needed people with an advanced education and recruited teachers as well. The man who guided my father in that direction was his teacher at training college in Yogya, Dwidjosewojo, a founding member of Budi Utomo (a Javanese cultural association which recruited its members among indigenous civil servants and broke ground for the nationalist movement) and cofounder of the Onderlinge Levensverzekeringsmaatschappij Bumiputra 1912 (the first Indonesian mutual insurance company).

Dwidjosewojo was a man of vision, far ahead of his time. He told my father: if you stay on as a teacher, your prospects are limited. This is an opportunity to broaden your horizon. At first father was based in Buleleng, on Bali, and then the family moved to North Sumatra, where I was born. In Pangkalansusu my father founded a local branch of Budi Utomo.

In Sumatra my elder brother was in touch with members of the Taman Siswa (an educational reform movement, wary of western cultural influences). Our house, home of a civil servant, was one of their meeting places. By the time we moved to Central Java, I had finished elementary school. When I registered for the MULO (the Dutch junior high school) in Yogyakarta I had to prove that I did not need to go to grade 0 (a remedial year) and that I could go straight to first grade. That depended not only on your results in general but on your fluency in Dutch in particular. For me that was no problem, but some of my friends didn't make it. Then some of my friends didn't make it. Then I realized for the first time that being a civil servant's son had consequences.

Q: Taman Siswa, Budi Utomo -- you were raised in a nationalist environment.

A: True. Moving from one post to another also contributed to this nationalist outlook. But I didn't join the movement till the Japanese invasion. My elder brother Soebadio did. He was a clandestine member of Indonesia Muda (Young Indonesia, a movement of nationalist youths. Since 1933 students of public schools were strictly forbidden to joint it). Soebadio was a fast learner, but I had to put quite some effort into my schoolwork, so there wasn't much time left for other activities.

Q: Why did you choose medical school? Did you really want to become a doctor?

A: Yes. Not because I was attracted to the profession as such, but because of the relative freedom a doctor enjoyed in colonial society. Once I spent a summer holiday with my elder brother in Majalengka, West Java. He was a regency doctor. Apart from the regency clinic he also was responsible for health care in the districts, so he had to make regular tours to the villages. One day he left late from the hospital and ordered his driver to hurry. I didn't have anything to do so I joined him. Halfway into the trip we saw the car of the controleur (a Dutch government official), slowly driving in front of us, in the middle of the road. Apparently he didn't want to pull over and let us pass. Finally our driver saw an opening and passed the controleur's car. Majalengka was a small town and social life was centered around its club, were everything was discussed. Two days after the event my brother was summoned by the regent. How could he treat the controleur so disrespectfully, he was asked. My brother became angry and said: if you want to make an issue out of this, you are welcome to fire me. I was deeply impressed. Apparently a doctor could afford to be outspoken, because the government was in need of his services. At that moment I decided to register for medical school in Batavia (Jakarta) after my final examination.

Q: When Japan invaded the Dutch Indies in 1942 the medical school was temporarily closed down, but after a while lectures resumed. Did you go back to school then?

A: Yes, but we didn't like the way the Japanese treated us. All students were forced to have their heads shaven and we refused to undergo this humiliation. Together with some friends I was kicked out of college and that is the reason why I never became a doctor. During the Japanese occupation we as a group stayed together. It was called Prapatan 10, the address of the students boarding house. That group became the driving force behind the proclamation of independence on Aug. 17, 1945. Former members became military officers, businesspeople, civil servants and diplomats. In 1948 I was sent to the United States to represent the fledgling republic at the newly founded United Nations, to put Indonesia on the world map. In 1950, after the recognition of our sovereignty by the Dutch, Sumitro Djojohadikusumo and I were went to Washington to open an Indonesian embassy and to take over former Dutch property in the U.S. capital. We were supposed to buy houses and rent offices. When the first ambassador arrived, bureaucracy followed in his wake. We had to fill in forms and show our diplomas. I could not present any papers, because I had lost them during the war of independence. When the Dutch started their first military aggression in 1947, all personal papers from my house in Grebek were seized by Raymond Westerling's soldiers. I have never seen them since. I even lost my marriage certificate. Without the necessary papers you were not allowed to join the foreign service and then I realized that I wasn't destined to be a diplomat.

Q: During the American years you became a close friend of Sumitro. Did that friendship play a role when in 1952 you started a company of your own and he was a cabinet minister? After all, you qualified for the terms of Sumitro's Benteng policy measure, which was aimed at developing a native entrepreneurs class.

A: The Benteng measures at that time no longer applied. I was too late for that. As to my friendship with Sumitro, that's right, but you should not jump to the conclusion that I received special treatment from him. When I wanted to start a company, many department heads appeared to be old friends. I got the license from an acquaintance who was the director of the trade ministry. The head of the section for import licenses was an old friend as well. When I wanted to get a loan from the bank, the same happened. The director was an old pal from the days of the revolution. To put it bluntly: I cashed in on my past relationships.

Q: Did you establish your first shipping contacts in the U.S?

A: Oh yes, Isthmian Lines was the first non-Dutch firm that shipped our exports to America (in the years 1948 and 1949 the Dutch still considered this smuggling). So I automatically had contact with their head office and became friends with the gentlemen. In 1950 Indonesia received a loan from the American Export and Import Bank of US$100 million for the purchase of capital goods to strengthen our infrastructure. Then the lion's share of the cargo went to Isthmian Lines, while at the time there were still three Dutch companies in the market: the Stoomvaartmaatschappij (Steamship Company) Netherlands, the Rotterdamsche Lloyd and the Stoomvaartmaatschappij Ocean -- called the "kongsi of three". The outbreak of the Korean War meant a breakthrough for Indonesian raw material suppliers into the American market. When I left the diplomatic service and started out on my own (on Oct. 20, 1952 Soedarpo and his wife Minarsih established the N.V. Perusahaan Dagang Soedarpo Corporation) I was visited by the executive vice president of Isthmian Lines. He said: "Take over our agency, because till now it has been in Dutch hands and has no potential. We need an Indonesian agency." A rational story. I was taken aback by that offer, since I knew next to nothing about shipping. But he took the matter lightly and said: "We know you." Finally I took over 76 percent of the shares of the International Shipping and Transport Agency (ISTA), a Dutch agency dating from before the World War II.

Q: So, your American connections meant your breakthrough into the business world?

A: The connections were innumerable. I had established the Soedarpo Corporation, a trading company (initially trading in paper and office equipment). I was the representative of Remington Rand and in the end also of RCA. At the beginning of the 1950s everything had to be done by Sumitro and me. If people wanted to go into trade, we had to find a way.

Q: And soon afterwards ISTA also became the agent of the Japanese Sempako Line?

A: When in 1953 I became director of ISTA, we only had Isthmian Lines as a principal and that was too limited a basis. So I went to look for other shipping companies. If someone had told me in 1950 that within a couple of years I would be representing a Japanese firm, I would have told them they were out of their mind. Now it is no longer a problem, but at the time the serious injuries caused by the Japanese to our country were still intensely felt. In 1953 we became agents for the German Hapag-Lloyd AG and in 1954 also for the Sempako Line. Within a year we had partners in three continents.

Q: How did the Indonesian merchant marines fare under the regime of Sukarno?

A: The merchant marines depend on trade. If trade doesn't run smoothly, the shipping industry suffers too. But that isn't all. As private entrepreneurs at the time we were merely tolerated. When Sukarno in 1957 and 1958 seized Dutch assets, it all became state property, controlled by state firms. Military officers were placed at the head of the firms. They were of the opinion that wholesale trade should be centralized in the hands of the government. One of them visited me at the head office of Soedarpo Corporation and demanded the agency of RCA. I answered: "that is the prerogative of the principal, not mine. You better talk to them". He said: "if you won't do it, you aren't going to get any more orders", to which I replied: "that's what you think. I am going to get them". After all, buyers even then wanted a reasonable price. RCA enjoyed a good reputation and government agencies were eager to buy, but purchasing was done through a state-owned company. The head was an old friend and in exchange for a commission he purchased on a large scale. So that franchise was doing quite well, in that way.

Q: It is said that you ran into political problems because of rather strong links with the Indonesian Socialist Party.

A: That's what Sukarno was like. However, one thing is clear; in personal matters we had no problems. This goes a long way back. Since 1942 Sukarno felt that Soedjatmoko (a young socialist leader) and I opposed him too much. But he never was hostile. An example was that when he began to mobilize the Romusha (Indonesian forced labor to support the Japanese war effort), we went to see him. The same thing happened when Defenders of the Fatherland (an Indonesian volunteer corps commanded by Japanese officers) was formed. We had heated arguments about that. Continuously. Until the moment of proclamation. But he always acted chivalrously. Only to the two of us, for that matter. I did ask him about that later. "Bung," I asked, "we were so hard on you, why did you never get angry?" Sukarno said, "I considered you to be the voice of the youth. You expressed their aspirations, without ulterior political motives. For an attitude like that I have great respect."

My personal relationship with Sukarno remained good. For example, when certain elements in his entourage wished to take over a number of agencies in key positions, they needed Sukarno's approval in cases like that. And when that proposal was made (take over my company), the president got angry. "Soedarpo is not my friend," he said, "but he is one of our entrepreneurs who has never asked for help or political intervention. He is a national asset. I won't allow it." That meant I was safe.

-- INA magazine