In the world war of economics, the sprawling Southeast Asian nation of Indonesia is shaping up as a key battlefield for the 1990s. The Japanese know it, as do the Germans, the British, the South Koreans and the Taiwanese. But American business people have yet to set up camp. The generals of U.S. industry may be hard pressed to find Indonesia on the map.
The fifth most populous nation on the planet, with more than 180 million people living on a necklace of 13,677 islands, has the largest and cheapest work force in the Pacific. It is teeming with untapped natural resources. And best, it is begging for business.
Three years ago, the government of Indonesia went on a deregulation binge, cutting away the red tape and tariffs that had discouraged foreign investors. Since then, South Korea has launched 126 business ventures in Indonesia, Japan 116, Taiwan 109 and Hong Kong 53. The United States has weighed in with only nine business ventures. In fact, 10 years ago, the U.S. business presence in Indonesia was far greater than it is today.
Even without an enthusiastic response from the United States, Indonesian President Suharto is patting himself on the back for the "miracles" deregulation has fostered: an up-and-coming stock market and a growth rate of 6 percent. Indonesia's public relations machine would like the world to believe that everyone has benefited from Suharto's reforms, but that is not the truth yet.
Our associate Jim Lynch visited Indonesia recently and found the rich and the poor grumbling that the new economics benefits only the wealthy.
The policies have fattened the banking tycoons of Jakarta who go home after a day's work to their marble floors and turquoise-colored swimming pools. But not much has changed for the sidewalk merchant who wheels his goods to work, or the rice farmer on the island of Bali who carries her load on her head. Nor has life changed for the Dani warrior still carrying his tribal spear on the island of Irian Jaya.
The canyon between the rich and the poor is so wide, and the standard of living so varied across Indonesia, that a beggar in Jakarta can do little with a few rupiahs handed to him. But if he had the same money in a village 100 miles away, he could buy a generous lunch.
Foreign investment has done little to increase wages in a country where skilled laborers get only about $3 a day.
Indonesian government insiders confidentially point out that the most visible beneficiaries of Suharto's reforms are Suharto's relatives. His children have received contracts to build highways, hotels and an airport.
There are the usual technical problems that come with doing business in the Third World. A lasting memory of Indonesia is people shouting "Hello? Hello?" into telephones that don't work.
Problems aside, Indonesia is one of the last and largest fertile terrains in the world economy. Indonesian leaders are hooked on the drug of foreign money and would particularly like to see more U.S. dollars. At a recent economics forum hosted by Suharto's government, the featured speaker was former secretary of state Alexander M. Haig Jr.