Economic, Cultural, and Ethnic Diversity in Emerging Indonesia

With a full week back in New York to reflect on my experiences in Indonesia, I can’t help but dwell on the implications of the stark differences between our time in Jakarta and Bali. The more I reminisce on our robust economic discussions with the Minister of Finance and breadth of market leadership of the Lippo Group, the more the contrast with the rich cultural adventure we had in Bali begins to crystalize into several interesting takeaways about Indonesia.

  1. Despite its size and potential, Indonesia faces difficult challenges to establishing itself as an economic powerhouse. If a visitor saw only Jakarta, he might walk away thinking Indonesia needs just an investment in infrastructure to establish itself as an economic power. However, the night and day contrast with Bali highlights the geographic fragmentation of the nation, which is much more daunting challenge nationwide than the infrastructure in the capital. For instance, e-commerce is a tremendous area of interest, but can a company like Amazon truly offer two-day shipping to 6,000 inhabited islands each with its own infrastructure issues?
  2. That said, Jakarta may be poised to compete as a regional center of business. I left Jakarta with a strong interest in visiting Singapore and seeing how a more developed Southeast Asian city economy operates. While there are geographic hurdles for the nation as a whole, Jakarta’s infrastructure challenges seem manageable with shrewd planning and wisely-utilized investment. It seems, anecdotally, as though Indonesian talent may be staying or returning home more than in recent history, indicating that the minds may be there to make Jakarta a player in the region.
  3. The challenges Indonesia doesn’t face are as interesting as the ones they do face. Indonesia is a country that is very ethnically diverse and features a tremendous array of cultures and dialects. In addition, it has the largest population of Muslim people in the world, as about 88% of its 250 million people practice Islam. In the 21st century, many other countries that fit these profiles are facing issues of disjointed populations, civil unrest or violence, religious extremism, and other cultural challenges that prevent economic issues from being addressed. This is not the case in Indonesia. Despite cultural differences, Indonesia is largely a unified, harmonious country whose issues are economic, not civic. This speaks volume about the people of this country and its future prospects.

This trip was a great first experience for me in Asia. The opportunity to learn so much about the business environment in an emerging market combined with the utterly unique cultural experience of the Balinese New Year celebrations made for memories I will cherish for years to come. If current or prospective students reading this blog have any doubts about the Chazen experience, I can promise it is among the most enriching I have had.

A tale of two trips: natural beauty and Nyepi in Bali

It took about 30 hours to travel from New York to Jakarta. It took about one hour to travel from Jakarta to Bali. When we landed in Bali, if felt like the second trip had taken us further. We had heard that Indonesia is an extremely multicultural country, but witnessing the divergence between these two regions separated by just about 750 miles was an eye-opening experience.

From the first step out of the airport, it felt like a another world. Lush greenery, shimmering blue waters, cloudless skies unscraped by buildings, scaffolding, and the developmental signs of an emerging economy. The only evident emergence was a need for sunscreen.

It's green in Bali
It’s green in Bali

While nearly 90% of Indonesians are Muslim, most Balinese practice a local form of Hinduism, bearing deep effects on the culture and cuisine of the island. We saw this quickly as we dined on suckling pig prepared several ways for lunch and cooled down with cold Bintangs, a popular Indonesian beer.

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Babi Guling and Lawar. Balinese roast pork. Delicious.

 

The character of the trip was instantly different. From visits to a Hindu water temple and a park to feed monkeys to a traditional Balinese dance recital and a dip in the Indian Ocean, it was almost baffling that just the day before we were discussing tax incentives for investment and strategies for raising the collection base with the finance minister. The challenges of infrastructure in an emerging economy felt worlds away on this picturesque island marked by such unique culture.

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Purifying the sacred springs of a water temple

 

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The natural spring at the water temple

 

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Afternoon snack with new friends

 

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Maybe better friends than some of us hoped

 

No experience better embodied this than the preparations and parades for Nyepi, the Balinese New Year. Nyepi involves several days of preparation culminating with a day of silence symbolizing purification for the New Year. During the day of silence the entire island shuts down and tourists are not to leave their resorts (was not a problem with how beautiful our resort was), but the night before includes parades in every village. The children of these villages spend weeks building Ogoh Ogoh, demon statues made of bamboo frames that are destroyed at the end of the night. To be quite honest, being at this parade was a once in a lifetime cultural experience that I never dreamed I might witness. Undoubtedly a #WhyCBS moment.

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They put big time work into these Ogoh Ogoh

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Electric Ogoh Ogoh
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Our resort. This is a school trip. Seriously.
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It was snowing in New York as I took this picture.
 

The day of silence was extremely relaxing at the Mulia resort. Hours by the pool, a little tennis, a lavish dinner, and good times with great friends new and old. One of the most relaxing and enjoyable days I have had in a long time. GDP per capita didn’t cross my mind once.

Growth, Issues, and Infrastructure in Jakarta

With travel delays behind me, I arrived in Jakarta on Monday night in time to join my classmates for a family style Indonesian dinner before retiring to the single nicest hotel in which I have ever stayed. Well done, Mandarin Oriental, you’ve found yourselves a new brand advocate.

Seriously though, this view, with $40 massages.
Seriously though, this view, with $40 massages.
Fish head stew, sauteed beef, chicken, and all kinds of Indonesian goodness
Fish head stew, sauteed beef, chicken, and all kinds of Indonesian goodness

As we settled in for our days of meetings, we learned a little background on our host nation. Indonesia is the 4th largest country in the world by population, and actually is a G20 economy, but has seen uneven periods of growth over the years under different political regimes and macroeconomic conditions. Geographically, it consists of more than 17,000 islands, roughly 6,000 of which are occupied, that spread a wider range than the US coast to coast. About 10% of the population lives in Jakarta, a developed cosmopolitan city of skyscrapers.

This is not a small island nation
This is not a small island nation

Our roster of meetings in Jakarta had a wide range, from a public school, to public officials, to a social network and a state-owned bank. Yet across these many meetings, several recurring issues facing Indonesia as they posture for growth continually arose.

During our 3 days of visits we had the opportunity to meet with the following firms/officials

  • An elementary school
  • Saratoga Capital, a private equity firm
  • The Governor of Jakarta
  • Lippo group, a diversified conglomerate that has market leading entities in telecom, retail, and other industries
  • Mandiri Bank, the largest bank in Indonesia
  • Astra International, another large conglomerate in manufacturing, automotive, commodities and infrastructure
  • The Minister of Finance for Indonesia
  • Kaskus, a social network/tech startup of sorts with strong engagement among Indoesians
Taking selfies with Jakarta's governor
Taking selfies with Jakarta’s governor
Ok so the selfie stick was kind of a thing. This time with John Riady, Director of Lippo Group
Ok so the selfie stick was kind of a thing. This time with John Riady, Director of Lippo Group
Storytelling at an Indonesian elementary school
Storytelling at an Indonesian elementary school

While these officials and business leaders all offered their own perspectives on the country at large as well as their individual challenges, several overarching themes emerged. There is nearly universal agreement that Indonesia is an economy with tremendous potential that is currently unmet. Recent growth in the middle class and expanding internet penetration could help this country move its economic rankings closer to its population rankings. However, there are serious issues impeding this movement.

For one, corruption has historically been an issue, though the new regime seems intent on curbing it. Further, infrastructure is a tremendous challenge both in the capital and across the nation. Jakarta lacks effective public transport and its roads are a perpetual logjam of disorganized traffic. On the trip from the airport to the hotel, we saw a man walk up to the driver’s door of a public bus and take over for the driver, who walked across the street to the mall. No one on the bus seemed to find this unusual.

From a national infrastructure perspective, several companies with which we met saw ecommerce as an area of huge potential in Indonesia, yet no one appeared to have an answer for the logistical challenges of making deliveries to 6,000 islands in a country without reliable postal service. Nor did they have much of an answer for how domestic players could compete with the Alibabas and Amazons of the world if they chose to enter Indonesia.

Castrol did a study that found Jakarta's traffic worst in the world. After sitting in this, we believe it.
Castrol did a study that found Jakarta’s traffic worst in the world. After sitting in this, we believe it.

Our meetings in Jakarta were hugely educational and leave me with a tremendous interest in this high potential economy moving forward, yet the obstacles Indonesia must overcome are formidable, and many in our group question how they will be tackled. Nonetheless the public officials with which we met were undoubtedly charismatic and aware of their nation’s issues. As such, Indonesia will be an exciting economy to follow in the coming years.

7 Days in Indonesia

I’ve never been to Asia before. Actually, living in Miami and Southwest Florida for most of my life, I hadn’t even known very many Asian people. Broadening my social network was huge attraction of Columbia Business School, and the opportunity to make friends from all over the world has been an incredible experience. One that tomorrow morning will become even more amazing when I travel with my friend and clustermate Aphrodita, a native Indonesian, and 18 other students to Jakarta and Bali for Chazen Indonesia.

The anticipation for this trip has been tremendous. Excitement over the wide range of companies and government officials we will be meeting. Awe of the natural beauty we expect across the country. Disbelief at the incredible properties at which we are staying (seriously, wait for the pictures). A touch of anxiety over the 27 hours of travel to get there. Confusion as to what exactly “cat poo coffee” is, and why we will want to spend $8 on a cup.

I’m told the aromas are powerful

My mind has been racing with excitement about this trip for weeks now, but two aspects of the experience stand out as most interesting: batik and Nyepi.

Having lived most of my life in tropical climes, I can attest to how sweaty a business suit can be on a hot day, but our itinerary calls for plenty of business formal. Enter batik, a traditional pattern that is found on lightweight, open-collar shirts and dresses. This traditional garment is acceptable wear for westerners in formal situations. We all plan to purchase one there, and some guys are planning to skip the sport coat all together.

If Batik is good enough for Bill Clinton, it’s good enough for us.

Then, while in Bali, we are lucky enough to be present for Nyepi, the New Year’s celebration for the Balinese style of Hinduism. While the day itself is something of a day of atonement during which the entire island shuts down and many locals take day-long vows of silence, the celebrations on the eve of Nyepi promise to be a once-in-a-lifetime cultural experience. Some Balinese people make statues of bamboo and paper to symbolize the demons of the past year, which are then paraded around the village and burned. Truly a cultural experience unlike any I have experienced.

Ogoh Ogoh, the demon statues for the Nyepi celebrations

These experiences should amount to a spring break journey unlike any other. I am excited to share more of our adventures and meetings as the trip progresses, but until then, I am very behind on my packing.

-Mark Adelman ’16