Seafaring nation needs a merchant fleet

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