The economic impact of cultural cluelessness

by Tonia

I came to Indonesia to find out something about the economy. To all appearances, Indonesia is an economic success story: in the 13 years since the 1997 Asian financial crisis, it has experienced remarkable success and growth. But roadblocks to economic development and foreign investment still exist. Explaining whether and how Indonesia can overcome them is the goal of my research. In Jakarta, I found a lot of “official” answers to my questions: carefully crafted policy assessments couched in staid financial language. In Bali, I found a contrasting opinion that unsettled my picture of the Indonesian economy.

During our week in Jakarta I met with an array of experts — a representative from the International Finance Corporation of the World Bank, the head of the world-renowned  microfinance operations at Bank Rakyat Indonesia, and researchers from the central Bank Indonesia — who were all more or less on the same page. After speaking with them and conducting some of my own research, I’ve been able to pinpoint several key reasons behind the success and growth of the Indonesian economy over the past decade since the 1997 crisis, and also some of the key challenges which the country faces in the future. Most gave similar reasons for why they felt there are still major roadblocks to Indonesian growth and why many foreign investors are wary of investing in the economy given these challenges (some of which will be fleshed out in upcoming articles in the Globalist).

But this week I met with someone in Bali who held a unique perspective on the reluctance of foreigners to put their money into the island’s economy. Unlike the officials from prestigious financial institutions, my Bali source had no qualms about giving his blunt, honest opinion. He held nothing back, and I’m glad he didn’t.

I met this source — an American accountant and consultant who has lived in Asia for over 17 years — at a popular German bar in Kuta on a sweltering Friday afternoon. Bali has many expats living and working on the island. Some come for the lifestyle, but others come to make a buck by navigating the island’s economy for clueless foreign businessmen.

While he admitted that corruption, mercurial laws, and other structural challenges do play a role in deterring foreign investors from entering the Indonesian market, my source claimed that the biggest problem is those investors’ limited world view. They are, he explained,  “completely ignorant about emerging markets in Asia.” According to him, Western businesspeople just don’t get the intricacies of Asian markets and consequently fail to see the growth potential of places like Indonesia. He did admit that some of the concerns my previous sources had listed–infrastructure, corruption, legal problems, reliance on the informal sector–did exist, but those who were truly perceptive  would not hesitate to work around these issues and invest in Indonesia’s economy.

Throughout our conversation, he provided us with colorful stories from his past experiences with businesspeople who still felt that Indonesia was a “bastion of deficiency” and had absolutely no conception of how the Indonesian economy actually operates. These businessmen ranged from bankers to blog writers on Yahoo! or Google. To him, this was American ignorance in action. Despite being American himself, my source was comfortable lacing his stories with utter disdain for his former countrymen.

While his stories grew increasingly long-winded as the afternoon progressed (he even told one about once taking his Javanese driver to a rock concert), the expat was more honest and frank than any of the experts I spoke to in Jakarta. Most of the officials we met with earlier were careful to choose their words according to the interests of the firms they worked for, but the expat just said what he thought: a reporter’s dream.

There are many successful expats on this island, and I’m sure their points of view vary. What I could take away from this interview was that investing time in truly understanding how a country works isn’t just respectful and rewarding — in places like Indonesia, it’s actually good for business.


Photo Update: Bali, May 19-20

Sunset at Pura Luhur Ulu Watu, a temple in southern Bali

A performance of the traditional Balinese "kecak" dance

Ketut Liyer, a Balinese medicine man, at his home in Ubud

Bali's verdant jungle landscape

A Day in the Kampung

by Raisa

In Indonesian, kampung is translated literally as “community” or “village,” but considered in Jakarta to be a slum neighborhood. To walk into a kampung is to walk into an intensely private, interconnected, and intimate space. For the residents, home is both the narrow mud street between plywood shacks and the clean-swept tiles within.

Catherine, Jasmine and I were lucky to be taken into one of the kampung of northern Jakarta last week with the field coordinator and secretary of the Urban Poor Consortium. The UPC operates throughout Jakarta and the rest of Indonesia to provide community organizing and political advocacy, working as a voice for the often-unregistered citizens who dwell in the slums and communities that are unrecognized by the government. After spending the morning with the UPC staff members, we drove through heavy traffic and by soaring skyscrapers and ritzy condominiums to a kampung named Kebon Bayem (“Spinach Garden” in English). Here, 450 families have built homes in a cramped space by the railroad tracks.

I have been to slums and poor neighborhoods before. Often I feel like an intruder staring at a spectacle. But at Kebon Bayem, I did not. We were immediately welcomed by the community leaders with whom the UPC works. Eager to show us their village and share their stories of frustration and resilience, we were invited into the humble mosque they built themselves, a plywood-and-corrugated-tin affair with white tile floors. As we settled ourselves cross-legged on the floor, residents began to crowd in; first the men, then women and children who peered in through the open door.

For two uninterrupted hours we spoke with the community leaders. The buzzing of flies, the air heavy with cigarette smoke, the shrieks of children outside, the stiffness of my crossed legs: despite these distractions, I didn’t for a moment want to be anywhere else. Never mind the sweat dripping down my face and the uncomfortable way my shirt stuck to my back. This was my first field visit as a reporter, not just a tourist. Each face and voice presented a story to tell. Each detail fascinated me.

When we tired of questioning, we were invited to attend a religious ceremony celebrating the seven-month birthday of a baby in the kampung. After the prayer chants were completed, and after each man present in the mosque had cut off a small tuft of the baby’s hair, a feast was served to us from a huge communal bowl covered with banana leaves and filled with rice, soybean cakes, noodles, chicken, and vegetables. We ate as everyone else did: with our hands, and sitting on the floor.

As the afternoon came to a close, we were brought to the spinach garden that some of the kampung residents farm. In the distance, huge villas and apartment complexes loomed. But the elderly woman pulling spinach right next to us, in her colorful sarong and round hat, could have been from any rural community in Indonesia in the last few centuries.

When I left Kebon Bayem, I felt like I finally had a grasp on Jakarta. Many find it complicated, overdeveloped in some aspects and underdeveloped in others, as I had too upon arrival. And while I may never understand what makes this city’s heart beat, I knew I had connected with real people in real, tangible communities, and with that Jakarta came alive for me.

Laundry hanging in a side alley of Kabon Bayem

Community leaders relaxing in the mosque after finishing the meal we shared

A woman picks spinach right outside the kampung

Banda Aceh Update

by Jeff

Apologies for the delay in posting, internet at our hotel has been down for the last day and a half. We’ve had an incredible few days packed with meetings and adventures. One thing that has really characterized our experience here is the friendliness of the people. Half of the things that have happened to us over the last two days would never have happened if not for people constantly offering to take us places and introduce us to new people.

A quick example: A member of our group had been in contact with a university professor named Suraiya in Banda Aceh, and we had planned a group meeting with her and some of her students. On Thursday afternoon we arrived at Asrama Haji (a school of religious studies and religious philosophy) and met Suraiya. After the meeting (which was an experience in itself. The 10 of us were seated as a panel in the front of a large classroom and bombarded with questions about Islam and perceptions of Islam in America) Suriaya offered to set up a meeting for us with the biggest local newspaper the next morning. So yesterday morning we arrived at Serambi Indonesia, Aceh’s largest paper, where Suraiya met us and helped with translation. After this meeting she offered to set up dinner for us at her sister’s restaurant. So again Suraiya met us last night for dinner. Her sister’s restaurant was incredible – most in the group said it was their favorite meal yet. We were seated on the floor (no shoes, of course) in an open-air private room built on the water. We had been cautious about eating seafood up to this point, but here everything had been freshly caught and was delicious.

Halfway through dinner Suraiya mentioned that she had called some of her friends to join us – and this is where the experience became surreal. First two men showed up. The first, an older man, spoke perfect English (which made sense when he mentioned that he worked for the World Bank in DC for 18 years). He was incredibly knowledgeable about Aceh, and especially the progress of economic development here. The second man introduced himself as Jamaica, but then said that this was his fake name – he  had been the spokesman for the GAM (the Free Aceh Movement) and used a fake name now for safety. His story was truly remarkable. He had joined the GAM while he was in university when he saw the lack of technology being employed by the GAM. He knew that they had no chance of success if they relied on typewriters to get their message out. When his computer skills were discovered he was quickly promoted and eventually became the spokesman for an entire region. His tales of hiding in the jungle and running from Indonesian military where hard to fathom. Soon another man arrived with his family – we were told he was the nephew of the man who was the top commander of the GAM. He had fled Indonesia in 1989 because of the danger he faced because of his uncle’s position. Since then, he told us, many in his family have been shot or poisoned. As we sat and listened to these stories we were all shocked by the openness about conflict. But all of these men stressed again and again that peace was always the ultimate goal. Fighting is done now – they try not to think about the past because there is such hope for what the future will bring.

This has happened to us over and over again – one contact has led to a stream of new people, one more willing than the next to talk to us. Aceh is a beautiful place with people so much more friendly than I have met elsewhere around the world. People in Jakarta are quick to criticize this region, but people here have experienced conflict and disaster like no where else. Only 6 years after the tsunami and the end of violence it is remarkable how friendly this place is.

About Ubud: Bali’s Cultural Capital

by Uzra

All you Eat, Pray, Love fans can be jealous. Today the eight of us reporting in Bali spent all day with Mario. For those who haven’t read the book (I hadn’t until this trip), Mario used to work at the Ubud Inn, where author Elizabeth Gilbert stayed on her trip to Bali.

Ubud is the cultural center of Bali—a quaint little town simply oozing character about an hour’s drive away from Kuta, the coastal town where we are staying. My eyes were glued to the window as we drove past villages with gorgeous Hindu temples decorated with gold and orange and stone statues, little huts packed with everything from colorful butterfly kites to intricate woodcarvings of Rama and Sita (“Romeo and Juliet,” as the carvers called them) and silverware. Each house/hut/any sort of establishment had a pengor outside it: a long, curved bamboo stick adorned with palm fronds and lanterns to make it resemble a dragon. These pengors are built to shield the little stone containers that are used to make offerings to the gods. On one particular sacred day in Ubud, all the pengors are burned—only to be remade on another sacred day after six months. Mario talked to us about his life and Balinese culture in between our visits to ninth generation traditional medicine men and medicine women, as well as modern clinics in Ubud (watch out for an article in the Globalist soon!).

What immediately struck me about Ubud was its pulsating culture and distinct sense of identity. Jakarta was, to me, a city with a bit of an identity crisis. After having spent five days there, I still am not quite sure what Jakarta and its people are all about. The indescribable and unexpected extent of consumerism in the city (I saw more KFC’s and Dunkin’ Donuts in Jakarta than in the United States) was impenetrable. To me, the true personality of Jakarta was lost somewhere in translation. However, Ubud, even with its huge tourist population, has not lost its distinctiveness, and its simplicity was a breath of fresh air.

A typical pengor on a street in Bali


Photo Update: May 19

This gallery contains 6 photos.

by Jeff

Lux et Veritas: Curricular Changes at an Islamic University

by Ramon

Nowhere perhaps is the question of religion’s role more fraught than in religious schools, which necessitate decisions, oftentimes fruitfully avoided in a pluralistic society, about the specific values and teachings that a culture passes on as its most lasting inheritance to its children. Universitas Islam Negeri  (UIN), one of the premier Islamic universities in Indonesia, was originally founded as a center to train and produce Muslim scholars to guide society, but in recent years, as Dr. Sudarnoto Hakim, a Vice Rector of the University explained to us on Monday, it has opened up its curriculum to include the hard and social sciences. This change, at a university still responsible to the Ministry of Religion, has produced backlash from more hard-line, elderly Muslims who worry about a university, and by proxy, a culture losing its way.

The changes have come as the university recognizes that the challenges of the modern world cannot be met just by imbibing doctrinal Islamic views but require as well other knowledge and skills, along with the argument from within Islam that there is no separation between religious and worldly life. The erasure of that line goes both ways, though, and the changes are still a far cry away from the West’s liberal arts and the myriad ideologies and worldviews that infuse them; at UIN all studies are grounded in Islamic values.

While the University officials we talked to believe that the criticism it faces represents the minority viewpoint in the country, the change has caused some consternation among the excellent religious scholars as increasingly more students study the sciences and humanities and fewer and fewer commit to Islamic study. Yet religious devotion is still vibrant in student culture, as reflected in the conservative dress codes and the prevalence of Islamic student groups on campus. Interestingly, though, the most extreme Islamic student groups in Indonesia have their base in the secular universities where Dr. Hakim speculated that they do not feel checked by elderly religious figures and faculty who can authoritatively temper the fervor of youth.

Though far from Yale, UIN’s story felt oddly similar to the history of our own university which was originally founded to train religious leaders and later expanded to a full and diverse study of the liberal arts. One wonders what the officials at UIN might make of the conclusion, at least for now, of that story: a school whose Christian roots, except for an occasional chapel and the presence of the divinity school, have largely withered away.

Yet in another sense, UIN’s change is characteristically Indonesian. Prof. Dr.Komaruddin Hidayat, the Rector of the University, explained that Islam in Indonesia bears an inclusive streak from its past, the confluence of the mystical emphasis of 13th century Islam which privileged the personal over the political and the traders who brought Islam to Indonesia during this to time who, as voyagers across many worlds, adopted a more tolerant doctrine than their stricter compatriots in Arabia. While Islam is by far the dominant religious faith in the country, those historical roots have produced a country that incorporates and celebrates its rich diversity – creeds and languages, flora and fauna.

Prof. Dr. Hidayat went on to characterize UIN as a bridge across the sectors of the society. Another professor termed it a catalyst, responsible for the transformation of her own faith from the rote teachings characteristic of many rural madrassas to the broader horizons and personal discovery that are the scars of scholarly study and discussion among diverse people. Prof. Dr. Hidayat continued, describing students’ time at UIN as one of rebirth as Indonesians and later as children and citizens of the world. This at times heady vision mirrored in many ways his description of Islamic faith and practice, one grounded in universal values, acknowledgement of one God, good behavior, and devotion to prayer. “It’s easy,” he told us with a slight chuckle, and though reminded as he excused himself at the end of our meeting to pray what commitment that entails, part of me wondered, with all due respect, whether he was making it seem too easy. Aspersions were cast at Huntington’s thesis of Clash of Civilizations, the ritual flogging of many who insist on a multicultural, peaceful world. With no defense of all of Huntington’s argument, the Rector did not seem to give sufficient weight to the conflicts that actively persist and the deeper, more intractable mysteries of religious faith.

Those tensions somewhat appear in students’ frequent criticism of corruption in Indonesian business and society, a fairly large problem and concern in the country. The Rector told us that after Indonesia won independence many groups felt entitled to some reward for the large investment they had made in the fight. The splitting of spoils required compromise, and much of it fell along ethnic lines. This led to a culture of ethnic solidarity in hiring practices –“if you’re a farmer from Sumatra, you are going to chose your friend from Sumatra.” Though the Rector would not directly commit to this, couched as some of his excellent talk was in the general yet sometimes evasive style of those little used to being interrupted and much accustomed to wearing many hats when they speak, my sense was that corruption now manifests itself as personal enrichment. O bygone community values!

The Rector is very active on several anti-corruption task forces. The challenge now, he told us, is to reform and empower the effective instruments of state against the creeping phenomenon of a ‘weakening state’. He holds much hope for a new law analogous to the Freedom of Information Act in the United States which gives citizens more room to push and question the government on public policy and forces the state to answer them. Recently, a high-ranking police official has caused a sensation with detailed allegations of abuse and corruption. We were cautioned to his motives by the traditional Indonesian saying, “Throw a rock, hide your hand.” While books and not rocks are the weapons of choice at UIN, it is certainly keeping its hand lifted, as by opening new fields of study it pushes the conventional role of the Islamic university.