The World: Indonesia slaps agencies with 'use local' law

Agencies in Indonesia have slammed the government for passing protectionist laws without consulting them.

The "bule-bule" - a crass vernacular for "foreigners" in Indonesia - have reason to feel anxious these days. New, unprecedented protectionist laws have all but shooed them away from the local ad scene.

Announced by the Ministry of Communication and Information on 1 May, the decree is two-fold: one part requires all locally aired ads to have been produced and directed locally, and with local talent; the second requires agencies to adhere to a strict "foreigner to local" employment ratio of 1:3.

Some brands are exempt, such as those whose entire identity is built on a Western image. The Marlboro Man can stay, but the face of Manchester United's Cristiano Ronaldo on ads for Extra Joss, a local energy drink, must go. Questionable circumstances will be reviewed on a case-by-case basis.

Apparently, the decree was sent without warning or prior consultation with Indonesia's 4A's (PPPI), one of Asia's more influential regulatory bodies. And within the first week, according to reports, at least ten production houses had to shut down after their foreign clients ceased giving them work.

So, naturally, people are miffed. "It's a really silly, backwards rule," Henry Saputra, the chief of Publicis Metro and a member of the PPPI board, seethes. "Obviously, the Government doesn't understand the ad industry at all."

Saputra's concern highlights Indonesia's understanding of its own less-than-stellar creative standards. Indonesia regularly trails its neighbours in awards shows, and its creative directors rely heavily on Malaysia, Thailand and the Philippines for quality production services. "We just don't have the right level of local talent," Saputra says. "I think we'll get to a point where the quality of TV commercials will suffer hugely."

Although the PPPI has formally declared its support for the decree, and is in discussion with the Government to soften its terms, Saputra is pessimistic of any change. "The decree is already in place and they didn't even ask the agencies beforehand, so I don't think the ministry will back down," he says.

Furthermore, local brands with international aspirations, such as the Indonesian cigarette company Djarum, may find it harder to compete regionally without polished-looking advertisements.

In the short term, it looks like the local industry will go through a temporary state of anxiety and upheaval as companies scramble to book the handful of esteemed local production houses.

Indonesia needs only look to nearby Malaysia to see how such xenophobic laws have worked out elsewhere. "Made-in-Malaysia" (MIM) was introduced in the 80s and likewise requires all ads to be produced locally. Now Vietnam may follow suit.

Malaysia's Minister of Culture, Arts and Heritage has denounced the use of non-Malay faces in TV ads - "too many white faces", according to one local agency chief - despite the fact that almost 50 per cent of the country is non-Malay.

But although MIM has been around for more than two decades, Malaysia has failed to enforce it. Instead, MIM has acted as little more than a finger-pointing campaign that the ministry reaffirms several times a year- or whenever the industry suffers a minor setback. So it should come as no surprise that last month, following an underwhelming run in several regional awards shows, the Malaysian Government again called for stronger enforcement of MIM.

Currently, the rule is for 80 per cent of production budgets to be spent in Malaysia, but according to Vincent Lee, the president of the Malaysia 4A's, this figure will rise. "The proliferation of foreign commercials has been tremendous," he says. "The number of commercials produced in Malaysia has dropped from 400 a year to around 100 a year over the past decade."

Lee further argues it is simply unfair for local actors, directors and producers to suffer just because agencies go abroad. "Free trade only benefits big countries," he insists.

Naturally, speculation is rife in both countries of underhand dealings. One advertiser in Indonesia points out obvious favouritism towards production houses. This is suggested even more in Malaysia, where a spokesman for the Ministry of Information claims MIM came about at the insistence of local agencies.

From a Western point of view, industry protectionism seems draconian and counterproductive for an industry that thrives on creativity and the sharing of ideas. But to some living in Malaysia, the laws have in fact raised the country's production standards. Bas Moreau, the executive creative director of TBWA\Malaysia, says: "I'm European, but I think the laws have done some good here. They aren't enforced, so in reality they just educate and promote the use of local talent. As a result, there isn't so much reliance on other markets as you'd find elsewhere."

Another bonus? "Now we have some really wonderful production houses, and prices are competitive - you can shoot a commercial on film for EUR20,000," Moreau says.

Back in Indonesia, Fadjar Rusli, a freelance creative director, is optimistic of similar benefits. "It could seem bad during the transition period, but I think the regulations are good for the film industry here," he says. "We have some good creatives, but they just can't compete with foreign markets.

"I heard this practice was applied to Malaysia. And as a result, their film directors are some of the most desired in Asia."