Expatriates lose jobs, business as Indonesia’s economy crashes (Washington Times)

Washington Times, Jan. 29, 1998

JAKARTA, Indonesia – American Ken D’Angelo had a dream job. He was to help design and build one of Southeast Asia’s large planned cities – an Indonesian version of Reston, Va., or Columbia, Md.

When he started six years ago, Mr. D’Angelo saw it as a chance to help change the face of urban Asia.

Today, the project – like most of the Indonesian economy – is technically bankrupt, and Mr. D’Angelo – like so many American experts here – is on his way home.

“We’re politically and economically expendable,” said the 49-year-old California native, who was recently told his contract was being terminated. “You accept that as part of the way of life here.”

Foreigners in Indonesia traditionally serve in key management functions, advising Indonesian owners and often running companies on a day-to-day basis.

But with Indonesian conglomerates staggering under the weight of $65 billion in offshore debt, the hefty salaries commanded by expatriates – paid in dollars – are a tempting target. Throw in the housing allowance and school fees, all paid in dollars, and it is a savings that cash-starved Indonesian firms find hard to resist.

“What’s really unpleasant is the way it’s being done,” said an American still clinging to his job at an Indonesian firm. “There’s no discussion, no warning. And contracts are meaningless.”

One American woman told the Jakarta Post her husband’s employer had given them until the end of the week to vacate their house. “His attitude is that the world is not treating him kindly, so he won’t treat us kindly.”

Not all those leaving are being overtly fired. With Indonesia’s currency, the rupiah, hovering around 12,000 to the dollar, many are being told their dollar salaries will now be paid in local currency at an arbitrary exchange rate of around 3,000 to the dollar. That’s the equivalent of a 75 percent pay cut.

And housing allowances, which average $30,000 to $50,000 in Jakarta’s high-priced real estate market, are often being eliminated.

“I’m really getting tired of going to farewell parties for friends night after night,” said one British securities broker.

There are no firm figures on the number of Americans and other foreigners losing their jobs, but international moving companies report business is up 50 percent to 80 percent.

“A lot of people are being told: `Sorry, pay for it yourself. We don’t have any money,’ “‘ said Jay McFarland of Global Silverhawk movers. “We’re doing well these days, but it’s not very pleasant.”

Major U.S. firms, which have invested hundreds of millions of dollars in Indonesia over the past decade, are also planning for what promises to be tough times to come.

With megaprojects like power plants, airports and toll roads frozen, hundreds of construction workers and telecommunications workers have been sent home. Managers, in those and other sectors, are likely to follow.

Worst hit are the real estate, telecommunications, financial and advertising sectors. At major agencies like J. Walter Thompson and McCann Erikson, staffers are literally sitting around playing video games.

“No one is advertising. No one,” reported George Ford, an American who heads a local advertising agency. “Not Merck, not Unilever, not Proctor and Gamble. No one.”

He recently sent his two American employees home and gave himself a sharp pay cut.

Newspapers are already slashing the number of pages printed each day, and local television stations are planning to cut back the number of broadcast hours.

“You just have to sit back and say, `Get me the number for Crown Pacific movers,’ ” said an American ad executive, only half in jest. “Like a lot of companies, we’re going to downsize through attrition,” said the head of one U.S. telecommunications firm in Jakarta.

“We have a lot of contracts ending soon. They just won’t be replaced.”

Others are waiting for the presidential election in March.

“That will be the deciding point for many companies,” predicted James Castle, a business consultant and vice chairman of the American Chamber of Commerce in Indonesia. “They’ll see how the economy responds. But meanwhile, they’re reviewing head counts.”

For Mr. D’Angelo, the fact that he and other expatriates are losing their jobs is less worrying than what is happening to the Indonesians, and the implication for any recovery. Upwards of 2 million have already lost their jobs. Several million more are expected to be cut in the coming months.

“As Americans, we come from a classless society. People at the bottom are part of the team. Not around here,” he said during a break from packing. “The salesmen, the clerks, the middle managers, they’re losing their jobs, but the guys at the top still have their golf memberships, their Mercedes, their girlfriends.

“They’re losing the expats, the middle managers,” he continued. “Who’s going to do the work? The guys with the store-bought degrees?”

But then, one must ask, exactly what work is there to be done?

“It doesn’t take a great financial genius to call the bank and say, `We can’t pay,’ ” said Mr. Castle. “The problems are much bigger than that.

Credit: SPECIAL TO THE WASHINGTON TIMES

Copyright Washington Times Library Jan 29, 1998

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