JAKARTA – With Jakarta’s office occupancy rates nearing their lowest since the 1997-98 financial crisis and more space expected to flood on to the market next year, Indonesian companies may be about to add to the woes of property developers by introducing permanent post-pandemic changes to their way of doing business.
Local government regulations on physical distancing already ensure that only 50% of staff can be in an office at any one time, but CEOs have been surprised that work-from-home arrangements are working better than anyone had expected.
“We’ve found that productivity has gone up and that our people are putting in more hours than they did in the office,” says Ong Hock Chuan, founder and partner of public relations firm PT Maverick Indonesia. “In fact, they’re finding it difficult to switch off.”
He’s not the only one to make that observation. After working at home for five months, Mike Broomell, managing director of property consultancy Colliers International Indonesia, can even see a time when senior managers will be looking for larger houses to accommodate extra workspace.
Commercial property developers, meanwhile, are bracing for tough times ahead. “Banks are tightening their lending policy and even withholding financing,” Colliers says in its second quarter report, noting that loans are the lifeblood of the commercial real estate sector.
More than 607,000 square meters of new office space is due to come on stream by the end of 2021, including 325,000 square meters in Jakarta’s central business district alone, where occupancy is forecast to sink to 78% next year as Indonesia’s gross domestic product (GDP) struggles to recover.
In many ways, the pandemic is acting less of a disruptor and more of an accelerant for a trend that was already under way as companies with new generation tech-savvy staff re-assess the way they work in the digital age.
“What the pandemic has done is kick off what we were working towards anyway,” says Shanti Poesposoetjipto, chairman of the diversified Samudera Indonesia Group, which employs 6,000 employees across the shipping, cargo and insurance sectors.
Samudera has had 70 Covid-19 cases, including a director and two workers who remain on ventilators. Like many other big companies, it is providing special allowances to ensure workers are better equipped to work from home, now and in the future.
One European multinational company is even supplying comfortable office chairs as part of a plan to eventually have 40% of its staff working from home. Says one senior manager: “We have to be cognizant of the fact that space is limited in many houses.”
Real estate analysts predict that in a city where workers can spend up to four hours a day commuting to downtown destinations, companies may in future only require them to go to the office two or three times a week – and then on a staggered basis.
Although it’s too early to predict how things will all shake out when a vaccine is finally available, a surge in business failures and significant down-sizing of workspace could leave the owners of newly-built office blocks struggling to find tenants.
In Singapore, for example, one major multinational firm is vacating an entire floor as it looks ahead to a future where Zoom meetings replace arduous cross-town commutes and visits to the office are more about maintaining a workplace culture than getting any work done.
“The office used to be where we went for work, but these days people go there for cultural rehabilitation,” says Maverick’s Ong, who is converting his second floor into video and audio studios now that 40 of his 70-strong staff are working at home.
Mining company PT Freeport Indonesia, long one of the country’s biggest taxpayers, is downsizing from four to two floors at its Jakarta headquarters, with only 120 of its 500-strong work-force now obliged to go to the Kuningan office each day.
In future, those that do have to clock in will need to book space on-line. “Nobody will have their own offices anymore,” says president director Tony Wenas, who has found that Zoom meetings are compelling employees to be more punctual.
That is already leading to a major shift in cultural mores. To the chagrin of foreigners, Indonesians are notoriously late arrivals to almost everything, so much so they have coined the popular phrase jam karet, which literally means rubber time.
Most of the employees who must still go to the office work in the accounting and procurement divisions, which have to continue providing so-called “wet” signatures and hard copy documents for taxation and other purposes.
The American Chamber of Commerce (AmCham) is trying to convince the Finance Ministry that the paperwork is unnecessary and that a change to on-line is long overdue. “Pushing paper in this day and age is ridiculous,” says one foreign businessman.
Finance Minister Sri Mulyani Indrawati and even senior tax officials don’t appear to have any objections given the fact there is already a legal basis for using e-signatures. But AmCham managing director Lin Neuman says the government has yet to issue a formal instruction on how it should be applied.
Stay-home work does have its drawbacks. Executives say while it works well for those who are motivated and skilled, others need the collegial support of fellow workers around them and access to key office equipment.
Mental health may also become an issue, they say. Pets, children and other household activity disrupt phone calls and seemingly endless on-line meetings, which can become tiresome in themselves even if a surprising amount of work gets done.
Office workers who have taken to using the new north-south Mass Rail Transit (MRT) system or the TransJakarta bus network in recent years are back to using their private cars for the daily commute to avoid catching the virus from fellow passengers.
That means the capital’s traffic congestion is as bad as ever despite half-empty offices, a discouraging spectacle for Jakarta’s municipal government which has spent huge sums of money in recent years to improve public transportation.
Perhaps of greater immediate concern is the increasing strains on an already weak internet infrastructure from more people working at home, with an increasing number of daily service outages, particularly in the period between 7 am and 9 am.
Communications specialists say the four main providers may have to bring forward business plans by months or even years to meet the surging demand. “Internet reliability is the biggest problem,” says one senior executive. “It’s unpredictable and it’s putting a lot more stress on things.”
But it is something companies will have to take in their stride in the early days of the new business order. “Whether it’s good or bad, it will never be the same,” says the CEO of one Jakarta-based service provider. “After sitting around home in shorts and nothing much else, the days of going to the office in suits and ties may be over.”