Indonesia was an enthusiastic participant at the second Belt and Road Forum held recently in Beijing. Although Indonesian President Joko Widodo did not attend the event, he sent a high-level delegation led by Vice President Jusuf Kalla to the summit, where more than 20 agreements were signed on the sidelines.
Having survived smear campaigns alleging he is selling out the country by soliciting Chinese investments, the President, popularly known as Jokowi, is likely to secure a second term when the final results for the country’s April 17 election are released. He is expected to continue seeking Chinese investments to develop infrastructure in the sprawling archipelago.
However, Chinese investors have found that despite having support from the top levels of the Indonesian government, investing in the Southeast Asian nation is not at all straightforward. Chinese firms must learn to navigate culture shock.
One major obstacle is ingrained anti-Chinese sentiment in the country, a legacy from an attempted coup in 1965 that is not likely to go away any time soon. That event blamed on the Indonesian Communist Party, which was allegedly backed by the Chinese Communist Party sparked a communist witch-hunt in Indonesia that left an estimated 500,000 people dead in 1965-66.
The anti-Chinese sentiment still lingers in parts of Indonesian society. In the recent election campaign, many Indonesians believed in fake news stories
circulated accusing Jokowi of being a communist due to his perceived closeness with Beijing
In his first term, Jokowi had attempted to rehabilitate those who had become victims during the communist purge in the spirit of bringing about national reconciliation, but had to call it off due to persistent opposition.
The groups that bear the strongest anti-communist and anti-Chinese sentiments are the military and conservative Muslims, with the former blaming communists for slaughtering its top generals in 1965, and the latter being intolerant of the atheism of communists.
A study by the ISEAS-Yusof Ishak Institute in 2017 found that conservative Muslims were more likely to have anti-Chinese and anti-China views.
In a country where more than 87 per cent of its population are Muslims, and where Islamic conservatism has been gaining ground, it will not be easy to dispel the ambivalence that many Indonesians feel towards a rising China.
This makes the Jokowi administration’s decision to assign North Sumatra, North Kalimantan, North Sulawesi and Bali as the economic corridors for Indonesia’s “Global Maritime Fulcrum” a project that overlaps with belt and road interests a wise move.
Not only are these regions multi-ethnic and multi-religious and therefore less under the sway of conservative Islam – the latter three provinces are Jokowi election strongholds. These factors will make it unlikely for resistance to Chinese investments to breed in the four regions.
Nevertheless, Chinese investors will still have to engage with Indonesian society more broadly, especially those who have plans to tap into the country’s 269-million-strong consumer market, the largest in Southeast Asia.
To succeed, the investors will have to expend much effort to grapple with evolving business regulations and local governments, as well as develop infrastructural support where there is none.
In Indonesia, much of this hinges on effective communication with local officials to overcome inevitable instances of culture shock.
One way to do that is to hire local translators who can facilitate interactions between not only Chinese investors and Indonesian officials, but also between Chinese management and Indonesian workers.
Such translators were once scarce because Chinese-language education was outlawed in Indonesia under Suharto’s regime in 1966 to 1998. But since the ban was lifted, and as China rises, many younger Indonesians are starting to acquire proficiency in Mandarin.
In 2017, the Chinese Embassy in Indonesia estimated that there were at least 14,000 Indonesians studying in China. Many of these students will have no issues securing jobs with Chinese firms once they return to their country. In fact, some have already been recruited by top companies such as Alibaba which owns the Post even while they were still in China.
On the flip side, Chinese firms have trickier issues to contend with than just a language barrier.
They have to learn to navigate the diversity of Indonesian culture, which involves understanding its particular aspects, such as the importance of the month of Ramadan and also how to work with Indonesian workers on a daily basis.
For instance, Chinese corporate culture is known to be rigidly hierarchical. But in Indonesian work culture, maintaining a cordial relationship is essential to productivity a phenomenon that is unfamiliar to mainland business leaders used to a top-down management approach.
If workplace relationships begin on the wrong foot, Indonesian workers may be perceived to be unmotivated, leading Chinese firms to prefer hiring workers from the mainland to meet tight deadlines.
However, equipping Chinese managers with a sophisticated level of operational understanding of the Indonesian work environment may not be easy, as these staff members usually see their stint in Indonesia as temporary, and so may be unwilling to commit to bridging the cultural gap.
Thus, investors looking to succeed in Indonesia in the long term must not only think of how to overcome the lingering anti-Chinese sentiments that are deep-seated in Indonesian society, but also learn how to operate in a cultural environment that is vastly different from China’s.
This will require a critical shift in mindset, and a new generation of Chinese managers that is willing to pick up the Indonesian language and understand Indonesian culture.