First Fruits

Industrial nations, particularly the raw-material-starved Japanese, long hungered after Indonesia's largely untapped hoard of oil, copper, nickel and timber. But intense nationalism and chronic political upheaval kept foreigners out until volatile President Sukarno was overthrown in 1965. Since the new government began encouraging outside investment two years later, hundreds of companies from Japan, the U.S., Europe and the Philippines have poured $250 million into the archipelago, mostly for mining and logging, and have pledged to spend another $1.15 billion. On top of that, they are spending $150 million annually exploring offshore for oil.

Only the first fruits of these efforts are now becoming available, but they hold much promise of turning Indonesia into an important producer of several materials for which the industrialized world could use an alternative source of supply. Canadian labor strikes in the past have caused highly inflationary shortages of nickel, for example, and the attitude of Chile's Marxist government threatens the stability of world copper production. Western nations also worry about the prospect of a shutdown of Mideast oil wells by Arab governments seeking more revenue. In newly stable Indonesia, the problems are merely finding the materials and bringing them to market.

Mountains and Jungles. Indonesia's resources are as vast as the country itself, which ranks fifth in the world in population. There are 300 million acres of teak, sandalwood, ebony and other valuable timber, at least one-fortieth of the world's oil reserves under the soil and probably far more offshore, and unmeasured quantities of copper and nickel ore. Experts estimate that Ertsberg Mountain in West Irian, which is the Indonesian half of New Guinea, contains 33 million tons of copper, gold, silver and iron ore all by itself.

Bringing these riches to the outside world is another matter, and in most cases the payoff is years away. Freeport Indonesia Inc., a subsidiary of U.S.-owned Freeport Minerals Co., must finish a 70-mile highway over rugged mountains and through jungle-choked valleys before it can begin exporting ore from its Ertsberg mining site in 1973. P.T. International Nickel Indonesia, a subsidiary of International Nickel Co., of Canada, last June reported finding "significant" nickel deposits on the island of Sulawesi but does not expect to begin production before 1975. By then it will have constructed a $200 million mine and ore-processing plant. Others are not even that close to production. Alcoa is prospecting for bauxite in west Kalimantan and north Sumatra; N.V. Billiton Maatschappij of The Netherlands for tin off the shores of Bangka and southwest Kalimantan; and a Kennecott Copper Corp. subsidiary for all kinds of minerals in West Irian, central Java and Sumatra.

No Choice. Forest and oil exploitation, however, are already bringing returns. U.S. and Asian loggers boosted Indonesia's timber exports to $110 million last year, 70% over 1969, and expect to double that by 1973. Working with Pertamina, the state-owned oil monopoly, several foreign firms--including U.S.-owned Atlantic Richfield Co. and Union Oil Co.--recently began producing oil from wells in the Java Sea and adjacent waters. Already the major oil producer in the Far East, Indonesia expects to pump out 1,000,000 bbl. a day this year and 2,000,000 daily by the mid-1970s. That would about equal the present output in Iraq.

Indonesia, which has a per capita annual income of under $100, desperately needs foreign money both to improve its people's living standards and to pay off $2.1 billion in foreign debts inherited from Sukarno and an additional $2 billion incurred since his ouster. At least for now, most citizens would agree with Mohammad Sadli, chairman of the Foreign Investment Board, that the country must welcome outside development capital because "we have no choice."

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