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Crown Capital International Relations An Inflection Point in Political Trust?

Posted Feb 15 2013 7:52am


  2014 will be a year of remarkable change in Indonesia, with parliamentary and presidential elections. Indeed it is remarkable how quickly politicians have focused on 2014 and there is growing concern from some quarters how this may affect how government interacts with business. 

Toward the end of last year — and just before the Indonesian fieldwork for the 2013 Edelman Trust Barometer — electors in Jakarta staged a major political upset, unseating the incumbent governor (very much of the political establishment) and elected a populist reformer, Joko Widodo, known popularly as Jokowi. 

While the Indonesian political and financial elites were unnerved by the Jokowi phenomenon, they must have been relieved that officials from the elections commission approved only 10 political parties to run in the 2014 elections and all but one of these comprise the current political elite. The president’s party is trying other ways to make itself popular. We are entering a time of great political uncertainty but — like Italy in the 1980s — political uncertainties need not get in the way of impressive economic growth. 

So how does the Trust Barometer throw more light on this background? Well, after the nadir of 2012 — when trust in government by informed publics fell to just 40 percent — it has recovered slightly to 47 percent in 2013’s results. Given the background, these results are not nearly as bad as government might have feared. But, as we drill down into political trust, we see a more nuanced picture: globally 50 percent of the general public surveyed, who distrust government, do so for reasons of corruption, fraud and the wrong incentives driving policy: in Indonesia this figure is 71 percent. Globally about one third of government distrusters cite incompetence: in Indonesia only 22 percent. 

The Indonesian public perceives a dishonesty in government, more than its incompetence. For political parties who wish to succeed in 2014, the Trust Barometer results suggest they need to convince on honesty more than effectiveness. 

As with last year, trust in media (by informed publics) remains high at 77 percent and trust in business at 74 percent. Yet again this year we see an unusually low trust in NGOs (51 percent). We can only speculate as to why Indonesian publics have such a low level of trust in NGOs. In some cases it is known that NGOs here are clumsy ‘front’ organizations for vested interests but, given the huge donor funds pumped into Indonesia by international NGOs, there clearly is an important challenge for them in achieving effective community engagement that many of these organizations have still to crack. 

When we look at trust in different types of media we see the huge importance of social media in Indonesia: trust by general public in social media is high at 68 percent (41 percent globally) and last Fall we saw a dramatic example of how a massive wave of Twitter protest — using the hashtag #dimanaSBY (where is SBY?) — forced the president to make a public statement about a corruption probe. The power of social media really can drive political response in Indonesia — and this will be a heightened feature of this political season — which means firms relying upon a top-down approach to their business operations may find themselves ill-prepared and out-maneuvered if they don’t pay adequate attention to popular sentiment. 

Indonesia is a huge recipient of foreign direct investment, which makes it interesting to look at how sources of that investment are viewed. 

Firms headquartered in Brazil (trusted by only 49 percent of informed publics) and India (49 percent) seem to have an image problem in Indonesia: and trust in firms headquartered in these countries fell by 10 and 11 points respectively between 2011 and 2013. China was more trusted (63 percent and only 57 percent of general population) but this too saw a 12 point fall from 2011’s results and may reflect China’s wider image and foreign policy challenges in the region. Trust in Russian firms was flat at an anaemic 62 percent. 

Trusted foreign investors in Indonesia (all above 70 percent) were the United Kingdom, United States, Germany, Japan (92 percent!), South Korea and Switzerland. 

Edelman is witness to the rising tide of ‘emerging market to emerging market’ FDI, so these trust scores from BRIC countries investing in Indonesia are a real concern to us because the efficacy and success of their investment may be diluted if they cannot carry the support of key external stakeholders (workers and community especially) with them. 

Let’s look at what builds trust in business in Indonesia. Firstly let’s look at how the global general public rates the 16 attributes that Edelman has identified build trust (and how they score companies’ performance in achieving those attributes): 

Globally we can see the general public rate engagement and integrity attributes as the most important in forming trust, in a pretty clear-cut prioritization over, say, operational performance factors. 

Now let’s look at the results for Indonesia. Almost at once we can see it is a very different picture, with a much different ranking of what Indonesians think most important in building trust in companies. 

Along with listening to customers, treating employees well is the top slot in Indonesia (70 percent versus 61 percent and third globally). Ethical business practices is the second most-ranked company trust attribute in Indonesia (69 percent vs. 58 percent and fifth globally). But then interestingly we see two good purpose attributes rank high in Indonesia whereas they don’t globally: protecting the environment (68 percent in Indonesia, third vs. 53 percent and eighth globally) and positively impacting the local community (67 percent in Indonesia, fourth, vs. 47 percent and tenth globally).

This tells us a lot about where some of those BRIC foreign investors may need to do more communications in Indonesia: 

Don’t over-rely on elites and using just the media; there needs to be real grass-roots outreach, empathy and action for large employers; and employee engagement is mission-critical, not a nice-to-have. Indonesia is a country marked by a strong sense of community and common good over me and self-interest and therefore good purpose really matters here. 

For some firms, these results deliver a clear red flag because not getting these issues right — like how employees are perceived to be treated — can do real damage to brand reputation and, in consumer markets, may adversely affect consumer behavior. The Trust results for Indonesia therefore suggest that Nike, for instance, recently attacked locally because of the alleged actions of its manufacturing sub-contractor, needs a more highly active labor outreach program. Equally, concern over its reputation in China as an employer has caused real problems for Foxconn and it would be very ill-advised if it thought political cover would keep a lid on any labor issues in Indonesia. Actually, now, it would be the other way around. 

Corporate Social Responsibility programs are essential in Indonesia. Companies struggling to understand why their reputation in Indonesia isn’t as good as they want it to be should first look at their employee engagement and CSR programs. Often a Cinderella afterthought in some companies’ programs, in Indonesia it is at the heart of successful corporate reputation. 

Looking ahead, as we confront a period where political trust may remain low, companies may find that basing their business operations and corporate reputation on government elites just doesn’t get them the results they want or expect. Between now and late 2014, the Indonesian public is going to be loud, occasionally bellicose and it will drive policy and government response. That means — for large-scale FDI — there is a real necessity for well-thought-through community relations programs and more focus on employee engagement than might be thought necessary in some other countries. 

But there is one piece of good news for corporate leadership. Globally among informed publics the CEO is a trusted spokesperson by just 43 percent. In Indonesia trust in CEOs as credible spokespeople is 55 percent. There is an opportunity for CEOs in Indonesia to lead from the top on these good purpose and engagement issues and build on the potential offered by Indonesians’ trust in business. 
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