I distinctly remember packing up my small apartment in Kemang, doing one final, weekend yoga retreat in the hills outside Jakarta and leaving Indonesia to move back to New York. Back then, Susilo Bambang Yudhoyono, or “SBY” as he’s known, was a newly elected, popular reformist president leading a strong anti-corruption drive. His top economic and development priorities were improving infrastructure, tackling corruption and attracting Western FDI.
That was then. Now with a husband and toddler twins, and much less time for yoga, I am packing up an even smaller apartment in Manhattan and preparing to move back to Asia – this time to Singapore – to lead AnnaPurna Consulting’ account management team in the Southeast Asia region.
As always happens with a major move, the brisk pace of preparations has now turned into a full sprint. The most urgent tasks included providing continuity for clients I’ll be handing over in the US and Canada, selling my apartment, and getting my kids into preschool in Singapore. With all of that firmly underway, I’ve started thinking in my new time zone – catching up with US companies focused on Asia, starting a dialogue with my Asia-based colleagues and renewing some of my contacts within the Indonesian government. Above all, I wanted to know what their biggest concerns were: how is the current investment climate? What are the top business risks in my former home?
As ever, some things change, and others don’t. Infrastructure and corruption are still high on everyone’s list. The surprise, though, came when I discovered how much the conversation on politics and the investment climate has evolved.
Indonesia’s old guard is changing. To be sure, some familiar faces remain firmly in power. PDI-P head and former President Megawati continues to play a major role. Agus Martowardoyo, who was CEO of Indonesia’s largest bank (Bank Mandiri) when I was there, is now Governor of the central bank. But now the wildly popular Joko Widodo, “Jokowi”, aims to be the reformist President after elections in July. The public speeches exhibit a new dynamism. I was shocked when Finance Minister Chatib Basri, at a recent event in New York, skipped the typical mind-numbing statistics and instead threw out memorable quotes like “If we want you to invest we need to answer the phone at the Investment Ministry when it rings!” Indeed it’s a younger guard with fresher ideas capturing the imagination of Indonesians, half of whom are under 30 years old.
The most striking change to me is the conversation about investment. Rather than focusing solely on attracting Western FDI, Indonesians now really aim to grow their own economy and invest abroad.
Indonesians seem keen to move away from a resource-led economy toward innovation-led industries like high-tech. This will require a legal and regulatory environment conducive to investment, especially in areas like privacy. I was surprised to hear that Indonesia is now seeking “lessons learned” from others who have tried to create technology hubs.
Gone are the days of Indonesia looking heavily to the US for investment. At an event for young Indonesian CEOs in town to run the NYC marathon last fall, US businesspeople noted that they love the consumer market demographic of Indonesia but can’t wrap their heads around the corruption issues. One CEO said, “You Americans don’t realize – others have already figured it out. You are late to the party.”
Finally, the focus on Indonesian outbound investment is totally new. When I was living in Jakarta I worked on several projects to increase lending to young, local SMEs. Now Indonesia seeks aid for those same SMEs to enter the global supply chain. I recently asked an official from BKPM, the investment promotion authority, for his pitch to attract foreign investment. All he wanted to discuss was his role in how he helps Indonesian firms enter the US. He referred to the hassles faced by an Indonesian wind farm and said, “If you think Indonesia isn’t friendly to investors, try California!”
Though the Indonesian CEO I recently met told me Americans are “late to the party”, surely it is better late than never. US CEOs have found that “Brand America,” including the US focus on sustainability and CSR, plays very well. US firms concerned about corruption are starting to look seriously at how other MNCs have been successful. AnnaPurna Consulting has a real role to play in supporting this growth.
I am just at the beginning of my re-entry to Southeast Asia and eager to learn more once I’m on the ground. But among the various conversations I’ve had there is one clear theme – it is an incredibly exciting time to be in the region.