Get your priorities right

The Business Times
Views & Opinions
Published October 22, 2004

New skyscrapers aren't going to provide the infrastructure and education that Indonesians, Filipinos as well as foreign investors need.

By THANG D NGUYEN

AS my friend and I drove on Roxas Boulevard, one of Manila's major landmarks, on an evening during my visit there last month, we passed by many Las Vegas-like clubs, bars, and restaurants.

The crux of the matter is, even with such advances as the Internet and airplanes, foreign investment still requires roads on which traffic flows.

While he was driving, my friend pointed to a tall office building, which stood invisibly (in darkness, actually) only a about 10 or 15 metres away from these well-lit, eye-catching entertainment facilities. He asked me if I knew what the building was.

'What is it? Is that a warehouse or some unoccupied office complex?' I responded in ignorance.
'That's the Department of Foreign Affairs (of the Philippines),' my friend said, taking pride in his reply.

'It is unbelievable, isn't it?' he added rhetorically, as I was still looking at him in speechlessness.

Back in Jakarta, I see a similar picture. Five-star hotels, luxurious apartment complexes, and shopping malls are popping up like mushrooms. Not too far from these high-end buildings - of which Jakarta already has plenty - are smelly, sometimes stagnant, canals and roads that are dirty and jammed almost all the time with decades-old buses spitting out black smoke behind them.

Where are the new schools, hospitals, roads, post offices, and other infrastructure that the public needs and foreign investors require, I often ask myself?

In the case of the Philippines, I am told, it is corruption in government that steals the financial resources that should be allocated for infrastructure-building projects, among other things.

Not only does the Philippine public deserve better, but building and maintaining good infrastructure is one of the prerequisites of foreign direct investment (FDI) in the Philippines, or any other country for that matter.

It is no wonder that a report last year by the Asian Development Bank (ADB), which is headquartered in Manila, described the Philippine investment climate as one of the worst in both east and South-east Asia.

As for Indonesia, the picture does not look any better, when it comes to FDI.

Citing poor infrastructure, a lack of legal consistency and corruption, among other things, The Economist glibly reported that FDI has now come to mean 'Foreigners Ditching Indonesia', as opposed to foreign direct investment.

But the lack of infrastructure in Indonesia is not just due to the limited government funding for them or corruption of public servants. It is also a reflection of the lack of corporate social responsibility (or CSR) among Indonesian business leaders.

Profits come first

In other words, Indonesian businesses are still driven by profit-oriented projects, like five-star hotel, shopping malls, and apartment buildings. While they are nice developments for Jakarta and other Indonesian cities, these luxurious facilities are not necessarily foreign investment projects.

If anything, these projects are places to which some of the old monies that left Indonesia during the Asian financial crisis of 1997-98 - of which Indonesia was one of the most prominent victims - come back.

Nor are they socially responsible investment (or SRI) projects that are, in addition to profit, aimed at providing better services to the public, such as clinics, airports, schools, subways or sky-trains.

For one thing, how many Indonesians can afford the aforementioned luxurious facilities? The answer is, very few.

Furthermore, can these facilities really help bring FDI back to Indonesia? The answer is, not really.

The crux of the matter is, even with such advances as the Internet and airplanes, foreign investment still requires roads on which traffic flows; telephone lines that work, airports or seaports that can transfer cargo quickly; hospitals or clinics that take care of their employees' health; and, most importantly, schools that are not flooded and can churn out skilful, competent, and reliable workers.

In the Philippines, it remains to be seen if President Gloria Arroyo will be able to use her second term in office to revitalise the economy, reduce the nation's debts, and improve the country's competitiveness by tackling such pressing issues as corruption, poor infrastructure and education.

Compared with the Philippines, Indonesia's prospects for change look relatively better with a newly elected president, Susilo Bambang Yudhoyono, who was inaugurated on Wednesday. Mr Yudhoyono, who is known popularly as SBY, was elected in the country's first-ever direct presidential vote on Sept 20.

Simply put, the people's expectations for Mr Yudhoyono, who won the race against the outgoing President Megawati Sukarnoputri by a 20 per cent margin, are high, and the tasks awaiting the new president are daunting.

After his honeymoon period - which will be understandably short - Mr Yudhoyono, who was security minister under Ms Megawati until March, will have to tackle more than the terrorism threat. Among his most urgent tasks will be to fight corruption, create jobs, and improve the nation's education system. Most importantly, he will have to lure FDI back to Indonesia.

Mr President, the people of Indonesia and foreign investors await changes under your leadership.

If you meet their needs, you will have passed the test of democracy.

The writer, a former regional manager for Asia at the World Economic Forum, is a Jakarta-based columnist. His recently published book is 'The Indonesian Dream: Unity, Diversity, and Democracy in Times of Distrust' (Marshall Cavendish Academic).