Investment-hungry Indonesia must fight corporate locusts

Budi Widianarko, a professor at Soegijopranata Catholic University, Semarang, and a member of The Water Dialogs, a London-based Global Multistakeholder Dialog on Water and the Private Sector responded to my 24 March Oped with this piece on 3 April, 2006.

He's very gracious and right – lots of the mining companies are locusts. But, at the risk of getting my metaphors very mixed up, these locusts are also usually underdogs in the sense that they are quite helpless in the face of PR-savvy individuals and activists. See one of my previous articles (Defense against the Dark Arts) for a grasp of how Goliaths can fall in the wake of nimble Davids.

I took pleasure in reading Ong Hock Chuan's column in this newspaper (March 24, 2006) that commented sympathetically on the Indonesian Chamber of Commerce and Industry's statement defending the interests of foreign mining investors against the despotism of the political elite. He advised that if the pressure on investors continued there would be a great chance that this country would lose its foreign investors. This, of course, sounds very reasonable and in favor of everybody's interests.

Ong's line of reasoning is well thought out and straightforward. Frankly, Ong's article has enriched my understanding of the beauty of diversity, something that we should cherish in this current age of post-modernism. However, I am truly amazed by Ong's stance with regard to the nature of corporations, including those he calls "big boys".

Reading through his arguments, one will certainly get the impression that big foreign corporations operating here are merely helpless creatures and defenseless when facing criticism from the political elite.

Actually, with experiences gained throughout the course of existence, the corporations have been forced to devise for themselves a multitude of strategies to cope with external pressures. In this respect, corporations resemble living organisms and behave accordingly. In his book The Chrysalis Economy (2001), John Elkington ingeniously divides corporate environmental strategies into four kinds of organisms: the locusts, caterpillars, butterflies and honeybees. The grouping is based on a two-dimensional character of a corporation, i.e. the nature of its resources utilization combined with the corresponding level of impact.

In terms of resource utilization, corporate locusts are classified as a degenerative model with a high impact on the environment. They are part of the "decreasing return" world, where the more they do, the worse things become. The characteristics of the corporate locusts are they use a highly unsustainable business model; have a tendency to swarm, overwhelm habitats; destroy various forms of capital; practice zero cross-pollination; and turn a blind eye to early warnings.

Corporate caterpillars are also representative of a degenerative model. However, they are usually more difficult to spot than locusts. Some traits of corporate caterpillars are: longer-term, unsustainable business models; high "burn rate"; relatively local impact; and potential to switch to a regenerative model.

Two regenerative models are represented by corporate butterflies and corporate honeybees. They are part of the "increasing return" world.

The first model is characterized by a sustainable business model; strong commitment to corporate social responsibility or sustainable development (CSR/SD), high visibility, loud voice; may publicly attack locusts; a wide network; and commercial lightweight.

The second model have the following traits: sustainable business practices; strong business ethics; constant innovation, cross-pollination; capacity for heavy lifting; strategic use of natural capital and other resources; sophisticated technology; and multiple capital formation.

Unfortunately, most mining giants fall under the category of corporate locusts. An infamous example of this model is Russian Aluminum, the world's second largest aluminum producer. According to Elkington (2001), based on a lawsuit filed in New York, the firm has been accused of a series of crimes, including murder, death threats, fraud, bribery, and money laundering. Elkington's long list also includes Freeport-Mc Moran Copper and Gold which is operating in Papua.

Given their common attitudes, it seems safe to assume that it is nothing new for big mining corporations to deal with social and environmental protests. In dealing with such pressures, Sharon Beder in her contentious book Global Spin (2000), points out that big international corporations have been developing a special technique known as corporate activism.

With their massive financial resources and power the corporations defy claims made by environmentalists to reshape public opinion and to persuade politicians against tightened environmental regulations. In the western world, corporate activism which began in the 1970s and rejuvenated in the 1990s has enabled corporate agenda to win most debates about the condition of the environment and what should be done about it. While numerous alternatives are available, two most perilous, and yet most common methods of environmental activism are the setting up of front groups, and public relations.

Basically, the first model is like putting your words in someone else's mouth. When corporations intend to fight against environmental rulings, or promote environmentally destructive development, they may do so openly. But, strategically it is far more effective to form a group of citizens or experts — and preferably a coalition of such groups — which can publicly endorse the corporations' interests whilst claiming to speak on behalf of the public.

When such groups do not exist, the corporations can hire public relations firms to form them. The use of such front groups enables corporations to get involved in public debates and government hearings behind a cover of public interests.

The second model is based on the "therapeutic alliance" — a technique commonly used by psychiatrists when dealing with an irrational patient — as described by Lindheim (1989) (see Beder, 2000).

Corporations can build a therapeutic alliance with the public, which they often consider reacts irrationally and emotionally to environmental and social risks. Corporations, thus, must use their communications resources to demonstrate their commitment to solving environmental problems, and improving the environment.

These two models of corporate activism are not new in the environmental arena. Clearly, corporate activism may endanger the ability of democratic societies to respond to environmental threats. It is therefore very crucial for the political elite, NGOs, the media and concerned individuals to constantly voice a critical account of the behavior of corporations — be they domestic or foreign investments. This country should certainly welcome the butterflies and honeybees but reject the caterpillars and locusts.

Stopping political elite from meddling in mining

I wrote this for the Jakarta Post on 24 March 2006. Some foreign journalists were ribbing me for not naming the political elites behind the demonstrations against foreign companies. My reply was that I write opinion, they report and if they were good at reporting they would have named the political elite.

Kudos to the Indonesian Chamber of Commerce and Industry (Kadin) for asking the political elite to refrain from stirring up protests directed at foreign mining companies.

It is a step in the right direction as it is high time an Indonesian institution of some stature spoke up for foreign investors against the tyranny of the so-called political elite.

The mining industry, headline grabbing though it may be these days, is only the tip of the iceberg when it comes to investors being bullied by the political elite.

Time and again many a foreign investor has stood helpless and alone once a member of this political elite chooses to make them or their industry a target. The political elite has only to make an accusation, no matter how wild it is, and the damage is done. The investor stands accused and because they are foreigners, are hesitant to speak out in an assertive manner to clear their name, for fear of provoking even stronger reactions.

Besides, the accused party rarely has credibility in protesting its innocence. Most attempts at this exercise make them sound as if they are defensive or are whining about their situation, which then makes matters worse.

They then look around for help, for someone who would not necessarily endorse their actions, but just to advocate fair play and a rational approach to issues. Usually they find no one. Not among the more well-known human rights campaigners and politicians because they have their own reputations to protect and being seen to advocate for big business does not endear them to their constituents; not among the various industry associations because they are usually staffed by bureaucrats or veterans in sinecure positions; and not among the various commissions and NGOs sworn to protect the people because they do not want to upset each other.

So foreign investors are left entirely alone to fend for themselves whenever the political elite decides to attack them. In their isolation, many of these foreigners must wonder what sort of a society in decay it is here where, to paraphrase Yeats, the best lack all conviction while the worst are full of righteous piety.

At worst many of them must seriously contemplate pulling out their investments from Indonesia; at best they would still relate their experience as a parable of admonishment to their fellow investors who are eying Indonesia.

This is why Kadin's recent move to warn off political elite from fanning protests against mining companies is such a positive step forward for investment. Finally, foreign investors can count on an institution of standing in the Indonesian community to try to keep the playing field a bit more level and temperatures surrounding issues a bit cooler. This will give all parties concerned more breathing space to resolve their differences and come to amiable solutions.

Kadin should perhaps now keep up the momentum by assuming a leading position in issues management and resolution. Led by well-respected businesspeople with the ear of government ministers as well as foreign investors, Kadin is well positioned to ensure that controversial issues are resolved satisfactorily.

It does not have to take sides, merely to ensure that all parties are being fair in their approach toward issues. The Freeport issue is a case in point. Kadin can, for instance moderate a roundtable of principal players where Kadin can set very specific questions for all parties to answer, such as what exactly are the complaints against Freeport and what are the reasons to support such complaints; who exactly has issue against Freeport and why do they need to resort to violence; what are Freeport's response to such complaints and what are both sides' suggestions to resolve the issue? And then print it as a white paper on the issue.

Such actions would not necessarily solve issues overnight but it would go a long way toward bringing some element of rationale to controversial issues.

True, Kadin should not really be involved in such activities but it would appear that it has to out of default as the other institutions have reneged on their functions. The press, the so-called fourth estate, is often more interested in repeating unsubstantiated allegations, sometimes the wilder the better, rather than practice responsible reporting; the self-styled human rights champions and social commentators do not want to make enemies of the political elite; ministers are usually too slow or lacking in political will to resolve anything decisively.

Indonesia remains a great place for investment and many foreigners know this. They want to put their money here and they are usually big boys, they can fend for themselves; but this country owes them an obligation to keep the playing field level in return for the money they bring in and the jobs they create.

Of course, foreign investors should act responsibly, adhere to all Indonesian laws and use their financial clout and know-how to benefit the community. Many of them already do that, all they need is someone to keep the hounds of the political elite at bay so that they can go about their business without fear of unjustified and unwarranted attacks.

Defense against the Dark Arts

I wrote this for the Jakarta Post on July 28, 2004. A few weeks after that Newmont became my client and I consulted with them for six months but we parted ways by the begining of 2005.

Just suppose, for a moment, that you are the management of Newmont. And suppose that you have operated your mine in Minahasa in accordance with the strictest of environmental standards.

Then, out of the blue, an environmental group and some villagers file a police report and call in the media to accuse you of dumping highly toxic mercury into Buyat Bay, not only ruining the livelihoods of the fishermen and their families but causing a stranger disease. They ratchet up the emotional stakes by calling it Minamata disease, after the infamous mercury poisoning scandal of the 1950s in Japan.

Being media savvy activists they have leveled their accusations in the media, replete with graphic "results" of your irresponsible actions. As a result the media is now hounding you.

What would you do?

The knee-jerk reaction for most managers would be to hunker down and try to work things out with the authorities and all parties concerned away from the glare of publicity. This course of action would, however, invite an escalation of the crisis because you would have failed to grasp a basic fact of managing a crisis-like situation: Perception is as important, if not more so, than reality.

Manage the perception well and mitigating the crisis is easier. Manage it badly and you have a bigger crisis to handle than what you began with. At stake is the reputation of your company. If it takes a beating it will never be fully restored even years after the crisis. Freeport is a case in point.

To manage perception during a crisis like that of Newmont's a company needs to demonstrate several attributes if it hopes to emerge from this crisis with its reputation intact: A willingness to accept responsibility, empathy and openness.

A willingness to accept responsibility does not mean the company should admit to and apologize for anything and everything. Rather, it means that the company should communicate and act in such a way that demonstrates that it is not in denial, nor is it defensive.

To demonstrate that it is not in denial the company should convey the message that it is cooperating fully with the authorities to help uncover the truth behind the allegations. To avoid sounding defensive the company should never point the finger at other parties, especially if it cannot prove its allegations conclusively. Hence Newmont's claim that individual miners were responsible for the toxic waste only made things worse when it could not be proven.

The company has also to demonstrate openness. Like it or not, the world is skeptical toward corporations. It is not fair but it is a fact of life. Corporations have to try that much harder to diffuse this skepticism in moments of crises, when they become the center of attention.

It is also a good idea to rely on independent credible third-party individuals or institutions to provide evidence or information that supports the company's case to diffuse the skepticism of the media and public.

It is by demonstrating such attributes that companies can hope to manage perceptions and defend themselves against accusations assuming, of course, that they aren't guilty of the alleged wrongdoing.

If they are guilty, then the best option is to fess up, apologize and announce measures taken to ensure such incidents do not happen again.

Whatever the scenario, however, companies must realize that if they do not manage perceptions well they can easily lose control of the situation as the media and public turns against them. Managing perceptions therefore is a mandatory skill for companies to acquire.

This is especially so because companies are extremely vulnerable to a crisis in Indonesia. At anytime a disgruntled employee, institution or NGO can precipitate a crisis by leveling an accusation, whether justified or unfounded, against a company. The onus then is on the company to exonerate itself.

For proof of how vulnerable corporations are, you need only to read today's newspapers. The Bekasi environmental management agency is accusing two hospitals and 12 companies operating along the Kalimalang River of dumping toxic substances into the river. Some of the companies have denied the charges but the rest have kept silent.

If the media increases its interest in the story, or if other environmental groups take up the allegations of the Bekasi environmental management agency the issue may escalate to crisis levels for the companies involved.

In such situations truth is elusive, even to the journalists whose job it is to cover these issues closely. There will be claims and counter claims but the public will believe the party that is most adept at managing perceptions.

Environmental groups and NGOs have demonstrated time and again that they are media savvy. They call press conferences, stage demonstrations, parade witnesses and victims in photo opportunity sessions and stage iconic moments (remember the David-and-Goliath image of Shell using a water cannon to get rid of Greenpeace activists atop Brent Spar?).

The question is whether the corporate sector in Indonesia is any match for these groups?

Governing via text messages

This first appeared in The Jakarta Post but was picked up by The Star on 3 July 2005

JAKARTA: We in Indonesia are so fortunate to have a President who embraces technology. After giving out his cell phone number and setting up an “SMS-line” for public complaints, the tech-savvy President has now taken a bold next step: sending SMS to all and sundry to “stop drug abuse and drug-related crimes right now”.

Done as part of a ceremony to commemorate the International Day Against Drug Abuse and Illicit Trafficking on Tuesday, this message was sent to millions of Indonesians fortunate enough to have a cell phone and, therefore, a message from the President himself.

The odd cynic or two, as usual, will criticise the Indonesian President for being ill-advised by spin doctors to once again engage in a love affair with the SMS.

No doubt they will be proven wrong months from now when a survey, probably sponsored by telecommunications operators, shows a dramatic drop in the number of drug addicts across the nation.

The cynics also miss the point: We here in Indonesia have a President on the cutting edge of a new form of government that even George Bush, president of the world’s most technologically-advanced country, has yet to cotton on to: Governing via SMS.

This form of communication is efficient, it is intimate (all of us are now SMS buddies with SBY), and it is direct. What more does one need to bring about positive change in society?

In the spirit of encouraging this daring, innovative breakthrough in governing the masses, here’s a list of major ills and the kinds of messages that the President could SMS in response to them, taking into account modern data mining technology that can identify specific groups of people.

Civil Servants: STOP MEETING. Stop lengthy and pointless meetings now. Let us have an efficient public service that actually serves the public.

Illegal DVD vendors at Ratu Plaza: STOP PIRACY. Stop selling pirated DVDs. Let us have a nation where the expatriates do not know where to buy illegal DVDs.

Public transportation drivers: STOP STOPPING. Just stop stopping in the middle of the road. Let us have a nation where public transportation vehicles actually stop where they are supposed to – by the side of the road.

Tax Department: STOP SHAKING DOWN TAXPAYERS. Stop finding grey areas of the law with which to extort honest taxpayers. Let us collect some tax from the tax avoiders instead.

Customs and other law-enforcement agencies: STOP TAKING BRIBES. Stop taking bribes this very minute. Let us, for a change, be protected by you guys rather than be a victim of your rapacity.

Traffic police: STOP STOPPING. Stop stopping cars for minor infringements so you can ask for bribes. Let us have instead a nation of smooth traffic because of the strict enforcement of road laws.

Politicians: STOP NATO. Stop preening and grandstanding now. Let us have a House where its members represent the interests of the electorate rather than their egos and wallets.

Non-governmental organisations: STOP THE NEGATIVITY. Stop finding fault with the government all the time. Let us instead be fair, something that you all preach.

By sending specific messages to these groups – hopefully repeatedly so that the message gets reinforced – we should be able to see positive changes in society.

But now that the government has set off on the technology road, why stop there. How about a presidential blog? Or if that’s not hip enough, the nerds are talking about podcasts as the next big thing in cutting edge communications.

Technology, however, can be tricky. As the President ventures forth with such bold initiatives, he may need to target another group with a specific message:

Cell phone users: STOP CALLING ME. Stop calling my cell phone or SMS-ing me. Use my other phone number instead. I have a country to run.


This was published as an opinion piece in the Jakarta Post on 3 July 2003

Restrictions and pressures from the TNI over reporting in Aceh, libel suits from businessmen like Tomy Winata against Tempo weekly, Texmaco boss Marimutu Sinivasan against Tempo and Kompas daily, as well as politicians Akbar Tandjung and President Megawati Soekarnoputri against Rakyat Merdeka, have prompted some senior journalists to proclaim that the Fourth Estate is under threat.

The Indonesian Corruption Watch (ICM) went one step further: There is foul play in the recent increase in the number of lawsuits against the media, it claims. “The powers which were momentarily discomfited by the reform movement are currently consolidating themselves,” proclaimed coordinator Teten Masduki.

So there you are — the evil and sinister forces are back and they are out to destroy press freedom through the courts. The implication here is that if the media loses any of these cases, it will be because of these sinister forces or the corrupt court system; but it can never be the fault of the press itself.

There is something flawed with the insinuations here. It presupposes a black-and-white world in which the bad guys (business fat cats and politicians) can do no good and the good guys (the free press) can do no wrong.

The press in Indonesia have certainly been the good guys even before Reformasi (reform). Tempo’s brave reporting, which led to its closure by the government in June 1994, is now legend. Other media pushed the envelope in ways that their, say, Malaysian or Singaporean counterparts would never dare.


The press was one of the major forces that brought about Reformasi and to this day, Indonesia has one of the most vibrant and free press in Southeast Asia. I remember a client from Singapore being in awe of Indonesian journalists because, contrary to her expectations, they were interested and asked more intelligent questions than their ASEAN neighbors.

Ironically, however, Indonesia’s press freedom may have also created the very conditions that could undermine its freedom.

The freedom that came after Reformasi allowed literally anyone to become a publisher or media owner. An explosion of the media industry was the result. Publications mushroomed overnight. Some failed, but still more filled their places. There are now so many publications in Indonesia that no one can keep track.

A testament to this explosion is the fact that Jakarta had only three TV stations in 1997 — it now has 11.

The rapid expansion of the industry resulted in a demand for talent that was not there. There are a few seasoned journalists who know their stuff, but they are vastly outnumbered by reporters who cannot get their facts and names right.

On Monday, a journalist wrote about our company’s first anniversary in a society column where, in a few short paragraphs and captions, he managed to change our evening function into a luncheon, our public relations consultancy into an event organizer, misspelled three names and even got the food we had served, wrong.

The media explosion also gave rise to intense competition. Since most of the publications, even the top ones, rely more on street — rather than subscription — sales for their circulation, the temptation to sensationalize and be the first with the hot news became extreme.

In such a market, the strong became stronger. Certain publications rode on their reputations to greater dominance of the market. Some of them now feel so unassailable that hubris has begun to creep in, while they feel that their journalistic standards are beyond reproach.

All these factors combined are the real threats to press freedom in Indonesia, not the political and business fat cats. In a democracy, these businesses actually have a right to sue the media if they feel that they are aggrieved and the media has acted in bad faith. The question here is whether the businessmen and politicians are justified in thinking so.

The sad conclusion is that the businesses and politicians, more often than not, have a valid legal case against the media but do not go to court because first, Indonesia is not a litigious society and second, it is an uphill task to pick a fight with someone who buys ink by the barrel.

There have been many cases where a business was not given the right to respond or a chance to tell its side of the story. A colleague was once lectured by an editor on the immorality of my working for a conglomerate, when he called on behalf of a client to clarify certain points raised in a newspaper article. In the editor’s view, it was despicable to work for a conglomerate, and whatever the colleague had to say was not worth hearing.

Never mind the facts.

A readiness to pass judgment, an unwillingness to impose strict standards of checking facts, ignoring the principle of covering both sides of the story, not corroborating information from sources with a second or third source, not putting journalists who malign and make wild and damaging claims on record, and passing off innuendo and allegations as facts have been some of the sins of the media of late.

Taken collectively, they are the soft underbelly of the media when it comes to press freedom. If these problems are not solved soon, it would leave the media totally vulnerable to lawsuits that could bankrupt many media companies that we’d sooner see imperfect but open, rather than closed. It is denial that is the media’s biggest enemy to solving these problems. The sooner the media addresses these problems, the sooner Indonesia’s press freedom will be ensured.

While it is true that businessmen and politicians may conspire with the courts to act against the media, it is also true that the media — which has a history of drawing together as a single force, as evidenced during the Tomy Winata-Tempo case — can exert tremendous pressure. Judges, after all, also do not want to pick fights with people who buy ink by the barrel.

No, it is not the courts nor the businessman nor the politicians that the media needs to fear in regards its freedom.

It is the media itself that is its greatest enemy.

The Mega metamorphosis is great but rather late

This is an opinion piece I wrote for The Jakarta Post on September 16, 2004

There has been a fundamental shift in how President Megawati Soekarnoputri communicates. The Megawati we saw during Tuesday night's presidential "dialog" was definitely a different one from the Megawati in the first round of presidential dialogs weeks ago.

Mega watchers will note that up to the last presidential dialog she was her old self — tentative, insecure, inarticulate and unprepared to speak before the public. She looked and sounded more like a dowdy housewife, happier to tend to affairs of the household than affairs of the state.

Then something happened. By Tuesday night Megawati was still a bit stiff, but she was doing all the right things to communicate effectively. Gone was the horrendous handbag that she plonked in front of the rostrum during the first dialog. Gone were the ridiculously folded notes that she clung to. And gone was the sense of confusion and helplessness that she greeted each question with.

In its place was a well-prepared Megawati who looked like she was confident, in control and in possession of the facts. This was a Megawati who could parry the more uncomfortable questions and deliver a message of how successful her administration has been in effecting change.

What happened? To a public relations practitioner, the answer is obvious: Megawati has, at last, been media trained. In media training executives and politicians are taught how to communicate effectively in an interview situation, whether it is in the format of Tuesday night's dialog or before a pack of aggressive reporters.

There are two components to effective communication: the content and the delivery.

The content consists of boiling down all that the interviewee has to say into two or three main ideas that are expressed in short, concise and memorable statements. These are called key messages and the interviewee's job is to repeat them as often as possible during the interview.

In Megawati's case one of the key messages was how successful her leadership has been in introducing change. There were at least four or five occasions during the dialog where she expressed this idea, saying that she had successfully introduced this law or that initiative and all that remains was merely the implementation.

Then there is the delivery. This is as important as, if not more than, the content. The late Ronald Reagan, who was known as the Great Communicator, was a master at this. No matter what he said, it seemed credible and likable. Successful delivery depends on body language and the use of voice.

In these areas, Megawati also seems to have had a makeover. Though she still does not come across as an animated or inspiring orator like her father, she was noticeably better. She looked responsive to the questions from the panelists. When confronted with difficult questions, she answered with confidence and seemed even to enjoy the session. Unlike the last time, where she leaned on the rostrum, she affected good posture and was attentive. She spoke clearly and enunciated well.

And she made eye contact with the panelists and the audience. Although she still needs to work on sweeping the audience with her eyes to make contact with more people, she at least did not make the same mistake as her rival, Susilo Bambang Yudhoyono. Like Megawati, his answers were well prepared and rehearsed but his trainers overlooked correcting his habit of rapid eye movements. This created the perception of shiftiness and mitigated the effectiveness of his otherwise competent though uninspiring delivery.

The result was a perception that Megawati came out better in the dialog. She even appeared mildly presidential.

Will this be enough to tilt the balance at the presidential polls on Monday? It is doubtful, as her change may be a case of too little too late. Whatever the outcome of the election, however, Megawati's metamorphosis raises intriguing questions about the future of Indonesian politics.

Like most of Indonesia's politicians, Megawati has obstinately refused professional help in managing her public image. Yet her performance on Tuesday night as well as in the immediate aftermath of the bombing outside the Australian Embassy — where she cut short her visit to Brunei and returned to pay a symbolic visit to ground zero and the victims in the hospital. She also delivered a speech that expressed empathy as well as an action plan — a clear indication that the age of the image maker has arrived in Indonesian politics.

From now on we will increasingly see the products of political marketing. Politicians will increasingly be slicker and more sophisticated in the use of public relations strategies and tactics to win the image war, so they can win the political war.

Will this result in a more open Indonesia where its political leaders have to communicate with the people to win their support? Or will it mean the rise to power of the slick, ruthless politician who's mastered the sound bite and other tricks of persuasion but has little else to offer?

Time will tell, but in the meantime we can rejoice that there is change in the air. Change is the result of self-realization. Where self-realization exists, there is capacity for improvement. This may be Megawati's lasting gift to Indonesia, no matter how she does in Monday's presidential elections.