Economic Growth & Entrepreneurship | Indonesia

Indonesian Attitudes 10 Years After Crisis 

By James Castle and Todd Callahan | The Jakarta Post | May 21, 2007 | 3 pages

A nationwide poll by CastleAsia and Charney Research reveals that the issues now on Indonesians’ minds contrast with those just after the fall of the New Order government in May 1998, when riots and violence were the major concern of most Indonesians.

The decline of fears about instability and growing public outspokenness about corruption reflect “the increasing normalization of Indonesian politics, as questions of the survival of the political order have given way to the sorts of issues about state effectiveness typical in a developing country like Indonesia,” says study co-author Craig Charney.

Despite pessimism about the economy, the pace of reform and other concerns, the poll found that most Indonesians believe their country is on the right path. A decade after the Asian financial crisis toppled Soeharto and plunged the country into deep socio-economic turmoil, more participants than not in the Indonesian Outlook Survey 2007 say the country is headed in the right direction.

The principal reasons for optimism are the restoration of order, signs of economic recovery, and growing reform and democracy. President Susilo Bambang Yudhoyono’s leadership and efforts to combat corruption and get more children into school are also important according to participants. Pessimists are worried by continuing weakness in the economy, the string of devastating natural disasters that have struck the country since the Aceh and North Sumatra tsunami in 2004, and widespread corruption.

Notwithstanding the economic pessimism, stated 2007 purchase intentions are robust for mobile phones, substantial for televisions and radios, and significant from low bases for land-line phones, satellite dishes and computers. Reported purchase intentions are also strong for motorcycles and home appliances such as refrigerators and gas cookers.

As regards Indonesian attitudes toward business, the private sector is more likely than the state-owned sector to be seen as efficient, providing good service, and offering better pay. Private foreign firms were also seen to be ahead of domestic private and state rivals in terms of having the most modern technology and systems.

Even though most respondents express support for free markets and the private sector, and the majority identify state-owned enterprises with corruption, the majority also feel state-owned enterprises do more to promote the good of society than either foreign or domestic private companies, and oppose the government transfer of public assets to private ownership.

Privatization was even rejected when participants were asked their view of enterprises that lost money and were a drain on the public treasury. In related findings, significant support was disclosed for the 1945 Constitution and the socialist principles embodied in Article 33, which broadly asserts that government should control the land, mineral and other resources, and important sectors of the economy.

State-owned companies in the poll received the most favorable ratings of all when taken as a group. Indeed, positive ratings of 80 percent or higher were received by Bank Mandiri, Bank Rakyat Indonesia, Pos Indonesia and Telkom. Even state-owned oil and gas firm Pertamina and power utility PLN enjoyed favorable ratings exceeding this threshold, despite widespread criticism of their performance in the domestic media. Firms that were less well known by poll participants, such as state cement producer Semen Gresik, still obtained a favorable rating above 60 percent.

The best known private companies with the most positive images tended to be consumer goods manufacturers. Private domestic companies such as Gudang Garam, Indofood, Maspion and Wings all enjoyed very favorable images. Among foreign controlled firms, Aqua was almost unanimously liked and Bank Central Asia, Bank Danamon, Coca-Cola, Hero and Sampoerna all received very high positive ratings. Interestingly, although U.S.-based Microsoft was known by less than one-fifth of the poll participants, the perception of the company was very positive.

In contrast, diversified conglomerates and large natural resource concerns were less well-known and well-liked. For instance, private domestic firm Medco Energy was little known and the majority of participants who were aware of the Bakrie Group were not favorably disposed to it.

Among oil and gas majors, ExxonMobil was not particularly well known but it garnered more positive ratings from participants who were aware of the U.S. firm. Mining companies were not known by the majority of poll participants, but of the people who did know them, they were viewed unfavorably with some variation across companies.

On questions of labor policy, a majority of participants were reluctant to make the rules more flexible regarding the dismissal of employees. Strong support exists for legislation that makes it difficult for employers to release workers when business is poor. On the other hand, poll participants supported the idea of shifting unemployment compensation to a state insurance plan based on payroll deductions.

In the wake of bombings by al-Qaeda affiliates in Bali, Jakarta and elsewhere, the poll found Indonesians support the U.S.-led war on terror. There was little support for Islamist movements and widespread concern about terrorism, which was condemned by the vast majority of Indonesians.

Nonetheless, attitudes toward the U.S. remain unfavorable, with over twice as many participants holding a negative view than a positive one. Despite their affection for U.S. brands, the poll found that nearly as many participants favored boycotting American products as were opposed to it under certain conditions.

With respect to avian flu, the survey revealed that two-fifths of poultry owners do not know they can contract the disease by touching infected birds. The poll also disclosed that opposition to the slaughter of birds in the event of an avian flu outbreak is strong in Indonesia. More public awareness campaigns are needed to educate poultry owners, many of whom keep birds in densely populated cities like Jakarta, about the dangers of avian flu and how the disease spreads.

James Castle and Todd Callahan, from CastleAsia, designed and produced the Indonesian Outlook Survey 2007, in partnership with Craig Charney of Charney Research (USA) who also contributed to this article.