Indonesia has a population of some 260 million people and is enjoying GDP growth of more than 5% in 2017, making it both an enormous market and an engine for growth within the recently created ASEAN Economic Community. The country is undergoing wholesale change and international investors are taking notice.

 

Indonesia has a population of some 260 million people and is enjoying GDP growth of more than 5% in 2017, making it both an enormous market and an engine for growth within the recently created ASEAN Economic Community. The country is undergoing wholesale change and international investors are taking notice.

Taiwanese-Indonesian exchanges are on the rise. More than 140 companies took part in the Taiwan External Trade Development Council’s 2017 Taiwan Expo in Indonesia at the Jakarta Convention Center in May, and more than 20 Taiwanese groups from fields as diverse as education, culture, and agriculture visited Indonesia in August and September.

From unilateral to bilateral

Taiwan and Indonesia have enjoyed close ties for many years, and many more bilateral exchanges have been initiated under Taiwan’s New Southbound Policy.

These include four or five new agricultural cooperation projects and agreements established in areas such as irrigation, personnel training, and rice cultivation. Meanwhile, the ROC Ministry of Education and Ministry of Science and Technology’s “Taiwan scholarships” are attracting applications from a large number of Indonesian students—1,037 in this year alone!

Economic investment, long the mainstay of Taiwan‡Indonesia exchange, is also growing. According to the Indonesia Investment Coordinating Board (BKPM) and the ROC Ministry of Economic Affairs Investment Commission (MOEAIC), Taiwan had 2,425 investments in Indonesia totaling NT$15.1 billion as of the end of 2016. Taiwanese companies have been extending their investments beyond the labor-intensive industries such as textiles, garments, and automotive hardware that they once preferred, and moving into food and beverages, finance, and e-commerce as well. 

“The forces driving Indonesia’s rise are very powerful,” says John Chen, Taiwan’s representative at the Taipei Economic and Trade Office (TETO) in Jakarta. Indonesians’ incomes are increasing and the country’s middle class is on the rise. In addition, Indonesia has picked up the once “plodding” pace of its infra­struc­ture construction, and has greatly improved the investment climate.

Indonesia’s streets are alive with the enticing aromas of traditional snacks.

Putting down roots in Surabaya

Established at the end of 2015, the Taipei Economic and Trade Office in Su­ra­baya has become an important locus for cooperation under the New Southbound Policy.

“TETO Su­ra­baya is located in East Java, a large province with jurisdiction over 30 cities,” says Jeffrey ­Hsiao, director-general of the Su­ra­baya office. “We have to address the characteristics of each region when seeking local cooperation with Taiwan.” As well as opening up exchanges in the areas of immigration, education, and tourism, the office has recently formed a “Taiwan alumni” association for Indonesians who have studied in Taiwan. It plans to ask members to give talks on their experience in ­Taiwan to students at colleges and universities in Su­ra­baya. The office is also helping match workers with jobs by sharing information on more than 100 “Taiwan alumni” with Taiwanese businesses.

Indonesian incomes are rising and the country’s middle class is growing.

Indonesian migrant workers are another important bridge for bilateral exchanges. As many as 60% of the more than 250,000 Indonesian migrant workers in Taiwan come from East Java. In fact, TETO opened its Su­ra­baya office in part to share the burden of processing the large number of visas for such workers. Following the model of its “Taiwan alumni” association, the office has also established an association of Indonesians who have worked in Taiwan, in hopes of fostering grassroots exchanges.

This year, Taiwan’s Ministry of Foreign Affairs invited the Taiwan representative offices of Indonesia and other Southeast-Asian countries to take part in September’s Asia-Pacific Cultural Day festivities. The event took place in the main concourse of the Taipei Railway Station, and featured an Indonesian booth and exciting performances by Indonesian dancers. Siswadi, deputy representative at the Indonesian Economic and Trade Office to Taipei, said, “The Indonesian booth showcased highlights of our national cultural heritage, such as batik. We hope the event will help foster the relationship between our two nations, and that we can continue to participate in the future.”

Bumper-to-bumper traffic is common in Jakarta.

Exporting Taiwanese knowhow

Kao Ying-­chang first visited Indonesia more than 30 years ago. Last year, he put the spirit of the New Southbound Policy into practice by establishing Formosa Tek­no­logi Sentral (FTS), a school that aims to bring Taiwan’s models for technical and vocational education to Indonesia.

Having run a machine-tools trading company in Indonesia for many years, Kao had noticed that the country faced a severe shortage of skilled machinists. He founded FTS to train people in the relevant fields. To that end, the school currently offers two programs—auto­mation ­control and machine operation—each of which puts students through 430 hours of intensive training, an amount equivalent to that required for a Class C license in Taiwan.

This year’s Asia–Pacific Culture Day festivities boosted Taiwan–Indonesia exchanges. (photo by Jimmy Lin)

Students who complete their training earn starting salaries of at least NT$1,000 per month more than those of common laborers. And it isn’t just Indonesian students who benefit from the training. Once graduates begin working on production lines, they can generate efficiencies that encourage plant operators to purchase Taiwanese equipment. “In the future, I’d like to extend our efforts beyond training frontline personnel to also cultivating seed teachers, so we can have a still greater impact.”

Life’s twists and turns

Lai Wei-hsin, who became chairman of the Indonesia Taiwan Chambers of Commerce in June and is also president of the Jakarta Taiwan Entrepreneur Association, spent more than a decade developing his businesses in Indonesia before the recent “go south” fervor.

Even so, Lai came to the country much later than many other Taiwanese businesspeople. He made his first trip to Indonesia after completing his military service, traveling to the country in 1986 on behalf of his brother’s trading business. He subsequently became a regular on the Taiwan-Indonesia route.

Indonesia is culturally diverse and very welcoming.

In Indonesia, he applied his keen head for business to the many emerging opportunities and earned a fortune while still a young man. But he stumbled badly in 1997 when he misjudged the Asian financial crisis.

Lai started over in 2001, establishing a small automotive hardware factory with the help of a friend. Seeking to repay his debt quickly, he chose to focus production on replacement parts for power steering systems, which have a high profit margin. The first stages of his comeback were grueling. Fortunately, his friend stuck with him, providing financial support and, even more importantly, help with production, an area in which Lai had no experience. 

Lai joined the Jakarta Taiwan Entrepreneur Association five years ago. In just a few years, he has become the president of the Jakarta association and is now chairman of the Indonesia Taiwan Chambers of Commerce. Having taken the reins at the parent organization, Lai’s goal is to invigorate it and develop its capabilities.

You might not know…

A Jakarta pedicab driver waits for customers.

As interest in the topic of “going South” has waxed, Jennifer Lai has written about her more than a decade of experience living in Indonesia in a book entitled Things You May Not Know About Indonesia.

Lai’s impetus for writing the book was straightforward. With the rise of the ASEAN market in recent years, many friends have visited Indonesia on business, and, after a few days there, always remark: “Indonesia is different than I expected.” After hearing that several times, she couldn’t help but wonder: “What are people’s expectations of Indonesia? What impression of it do Taiwanese have?”

Lai wrote the book in her non-working hours, and took more than a year to complete it. Though relatively slim, it covers a huge range of topics, from snacks in the country’s Chinatowns, to Indonesia’s work culture, Islam, and the joys and travails of life in a foreign land. Her first essay addressed the cultural differences between ethnic Chinese in Taiwan and Indonesia—a subject with which she is personally familiar—and she has retained that kind of personal perspective in everything she’s written since.

Lai’s Indonesian experience began when she met her husband while studying in the US. After marrying there, the couple returned to her husband’s Indonesian homeland. Living in a new and unfamiliar country, she had to adapt not only to its different culture and working environment, but also, slowly, to his Chinese-Indonesian family’s customs and traditions.

What kind of country is it? Speaking as a long-term resident, Lai says, “Indonesia is culturally diverse and very friendly.”

In the past, Taiwanese-Indonesian exchanges consisted primarily of investing or traveling, but Lai’s long years of observation have shown her that Taiwan and Indonesia have the potential for more diverse kinds of exchanges flowing in both directions. She notes that Taiwan’s colleges and universities are an option for Indonesians thinking about studying abroad, and that Indonesia’s relative lack of medical services and Taiwan’s high standards of medical care make Taiwan attractive to wealthy Indonesians seeking medical treatment.

In recent years, many Taiwanese have become curious about Indonesia as well, hoping to visit and gain a better understanding of the country. What kind of country is it? Speaking as a long-term resident, Lai says, “Indonesia is culturally diverse and very friendly.”