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Jakarta Post
The Jakarta Post
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Economic interests of investors in RI: Convergence and divergence

  • Prabowo Subianto Djojohadikusumo

    The Jakarta Post

Jakarta | Tue, January 28, 2014 | 11:01 am

Throughout history there have been many examples of foreign investment that was exploitative and destructive, while in other cases foreign investment yielded positive returns to both the overseas investor and the target country '€” most likely a developing, sparsely populated one.

The classic example is British investment in the American colonies, which built vast fortunes for those involved in cotton, tobacco and other commodities.

Eventually the wealth that was generated enabled an educated class to struggle for political freedom '€” much as independence movements in Asia have sprung up in the most prosperous colonies, with Malaysia, Vietnam and Indonesia among them.

We won our independence but continue to seek foreign investment to build our nation. This is a regrettable reality, considering how other previously poor nations such as South Korea and Japan have outpaced us.

The question for 2014, then, is how to strike a deal with the foreign investor, whether it is a joint venture or a multinational operation entering Indonesia. We welcome them '€” but demand fair treatment.

One of the inaccurate charges leveled against me, which I would like to correct, is the notion that I am somehow against foreign investment in Indonesia and, if elected, would tend toward nationalization of businesses currently controlled by multinational interests.

Considering the wisdom of allowing a specific project to go ahead, it is important to define the interests and objectives of all concerned. Foreign investment is not charity. Those who place their hard-earned capital in an industry, business or resource extraction operation in another country naturally expect a return '€” a somewhat higher return than they would reap in their own country, where there are fewer legal, economic, political and social variables and, thus, considerably less risk.

Indonesia is a natural target of interest for international businesses, as we have been blessed with both natural and human resources. Until this moment, we have not been able to convert those minerals and agricultural commodities into a satisfactory level of prosperity for the average Indonesian.

That is the stated objective of the government. The foreign investors have no such responsibility: while they are bound to acknowledge a certain degree of corporate social responsibility, their prime duty is to secure a maximum return on investment for their owners, the shareholders.

It is thus natural that the ultimate interests of the host country and its government do not match those of the foreign investor. They may diverge in terms of wage levels, environmental protection, community relations, pricing of resources and added value, along with other considerations.

My policy is to face off with our overseas guests and work out a win-win situation, seeking convergence of the interests of both sides. We shall not give away the store, and we do not expect foreign investors to sacrifice so much that their businesses become losing propositions.

In past years, Indonesia has appeared helpless in the way it has suffered from manipulations in the price of its resources in London, Hong Kong and New York.

Tin and crude palm oil (CPO) are prime examples. Just as the traders on those faraway exchanges feel no responsibility for royalties and tax income in relation to the Indonesian government, or the consequent betterment of the welfare of the Indonesian people, our dignity and national interest compel us to stand firm with the multinationals.

They use clever lawyers, apply pressure through government-to-government negotiations and attempt to work around the elected authorities to secure the best possible deal. That is the reality of dealing with '€œcorporate nations'€ and each country that does business with them struggles to do so from a position of strength.

Indonesia asks no more. If elected, I promise to work closely with all foreign investors, ensuring that their proposals do no damage to domestic business, respect community traditions and protect the environment. We will hammer out fair prices and fair terms for what they produce in our nation, with the expectation that our terms will continue to be attractive enough to warrant their investment.

The writer is a presidential candidate for the Gerindra Party in the 2014 elections.