Fred Hoyt's Travels

Surabaya (or in the old days, Soeribaea)

We are in Surabaya, 420 miles east of Jakarta, and 7 degrees south of the equator. The capital of East Java, it’s a city of about 3-4 million, on the Java Sea, with some intriguing mountains in the distance. It took us most of the day to get here yesterday, which is probably the first lesson today about Indonesia; it is hard to get around not just the 17,000 islands spread over 3,000 miles—sometimes it’s hard to get around one of the islands, in this case, Java, the most populous. My understanding is that there is not a highway across the island.

We had a nice mix of activities today, which began with a visit to the National Mosque of Surabaya, a huge building with a blue and green dome that dominates the city. As I’ve stressed, Indonesia has a Muslim majority, but everyone emphasizes it’s a secular democracy. However, even in the airport, we saw many more Muslims dressed in the traditional robes than we had seen in Jakarta.

Our second visit was to one of the tourist-listed places (it says something that of the six places listed in the brochures for tours, two are malls, and one is a national park)—the Hotel Majahapit. The historic hotel (you knew there was a reason it was special for me!) was built by the Sarkie Brothers, who brought luxury to SE Asia from the 1890s into the 20^th century. I’ve stayed in several—the Raffles in Singapore (home to the Singapore Sling), the Eastern and Oriental in Penang, and two in Cambodia—and had dinner at their hotel—the Strand—in Rangoon. The Majahapit (born in 1910 as the Oranje) well lived up to the brand name. The older part of the hotel is Colonial, the newer part (dating from the 1930s, and opened by Charlie Chaplin) is art deco. We got to see a number of rooms (one of which had a “crapper”; for those who don’t know it, John Crapper invented a toilet, with a tank that sat up high and a pull chain to flush), including the one occupied by the Dutch High Command in 1945 in the face of Indonesian efforts to declare independence from Holland. An angry local mob stormed the hotel’s flagpole and tore off the blue on the bottom of the Dutch flag, leaving only the Red-and-White, which remains the flag of the Republic of Indonesia. Not coincidentally, the Scout neckerchief is red and white today, partly because the Scouts played an active role in the war for Independence.

The business visit this afternoon was arranged by UPH, the Lippo group university I mentioned we had visited in Jakarta. It has a newer, smaller (600-student) campus in Surabaya, targeting a similar market segment—mostly wealthy Chinese. I think I mentioned that the Lippo group is building housing units centered around schools and hospitals (which it builds into the community). The University in Jakarta has a medical school, which helps the group get a lead on physicians.

The company we visited works for chicken feed—rather works with chicken feed, and chickens. It is the main supplier of ayam (chicken) for KFC and McDonalds, and is overall the third largest chicken processor in Indonesia. From what the Chief Financial Officer told us, the company is operating close to capacity, which means it’s not exporting (and, to my surprise, said chicken prices in the U.S. are less than in Indonesia), but because the consumption rate in Indonesia is 4.8 kg a year, much lower than elsewhere in Southeast Asia, the executives expect they can continue to grow domestically for a long time. I learned a lot about chickens—given my Chicago upbringing, it was almost a surprise to learn that chickens do not grow prepackaged. Instead, the company buys “grandfather generations” from the U.S. and France, hatches them out for 6 months, gets a second “parent” generation for six months, then takes the third generation (“one-day chicks”) for 32 days of scientific feeding until the chickens weigh 1.8 kilograms. The company manufactures chicken feed, harvests (their words) broilers and roasters, processes (slaughters) and sells them to, as I said, McDonalds and KFC, or at retail, under the brand name “Gold Star” to Carrefour and other retailers in Indonesia. They served us enough samples after our session that we might have upped the average to 4.9 kilograms.

I was just thinking it would be nice to observe the stars in the southern hemisphere. Unfortunately, this is the hot and rainy season, and we’ve barely seen the sun, much less the stars. The other season, though (April-October) is hot and humid. In other words, the temperature now is roughly 88 degrees with a 30% chance of rain—everyday.

Jakarta

Indonesia has over 17,000 islands (over 5,000 unnamed, so if you want to buy me a present….) and 34 provinces—and, believe it or not, we visited over 5 of them, from Aceh to Papua in 3 hours today. All without  leaving Jakarta.

Let me explain.  Jakarta has a park, developed in the 1970s, which is over 600 acres and houses (literally) houses from all 34 provinces, giving an indication of the human diversity in a land characterized by biodiversity. The Kampungs (a Malay word for village) are representative of the housing in those provinces, and the employees are usually from those provinces, knowledgeable about the cultural mores of the area, and selling handicrafts from that area.  It’s reminiscent of Lincoln’s New Salem, Epcot, or the Suwon village in Korea.

We visited Aceh, which is the northernmost province, on Sumatra, across from Malacca. Strongly Muslim, it follows shariah law, and for many years was in rebellion against the central government. The tsunami hit pretty hard, and I don’t know whether or not it was causation or correlation, but the rebels signed a truce in 2005, the year after the tsunami, and it’s been pretty peaceful since. Most of the villages had a palace for the ruling Sultan (the Muslim rulers), with elaborate dress, and homes and outbuildings, and even school/mosques. A few were original; I think it was Aceh that built homes on stilts (most were on stilts because it’s cooler, protects you from animals (and lets animals live underneath), but without nails for removing and rebuilding easily. At the other end of the archipelago, Papua has headhunters, and there was a house that held the shrunken heads.  It does make it astonishing that the Republic of Indonesia has been able to be a nation. One of our hosts told us, in fact, the United Nations has asked the Indonesia Army to do the peacekeeping missions because of its ability to have internal harmony.

This evening, my roommate and I found what purports to be (and was) one of the best Indonesian restaurants in Jakarta. It’s only about 3 long blocks from our hotel, but so many of our meals have been at malls that I was eager to get at least one “good meal.”  And it was—free range chicken served west Javanese style on a banana leaf, with coconut and lemon grass rice….yum. Did I tell you I loved the food here. Even the durian brule for dessert.

We move tomorrow morning to Surabaya, the second biggest city in Indonesia, less than a quarter the size of Jakarta. I bet I can find good food there, too.

Jakarta

The first time I took Mrs. Hoyt to Shanghai, we were having dinner in the old Sassoon Hotel along the Bund, and she noted, “Foreigners built as though they were going to stay forever; only the buildings have remained.”  That’s as true of Batavia—er, Jakarta—as it is of Shanghai, though to a much lesser degree.

In the morning, we went to one of those old buildings, a Doric columned old Dutch government office building that screams “Power.” Built to house the Javanese bank (the bank that furnished the financial wherewithal that brought the spices—pepper constitutes 20% of the world’s spice trade even today) to enrich the Dutch, it became the National Bank—and today houses a museum displaying both the history of Indonesian economy, and a numismatic approach to its history.  I liked both aspects, partly because of the information it contained; the VOC—the Dutch East India company, with its 17 Dutch masters, pictured on the Dutch master’s cigars—went bankrupt during the Napoleonic Wars, and in fact the British under Sir Stafford Raffles, he who founded Singapore, seized the Dutch East Indies and held them until 1815, when, as part of the Congress of Vienna, they went back to the Dutch; the Islands fell to the Japanese in 3 days (2000 miles long, over 17,000 islands) because the Japanese had placed spies in the major cities; and the crisis of 1997 brought a sobriety to the fiscal system that continues today.  The building had some fine art deco touches, and, speaking of touches, we got to touch a gold bar, all 13.5 kg of it.

From the museum, we went to the “New” Indonesia, the Lippo group, one of the major Chinese conglomerates that dominate the economy, for a presentation on its operations.  The Lippo group is into a variety of businesses (as are so many of the large Chinese companies), including hospitals, property, media, and education.  As explained to us, the company has worked out a pattern that will target middle-class families by building schools, hospitals, and malls (it owns or operates 25% of existing malls in Indonesia), followed by the housing.  The company sort of builds to order; it announces it is going to build, gathers advance orders (paid in advance), and when it has sufficient funds to cover the construction costs (and as our host explained, cover the cost of the bribes), they build. The current developments are in the Jakarta area, but they are focusing on second- and third-tier cities, such as Samaridan, Kalimantan, where the average income is $16, 500, because it is a mining community, and the raw materials are being purchased by the Chinese, Japanese, and Koreans right now.  I should point out that the company also owns funeral homes, making its coverage, as our host explained, from cradle to grave.  Given the shortage of good schools and good hospitals, and the fondness of the Indonesians for shopping, the construction of “towns” seems like a good idea. One other item in its portfolio—the Lippo group (one of its leaders, James Reddy, was implicated in a corruption charge—he gave the Clinton campaign what were illegal contributions, as I recall) has a university—with a difference.  UPH is a fairly new university on Lippo property that has 7,000 mostly Chinese Catholic students (a rarity in this Muslim predominant country). The head of the group gives required lectures weekly, but the facilities are wondrous, including an archway that proclaims, ‘With God, anything is possible.”  One of our participants, a Chinese Indonesian, pointed out that it wasn’t until the 1990s that Chinese were allowed to celebrate the Chinese new year in public, or even to have Chinese names.

The other session today was put on by members of the International Society for Sustainability Professionals, an NGO that was formed in 2012 to help educate people (and businesses) about the need for sustainability.  One of their emphases was forests, which was interesting because Indonesia has the second largest forests in the world, and the management of them has been a real challenge.  Part of the challenge comes from the use of natural resources to raise the population out of poverty.  Over 100 million live on $2 a day or less, which is certainly a sobering fact that should inform everyone who visits Indonesia that the malls (and do they have good food!) cater to a growing middle class but in a society that is still bimodal.  Ironically, last week, my Scouts were at Trees for Tomorrow, which the newspaper companies in Wisconsin started to build awareness of the need to replant trees;  I still believe that the answer will have to include an enlightened business community at least as much as a concerned government.  My roommate, a Dean of a Business School, told me that the accrediting body for business schools in the U.S. has mandated curricula additions dealing with sustainability and corporate social responsibility, perhaps allowing the students we reach to help be part of the solution.  I certainly hope that more than Scouts are thrifty with scarce resources.

The 2 ½ ride the 28 km back to our hotel was also about the new—the lack of infrastructure, or at least the proliferation of automobiles.

Then to dinner at a mall.  If you want to find out why I love Indonesian food (and it is hard to find in the U.S.), find somewhere that serves coconut rice.  That would be a nice start.

Jakarta

If you’ve ever wondered where a day went, there’s an easy answer if you are flying west—and a long distance.  I lost January 1, partly because I spent 32 hours getting to Jakarta; and in crossing the dateline, lost a day (that I’ll get back when I return).  The result was I missed the games that I wanted to see, but since they came out wrong, it’s just as well that all I could do was read about them online.

I’m in Jakarta, the capital of the largest country no one knows much about— Indonesia’s population is around 250 million, about 10 million of whom are jostling with me for space on the streets of the capital. It is about 85% Muslim, but describes itself as a Muslim-majority country, not a Muslim country like Malaysia.  The laws are secular; for example, alcohol is available.

As I remembered from the only other time I was here (1997), Jakarta was born under the Dutch, who ruled from the 18^th century—as I recall, the British exchanged Bencoolen for Malacca in the aftermath of the Napoleonic wars—until after World War II; the Indonesians declared independence in 1945, the Dutch waged a bitter war of reconquest until 1949, but recently acknowledged that the civil war was officially over in 1945. Jakarta has broad streets, lots of skyscrapers, and the juxtaposition of those skyscrapers with shacks and shanties that is typical of most developing countries. As an example, there’s a gaping unfinished project out my window—one that may never be finished.

On our site visit to the U.S. consular service today, we had a panel that brought me up to date on what happened here after 1997, when the Asian economies collapsed (the rupiah dropped to 1/6th of its pre-crisis value).  The Suharto dynasty had just been toppled.  In fact, there were folks who described Indonesia as potentially an “Asian Yugoslavia”—a potential candidate to fracture; even today, of the thousands of islands that comprise the archipelago, Java (with 60% of the population) and Sumatra (with almost 20) constitute the two most important islands—the country spans almost 2,000 miles.  At least the rebellious province of Aceh negotiated a truce a few years ago, and that was one of the last holdouts for separation.

In terms of the economy, today, Indonesia seems to have escaped the current downturn.  After the economy tanked in 1997, and got bailed out by the International Monetary Fund, growth has been steady at 6-8% for the past decade.  Part of the stimulus comes from the rest of Asia, which hungers for the commodities (oil, gas, palm oil, etc.) that are so well distributed here. Trade has come more from the region than from the U.S.; U.S. trade with Indonesia is about $10b, which is less than U.S. trade with the 6 million people in Singapore.  Interestingly, one area where the U.S. has made an impact is in aviation; Lion Air recently signed the largest Boeing contract ever!  Part of the stimulus came from cleaning up the financial structure—the banks got slapped, and the kind of mortgage repackaging that almost toppled US banks barely tickled Indonesia.  The upshot is that the per capita has reached something close to $4,000.

I was here for the first election in Indonesia since the Suharto family came to power.  It was hard to see where it would go at the time.  The military had been a force in politics (partly the residue of that civil war in the late ’40s).  What happened is that Indonesia has become the 3^rd largest democracy in the world.  Subordinating the military for defense rather than king-making in politics has put Indonesia in position to set an example and give advice to Burma and Egypt and the other “spring revolutions” in the Middle East.  The local provinces, where a lot of the commodity trade has taken place, have also developed democratic institutions.

The State Department (and Commerce) speakers did point out some of the problems—the rampant corruption (an article in the Wall Street Journal this morning reported that 33% of the respondents thought they would have to bribe the police or the government officials); the lack of a successor to the current president, which has led to a lot of “playing to the crowds” for the election next year—and that has meant a lot of laws for protection of domestic businesses.  One area they pointed out was laws against franchises—all franchises, not just American ones, perhaps an effort to slow the trend from traditional markets to more modern ones.

In the afternoon, though, we went to one of the “modern markets”, a six-story mall typical of what I’ve seen in Asia, and one that makes me wonder whether I’m in a developing country.  It had all the stores one would find in an upscale mall in the U.S.—but much better food. Did I say I love eating here?  The reason we were at the mall was to visit the equivalent of the U.S. information agency—a cultural diplomatic outreach that is the only one of its kind in the world.  It’s in a mall because the target market is Indonesians 15-30, and the venture is a public-private venue cosponsored by some of America’s best known brands—Apple, Google, and Microsoft.  The brainchild of a former U.S. Ambassador to Indonesia, atAmerica (or @America) is a high-tech (and high-security) museum/exhibit hall/entertainment center.  According to the director, they hosted 50,000 students and 260,000 visitors at 1,300 events, including rock concerts, comic book groups, etc.  A far cry from the days when Voice of America broadcast the truth across the Iron Curtain!  With 60% of the Indonesian population under 30, that group might well be one worth reaching.  And like all “best practices” I can only wonder why this model isn’t being duplicated around the world.  It’s a lot more attractive, I would think, than the old U.S. information libraries that attempt to win friends and influence people.

I’m glad I did not lose THIS day! Did I mention I love the food?