Tuesday
Tuesday we left from Singapore. Impressions are that there is still much more to learn about Singapore and the people of Singapore: their hopes, dreams, aspirations, individual differences. Singapore is a great country that has endorsed much of the free market and has led to much of its success. Unfortunately, being so small, it's forced to be dependent on so many other people.
There are troubles, and, unfortunately again, the government has taken credit for the work that the market has done. However, it's quite clear that the government of Singapore will not molest beyond a certain point. There is a further conversation to be had about political freedoms and some civil freedoms that need expanding, but hey, I'm an anarchist. I don't stop until there's nothing but freedom.
Anyway, I don't want to paint too rosy a picture, nor to do I want to paint something that is dismal. Singapore has done better than many of its neighbors, and there is a reason for that, especially considering that the neighbors are resource rich and Singapore is resource poor.
Wednesday
Waking up Wednesday was the first day in Jakarta after a long bus ride to the Grand Hyatt on Tuesday.
This place is lavish, and one could easily get the wrong impression of Jakarta from staying here. There are fancy shops, restaurants, businesses, and really nice hotels with staff that will do everything for you. The pomp and circumstance are easy to get use to, and if you learn a little bit of the language, the people are even friendlier.
The people are just plain friendly here. Petty crime is actually not so bad, although there are muggings and pick-pocketing, it's nothing so bad as Detroit or Washington DC (which are two cities I would not be out at night in). The Jakartans are great, and there is so much to learn that five days doesn't do. 50% of the population here lives on less than $2 a day, but there is a growing middle class and people. How do I know? Well, there is evidence. There are mini-marts, hypermarts, and other stores that work for a greater array of income groups. Furthermore, there are advertisements on billboards everywhere and prominently displayed for so many different products. The rich don't need such advertisements and the poor would never justify the expenditure (especially not for an SUV). Some signs are written in English, which would be advertising to the larger expatriate community that seeks the lower costs of living here. However, many are in Bahasa, the common language in Indonesia. That means that there must be a sufficient and growing middle class to cater to.
We went to the Commerce Department and talked to several "important" people. They all pretty much have Stockholm syndrome, think that Indonesia is the greatest thing on Earth. But they all speak the party line. They talk about the natural resources, the hard working population, new and "stable" democratic government. They admit that there are some "troubles", but there isn't necessarily much talk about how deep these things might go.
Interestingly, we talked to Dr. Baswedan, who could well become the next Indonesian prime minister (or so in about 10 years). He had much interesting to say, and he painted a super rosy picture of a united Indonesia. I asked him some questions about secessionist groups and East Timor, and he painted over those very quickly.
Furthermore, there was a Lt. Colonel who spoke to us about the Indonesian-US military relationship. Indonesia suffers from no potential external threat, has a history of using its military against its people, but the US has decided to give them US training. The officer admitted that the generals weren't "sold on the idea of civilian government" and spoke about some "ostensibly" innocent people being shot in East Timor. Furthermore, the US gets to sell lots of expensive weaponry to Indonesia.
After lunch we went to an Indonesian company that makes over $500 M per year in revenue, Kawan Lama. It even owns a good stake of Ace Hardware. It's a holding company of a large Chinese-Indonesian family. Lots of interesting take-aways from the place. The children who run the company were forbidden from learning Chinese after the military coup in Indonesia, so only the older and the younger speak Chinese. The older speak Cantonese, the younger have learned Mandarin. During the time of the military junta, they had to learn how not to be seen so the government didn't take them over or tax them to death.
Speaking of which the government still owns large portions of the big companies here. Even worse, the military is oftentimes the real owners, and they run that to their own advantage. Indonesia is very much a place that seems like it could be ready for a great explosion of wealth, or a great explosion of violence. Many people come to Jakarta, and jobs are not being created fast enough, even for the growing population. They have liberalized some areas of their economy, but labor laws remain rigid, freezing these people into unemployment.
Finally, P&G hosted a dinner that night, where we got to meet some very interesting people. One of the people I met was actually from Vietnam, is now working in Indonesia, and will likely be moving around SE Asia for some time now. He taught me how to say "thank you" in Vietnamese, which sounds very much like the English "come on". Vietnamese is tonal though, which will take some getting use to. We learned a great deal about Indonesia markets and how people do business here. Less than 2% of the population owns washing machine, and much of the labor is done by hand by maids. Maids are cheap, and you can often buy servants and set up servant quarters very near your house.
Thursday
Today was crazy. We got sent to a traditional market, a mini-mart, and a hypermart by P&G to learn spending and shopping habits. The traditional markets are dying out as the mini-marts and hypermarts are opening up with trade liberalization. It's a good thing in that these places are cheaper and nicer places to shop. That means more people can shop in safety and enjoy a higher standard of living. The traditional markets are dying out and probably won't be around, but that means these people can move into better paying unskilled or skilled labor. Furthermore, by saving more money, these people will be able to save it, and form the pool of savings necessary for development.
I don't know how secure the financial sector is here. That is difficult to get a read on. That will be important as Indonesia develops further.
The mini-mart was something like a 7-11 with a few more products. And the hypermart is much like a mall, with a super-grocery store attached. Shops outside have some negotiable prices, but shops inside the grocery part are far more American in price. Things are made more cheaply so that people can afford more. Furthermore, since maids to much of the shopping, or poor families will go to buy in bulk, you can find huge things like refills for dish-washing soap right next to individual packets, and shampoo for 5 uses next to a much larger bottle.
Cool too. These people like fresh fish. We have live lobsters in our stores at times, but they have the fish swimming about in the tank and you can pick him right out and they gut him for you there. We got to go to the inventory section of the hypermart, which was cool seeing how they store things. The girls and the guys who worked in inventory (not just guys either, very interesting) were sharply dressed. I was surprised being that they are doing more labor and they are hardly ever seen.
We had some P&G Jakartans come along with us during all these trips and give us information, which was really cool.
In the afternoon, we talked to an Indonesian banker (again Chinese), who is doing more "micro-finance" type work. I've learned that micro-finance is the same thing as traditional short-term, high interest loans, but it's given another name and they put "social purpose" on the title. The interest on the loans can be higher than 30%, but people never talk about them because they are always reported in the more relevant monthly rate. So, people who traditionally do this are called "loan sharks", they are excoriated, and they are slapped with high regulation. But when you call it "micro-finance", you get almost no regulation and people invite you in as if you were Mother Teresa. An interesting way the market may have found around regulation. However, I remain skeptical of many of the claims of micro-finance simply because I've heard inklings of government involvement and back-door dealing, especially with the Gramean Bank. Nonetheless, much of mico-finance is traditional banking principles done on a smaller scale.
We also met with an investment banker/ hedge fund guy. It was great. He managed to talk to us all about the coming US Greater Depression and showed lots of information that was new to the class, but old hat to me. I could smile as people gave me the "ohmygosh, Jacob is right!" look. However, the guy seemed to make spurious predictions that Indonesia would be better off than the US in the coming economic crash. I'm don't think I can believe that, especially with what I know, think I know, and with what I've seen. However, Indonesia is a vibrant place, and there is a lot of potential. That's universally realized. But how to tap that is another story.
Finally, we've come back to the Grand Hyatt and had dinner with a number of UVA alums, future UVA students, and some very important people again from Commerce Department, banks, oh...and the INDONESIAN FINANCE MINISTER showed up! It was really great. I got to ask her a question about the future of Islamic banking. I was even taken aside later by a banker who told me more about what he was thinking about Islamic banking. It's something I'm going to have to look more into.
Anyway, that's the very short of what has been going on here. I'm going to need more time to process it, but that's going to take a very long time.
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