Jakarta Post – May 20, 2005

President Susilo Bambang Yudhoyono will visit Washington, DC next week. The Jakarta Post’s correspondent Yenni Djahidin recently talked with the president of the U.S.-ASEAN Business Council, Matthew P. Daley, in his office in Washington. This is an excerpt.

Question: After the tsunamis, what changes have you noticed in U.S.-Indonesia relations?

Answer: Actually there are two. From the perspective of Indonesia, the people have had the opportunity to see a positive side of the United States and its attitude toward Indonesia. It’s been a positive reaction to the efforts that we made to help with the tsunami. And that has involved both the private sector and the public sector. But the most tangible and visible aspect was the deployment of the aircraft carrier Abraham Lincoln and its associated ships that provided direct humanitarian relief to the people in Aceh and affected areas. And in terms of the private sector, there has been over US$500 million that has been raised for tsunami relief and reconstruction in the region.

Aside from the tsunami, has President Susilo’s administration made any difference to the business community from the previous Indonesian administrations?

We understand that not everything that is necessary can happen immediately. American business understands that. American business is encouraged by the stated objectives of President Susilo’s administration, to make progress on the issues that are important to Indonesia. President Susilo is aware that Indonesia is perhaps the one major country in Southeast Asia that has not recovered the foreign direct investment levels that it enjoyed before the 1997-1998 financial crisis. And certainly there is a belief here in the business community that he understands the issues intellectually and is going to proceed to address them in a serious way.

There is a disposition to give him and his administration the benefit of the doubt as they try to put a program for the future in place. And people are looking forward to his visit here later this month because they know that he appreciates what needs to be done on many fronts including economic policy, strengthening Indonesia’s democracy, military reforms, and they think that he will be an effective and articulate spokesman for Indonesia’s concerns and interests here. So there is a high degree of anticipation regarding his visit.

What do you expect from President Susilo’s visit?

First, his visit is going to give him an opportunity to tell American audiences about the changes that have taken place in Indonesia. And there have been a number positive changes.

I would, first and foremost, signal that there’s been a positive democratic evolution in Indonesia. And this is something that is important to Americans. His election, the first directly elected president in Indonesia, is an example of that. The election was conducted very well.

Second, the signs of reform are encouraging, in military reforms, discussion of economic reforms. These are things that are encouraging to Americans. The signs of continuing improvement in relations with Timor Leste are encouraging to Americans. Obviously, Indonesia is the largest country in Southeast Asia.

How does U.S. business see Indonesia now compared to other ASEAN countries?

ASEAN is composed of countries that (have) extraordinarily different levels of political and economic development. You are familiar with the ones that are lagging behind.

What American business is looking for now is the establishment of concrete policies that will remove some of the factors which have impeded investment in Indonesia. The foremost of these, on a sectoral basis, is the energy sector. I would say that American companies have plans, which are active plans, for something between $10 and $20 billion of investment in the near term, which they’ll make as Indonesia puts into place the kinds of policies that will facilitate that investment.

There’s one area that is of growing general concern to American investors and that involves a practice of resolving civil disputes in criminal courts, or to put it differently, the criminalization of commercial disputes, and how issues of bankruptcy are handled. All of these are issues that have had a negative effect on the willingness of people to invest in Indonesia.

What are the advantages and disadvantages for U.S. companies wanting to invest in Indonesia?

Indonesia has an abundance of energy that awaits further investment and development. It is increasingly being seen as a stable political environment. Following 1997-1998 (the economic crisis) although the trends were going in the right direction, there was a lot of uncertainty about what was going to happen. And I think the recent round of elections, the perception of political stability in Indonesia has been enhanced. And that, in turn, has had a favorable impact on investment whether it’s domestic investment or foreign investment.

The decentralization process, as it sorts itself out, will enhance this political stability, I think. At the same time, it may complicate doing business. It’s important that decentralization not be seen as a complicating factor.

Is security a big issue for American companies?

It’s an issue that varies a lot from company to company, depending on the nature of their investment. The companies that have had a long involvement in Indonesia have stayed. And they have worked very hard to try and create a safe environment for their facilities and their employees, most of whom are Indonesian.

One of the things that distinguishes American companies from other foreign companies is that American companies are more likely to draw their senior management from the population of the country where they are located and they have fewer expats. They are more likely to do career development for the employees in the countries in which they are located.

I think the general view here is that President Susilo, because of his background, will bring to office a more detailed and sophisticated understanding of security concerns than someone else who does not have the background that he has (in the military).


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