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Friday, January 9, 2009

Devastation of world financial markets - A case of Policy Reversals in India?

The economies around the world in the last few months are trying to adjust to the neutron bomb like devastation that downed many titans of the financial market and decimated large part of the forces, both officers and the foot soldiers, all around the world. We in India have also been caught the wake of this destruction and has been exposed to a fair share of misery ourselves. This experience has since raised questions from many as to whether this is a signal that the market economy too is a failure; like the failures of communism and planned economies in the last couple of decades. For a country like ours that is struggling out of the paralyzing hold of the planned economy, the lower impact this meltdown had on our economy naturally triggered these doubts. Fanning these worries are many who enjoyed the protective cocoons, of licenses and controls we had for practically each and every economic activity ranging from manufacturing to imports and exports, which ensured profit for few at the cost of many.

I am not an expert to assess the reasons and impact of the quake that shocked the financial world. But I couldn’t help pen few thoughts that come to my mind on the issues that are being discussed among my crowd of friends.

It is in the nature of market to see cycles of growth and creative destruction. During the cycles of growth we will see extensive rallies of innovations. Many of these innovations are meant to die. Like experimental mutations of evolutionary process. The environment around test these mutations and the ones that can survive these tests precede forward in the path of evolution. As Garry Hammel has explained in ‘Future of Management’, this is one lesson we need to learn from the evolutionary process if we want to build sustaining institutions.

Some time these innovations build a momentum that takes it to ridiculous heights. If we recall, similar enthusiasm and short term orientation resulted in blowup of about 65 billion dollars in the dotcom revolution. Internet then was a new idea opening up opportunities that were not dreamed. The matrices to measure the performance were just evolving. In the meantime there was much causality. Did the internet industry die? No. The right kind of models survived. In past most of these such bubbles were localized to industry and market. Whenever new technology or new product ideas have been identified, we have seen an immediate profusion of organizations that spring up to exploit this. Most of them die and few survive to become successful players in the market. Men with showels who ventured to prospect diamonds when new continents were discovered to the number companies which were set up to manufacture electrical machinery to computers are cases in point. How many have survived till today? Very Few.

What can control this runaway acceleration is healthy governance and stronger regulatory institutions to ensure that the innovations are good for the market as whole and not just for few people. Any game would need clear set of rules and an umpire who understands the game, its rules, its compulsions and who is fair. Else, greed or muscle power or fraud will rule the game.

In the last few years we saw out of balance developments in the market in comparison to the development in regulatory mechanisms. When complex financial engineering products were being structured and marketed the credit rating institutions who are supposed to signal the true risk associated with these products failed in their duty. The pull of the unhealthy incentive structure for these agencies (where their income was derived from companies whose products are being rated by these rating agencies) distanced them away from their fiduciary responsibility leading to ratings that failed to reflect the true risk which in turn lead to mis-allocation of funds.

When such ingenious financial engineering helped US sub-prime loans to reach un-sustainable levels the bubble broke. The mere scale and spread of infected assets across the market players suddenly came to light. That took away the trust that these institutions had among them; the trust that kept the money flow between these entities.

When the inter-institutional trust evaporated the absence of such well structured markets were exacerbated. This squeezed flow of money in the international money markets. The pumps that pressured the flow were no more primed sufficiently. It was this flow that provided the lubrication for the economy to work. And the sudden drying of the money market seized many of the moving parts of the real economy.

Financial markets can be compared to the circulatory system in a body (the other industry segments may be compared to different organs of the body). In an integrated world the infection in the circulatory system spread very fast and wide and it had its impact even in India although there has been no build up of toxic assets in India. The drying up of the western money markets added pressure on the international investors who had invested in India and the Indian corporate who had exposure to international money market which contributed to selling pressure in Indian stock market and a credit squeeze in Indian Money market.

Governments realized the magnitude of this disaster and the need for immediate action. They quarantined the infected, separated toxic assets and pumped in liquidity. Like the doctor taking series of actions to contain the infection and suggesting a life style of extreme moderation till recovery to normal health. It also suggested the need of disciplined life.

But this no way suggests the ossified existence of a vegetating economy with a permanent freeze on any innovation and experimentation. I don’t think the governments of US and Europe that came in with a bailout package, plan to permanently run these as nationalized institutions frozen permanently into a mummified existence. They wanted to contain the mess, doctor them to health and put them back to the competitive pressures of the evolution process. If we look a bit cynically, this is in a way similar to Buffet pumping funds to Goldman Sachs and buying controlling stake really cheap. I am sure both these parties are going to be better off from these transactions once the tide has turned and will not be saddled with unproductive and unresponsive companies to run. I am not suggesting that the intention of the interventions was profits; it was primarily stabilizing the rocking boat. But the process and the expected outcome is going to be similar.

The failure that we witnessed in the market and the governmental interventions even in the developed countries seem to spur pressure on the policy makers in our country to revert back to more government control of business. Let us for a second look back at what the prevailing situation was in our country before started our journey towards liberalized market economy.

The Indian manufacturing was protected from both internal and external competition. Import restrictions and high import tariffs protected them from external competition. The government licensing system, coupled with the MRTP removed any incentive for innovation or even providing quality product, customer service or improvement of product features. The history of our automotive industry is a classical case in point. India commenced production of motor cars in 1957 ; Toyota commenced production of cars in 1937 and Honda motor company of Japan commenced production of cars in 1963. For the next four decades we produced the same car, sold it at ridiculously high prices and the buyer had to wait for months after placing an order after paying an advance. In the meantime the Toyota and Honda established as world leaders in automotive industry. This is not something that was unique to automotive industry. Each and every Industry in our country from blades to cement to pharmaceuticals has the same story.

Banking and financial services industry was no better. Customers of the banks, instead of being serviced were made to feel like mendicants asking for alms. Stock market was a closed club of brokers with the interest of the investor always coming last.

What did it mean to Indian Economy? India was never regarded as place where anything was happening. The slow growth rate of around 3% was considered the characteristic Hindu rate of growth. The consumer had no options for any new products. The job opportunities were limited. Few connected industrialists made all the money by cornering licenses, sharing the booty with the political bosses who were also able to exploit this state of affairs by attracting the patronage of masses who were living in a world of shortages.

Since we gradually moved towards a liberalized economy we have now established ourselves as a place where things do happen. There is a feeling of widespread optimism that we are on a path of real development and not in a spiral of poverty.

Let the nostalgia or the convoluted interpretations of the happenings around blind us to the history. But let us use this as an opportunity to learn from these mistakes and strengthen our institutions so that the momentum we built is not extinguished.

My South East- Asian Retreat

Break at the Lion's den

December is the time for my annual holiday. The policy of mandatory leave in our office gave no choice even for workaholics like me to find excuses to stay back. That is when Sachin, my good old friend, suggested that we could plan an Indonesian holiday. As I had spent two years in Jakarta some time ago, it had a nostalgic appeal. When he further sweetened the plan with an idea to hop around the scenic islands with a whole host of old friends and families, the idea was sold. I knew Sachin would make excellent plans. The kind of holiday I would prefer. Economical , exciting and off the beaten track. (Once you identify the right guy to do the project, leave it to him to deliver the best. But you need to learn to cherish the unexpected). For a contrarian like me, ‘off the beaten track’ has a special appeal. With Sachin married to Vandy who is Liz’s best friend no objection from the Home Ministry too.
We took a break at Singapore for few hours. Managed to meet up with Abhijit and Anju who were my class mates from IIM and who are now settled in Singapore. My daughter Isabella was too excited to spend few hours with Zen, their lovely Golden Retriever. It was something special for Isabella as Zen reminded her of ‘Rocky’, her old pet who is a similar Golden Retriever whom we had given to a friend when we left Dubai.
On to high hills..
We landed up in Jakarta by Sunday evening. Monday was the day to relax and chat up on the old stories. An evening visit to the local Chinese spa was sufficient to melt away the jet lag. In addition to the regular sauna, steam hot and cold pools they also had the ‘joy fish’ treatment which was a novelty for me. For this, you dip you leg in a pool containing some kind of live fish which love to nibble your feet. Apparently they love feeding on the dead skin. The spa patrons suggested a complete dip. But even a dip of foot was a crazy idea for me. Then I had a lovely massage for about an hour that was relaxing and rejuvenating. Specially the hot-stone massage.
Then on Tuesday we ventured out for our first leg. Five families including us. In addition to Sachin the cable TV channel entrepreneur, there were Chubby (Rajesh Menon) the adman with Miranda his wife, Sunil the banker and his wife Urmila, Paul (the paper industry executive) with his wife Maria. Nine children among all of us with three baby sitters made the up a group of twenty two. With all of us from same age bracket and tastes, group jelled quite well. The right mix of communion and personal space…
A local flight to Padang by Lion Air. The crowd we were, the kiddos were suggesting that the airline be renamed Monkey air.
Padang is the main town in West of Sumatra which is one of the major islands of Indonesia. The island that got its name splashed around the world when the Tsunami ravaged through it, killing millions of people. The flight from Jakarta took about one hour and thirty minutes after it took off about two hours late. The plane was flying along the western cost. The sea has a splatter of small islands all along. From up there in the sky these islands looked brilliant. Green patch in the middle (the vegetation), white sand ribbon around it and then the aquamarine patch (the shallow water) surrounded by the vast blue ocean. Some of these islands are perfect circles.
The airport building has a typical West Sumatran Architecture. The rooftops looks like two pairs of bull horns kept perpendicular to each other. When you look at a pair of horn in direction with both of them in a straight line away from your eyes, Originally this design may have been meant for effective air circulation. These days very often there are no vents in the triangle but rather decorative carvings. In some of the large mansions, in place of each of the above pair, there is a double pair.
[1]The slanting roof triangular edges appears quite similar to the Kerala architecture in houses referred to as ‘nalukettu’ In these case there are no horn-shaped corners as seen in Sumatran architecture. One would see a number of similarities of customs, cuisine and architecture between India and the Indonesia.[2]
These roof tops could have been shaped this way on account of the special place buffalos have in their folklore. As per one of the stories, once a Javanese king attacked them and they suggested a buffalo fight instead of two armies fighting it out. Javanese army sent in an elephant sized buffalo and the Sumatrans sent a half starved calf with its horns fitted with sharp blades. The calf ran to the huge buffalo thinking that it was the mother and tried to feed from the udder, slicing the giant’s belly. The crowd shouted Minangkabau, meaning the ‘buffalo has fallen’ Hence the locals came to be referred as Minangkabau (there are many other folk stories on how this name came about. But I just narrated the most exciting one). Legend has it that the Minangkabaus are descendants of the youngest son of Alexander the Great, King Maharjo Dirajo,more commonly known in Indonesia as Iskandar Zulkarnain. They originally settled in the Padang Panjang region and gradually spread out over the rest of Western Sumatra.
A two hour drive (about 90 kms) to Bukittingi (high hills in bahasa Indonesia, the local tongue- there are many places called bukittingi in this part of the world including one in Singapore) and then a one hour drive to Harau Valley by bus took us to the resort where we spend the next three days. The scenery along the way is breathtaking. Luscious greenery that reminds me of my homeland Kerala; God’s own country.
We stopped on the way for a Padang Lunch. In a typical Padang restaurant there are no menus for you to choose from. With a variety of food preparations available in Padang cuisine, which is unique to this part of the world, it would have been difficult to make any sense to decide from a menu. Particularly a menu in local tongue. (We cannot expect all the hotels to have menus in English) In a typical Padang Restaurant the waiters come and arrange small plates filled with each dish. You look at it, ask for explanation if you can’t figure out what it is, and then eat it. If you touch a plate you will be charged for. The variety is incredible. All kinds of meats, fish and vegetables cooked in different styles. (Out at the villages the meat may also contain many exotic options including dogs!) Many of the curries do use coconut milk as it is done in Kerala. Sea food options are plenty. For a carnivorous creature like me, this was really a treat.
During the Japanese occupation of Indonesia in World War II, Bukittingi city was the headquarters for the Japanese 25th Army. The city has its origins in five villages which served as the basis for a marketplace. The city was known as Fort de Kock during colonial times in reference to the Dutch outpost established here in 1825. The culture of this region is unique and one would find matrilineal system (again like in Kerala. Women own the property and the men choose to wander.
Located 930 meters above sea level Bukittinggi has a cool climate and is surrounded by three Volcanoes: Tandikat, and Singgalang Merapi. The other attractions include the Lobang Jepang-the underground tunnels made by the Japanese in the World War II and the Jam Gadung that is a large clock in the city centre. In the outskirts of the town is the Ngarai Sianok, a canyon separating Bukittinggi from Kota Gadang, 12 km away overland. Kota Gadang is renowned for its fine silver filigree and hand embroidery.
People in Bukittinggi appear to like dry, spicy and sweet snack foods very much. They have snacks with different taste, shape from one ingredient and it makes the foods here are special. For example, from cassava they can make spicy long shape cassava chips, tasty cubes cassava chips, and sweet round shaped cassava chips.
Harau valley is a small valley floor of rice fields surrounded in three sides by vertical cliffs. It looks as if a giant hand has scooped away a handful from the middle of a mountain. The resort we stayed was called echo valley (Lembah Echo). With the cottages on one of the cliffs and the opposite cliffs not quite far, the children could enjoy the echo of their loud hollers. In the morning the cacophony of the black gibbons coupled with its echo was a good alarm call. We are lucky that this alarm at a decent hour like 8 am and it does not continue through the day.
On the second day all of us got in to our bus to visit a picnic at a volcanic crater lake, Maninjau Lake[3]. The path to the Lake is impressive, with 44 hairpin bends that offer spectacular views over the lake. The drive was fun but by the time we decided for a boat ride the weather was not conducive. The bus driver suggested that we visit the underground bunkers & tunnels built by the Japanese. We never got around to doing that. There was a nice restaurant jutting to the lake where we enjoyed a gourmet lunch.
Evenings were normally spent in some sort of games. Paul was our ‘game boy’. He had come prepared with an array of board games and decks of cards. He was so innovative that ‘Theen Pathi”, the Indian version of poker, we played had so many types of challenges for wager. As we were not inveterate gamblers, the bets were quire moderate; but the excitement was not any less I suppose.
We walked to a nearby waterfall on the third day. The road is along the tall cliff which is quite imposing. I couldn’t help feeling mesmerized at the marvel of nature’s handiwork. The waterfall was from about 500 ft high. The quantity of water that was guzzling down was not so much. But the flow from such heights with a brilliant spray that drew a rainbow around made it a feast for the eyes. The cool spray on my face wiped away any fatigue from my soul.
Next to the waterfall was a nice climb up the cliff of about 500 ft. The cement steps made the climb easier uphill. Up from the top the view was brilliant. The valley was luscious green of various hues, depending on the vegetation. The large stream of guzzling water through the middle added colour and the background music.
We tried some local satays. Although satay supposedly originated in Java Indonesia and is very common item in most of the South East Asian kitchen, the taste from each part is distinctly different. Satay is made by grilling or barbecuing chunks of dice-sized meat (chicken, lamb etc etc) on a bamboo skewer served with various spicy seasonings (often containing with peanut paste)
There was a nice small nursery that sold a variety of oriental plants. There was one particular fern the cyst of which looked like a monkey head with bright brown hair. (res)
In the evening we were all again at the open air restaurant busy in a game of cards. Then we see a creature the size of a small bat that flew in and started flapping around. The ladies and the girls were equally horrified and started screaming. The ghost stories that I was narrating and the smell of that particular flower which is associated with Kerala ghost stories added to the special effects in the minds of many. The creature was trying to perch on the shoulder of each person and that added to the commotion. Finally it decided to settle down on the ledge and then we had a good look at it. A moth with wild pattern and multiple colours (being a moth the colours were not bright; but were brilliant). For kids the whole incident provided excitement laced with fear.
The next day early morning the long bus ride back to Padang airport for to catch a Mandala Air flight to Medan. Medan is a large town North West of Sumatra. The town has a large Chinese population.

Meet the grand parents....

We had our lunch at Medan town. The markets have a huge collection of fake jewellery. Specially watches of most of the top brands in the world were available for about Rs 250. After the lunch we set off to Bukit Lawang famous for the Orangutan sanctuary. (Orangutans means ‘man from jungle’ in Bahasa like we are referred as Orang India – men from India by the locals) We stayed at Eco lodge. Quite a cute and nice place. By the time we reached the lodge it was evening. The hanging bridge to reach the lodge swayed quite a bit and added to the fun.
Next day early morning we packed our backpacks for the trek in the jungle to see the Orangutans. There were two trails. One easy and the other difficult. The easy one was about one hour. In between we had to cross a large stream with fast current. There was small boat that is hooked to a pulley that rolls over a wire across the stream. The boat could take about four people at a time. The fast current made the minute long journey quite an excitement.
I was such a fool that I wore a walking shoe instead of a trekking shoe. With the sticky clay like mud forming a smooth layer under the sole, it became more like a skating shoe. As we took the easy trek up, onward journey was not so painful though it was tiring. Up at the top of a hill covered with thick tropical vegetation, we had some of the country cousins hanging out to accept the treat that we had taken for them. They have about 16 semi wild ones that hang out, accepting the goodies from the tourists. These were the ones which were mostly rescued from poachers as babies or found abandoned and then nurtured by the staff of the park till they became independent to be sent back to the wild. Therefore they were comfortable with humans and were too happy to be near us and allowed us to take snaps with them while we fed then with bananas.
There are about 6000 wild apes in the “Gunung Lesur National Park’ of about 8000 sq km. With one baby in about five to six years, and 30 years span of child bearing in a life span of about 50 years, Orangutans are now an endangered species. With straight auburn hair all round, they are quite beautiful.
There was also a large contingent of long tailed mecaca(LTM) adding to the attraction. As the centre of attraction was our large distant cousins, these LTMs might have felt neglected.
After an hour of our breakfast session with the orangutans we started our trek back to the hotel. We took the difficult trail and then the selection of my footwear penalized me. I had to hang on the branches and vines to prevent me from falling flat and treacherous slopes. I looked like a comical rendition of Tarzan the ape man or a clumsy baby orangutan while climbed up and down the slippery slopes. It was quite and excitement and exercise. On the way we had some of the orangutans following us and we kept feeding them the bananas. We were worried whether they were going to snatch away our back pack. The guides were only too happy narrate stories (real or made-up I don’t know) about some Orangutans chasing the tourists and it added to the excitement of the trek, specially for the kids.
The vegetation was quite dense with the fertility of the volcanic soil injecting life into anything that grows on the ground. There is not an inch without some kind of greenery. Trees with a variety of hanging vines and an assortment of ferns. Some wild orchids and un-describable flowers added color to the scenery. Twittering of the crickets and chirping or birds interspersed with occasional hoots by the monkeys provided the background audio.
By the time we were back in the hotel the cold beer really tasted like a drink from heaven. After lunch we were back at the stream for a rafting expedition. The guides had tied up about five large tire tubes one after the other and we climbed to it. One hour down the stream in the current on a rollercoaster ride was worth the money. We were brought back to the hotel on rickety truck.

The largest fireworks in the history of mankind..

[4]Next day we were back in our bus for an eight hour drive to Lake Toba. This lake has been formed in the caldera[5] of a huge volcanic explosion that occurred about 67,500 to 75,000 years ago. A mega colossal explosion with a Volcanic Explosively Index of 8, the Toba eruption is supposed to be the largest explosive volcanic eruption in the last 25 million years. The total amount of erupted material is about 2800 cubic km of which 2000 ckm flowed over ground and 800 ckm flew as ash which was mostly carried west word by the wind. (Although the eruption took place in Indonesia, it deposited an ash layer approximately 15 cm thick over the entire Indian subcontinent; at one site in central India, the Toba ash layer today is up to 6 m thick[6] and parts of Malaysia were covered with 9 m of ashfall[7]. In addition it has been calculated that 10 metric tons of sulphuric acid was ejected into the atmosphere by the event, causing acid rain fallout.Stanley Ambrose proposed that a volcanic winter induced by this eruption reduced the human population to about 2,000 - 20,000 individuals, resulting in a population bottleneck (see Toba catastrophe theory)).
The subsequent collapse formed a caldera that, after filling with water, created Lake Toba. The island in the center of the lake is formed by a resurgent dome[8] called the Samosir Island and it is almost as big as Singapore. In the strict sense, this is not an island because it is connected to the mainland by a thin strait.

Lake Toba which is 100 km long, 30 km wide at its widest point, 505 m at the deepest point with an average depth of 400 m, this is the largest fresh water lake in SE Asia. Net of the island the total water surface area is about 1100 sq. kms. Apparently, the water level used to be 200 meters higher and as the mouth of the lake spewing the surplus water to the Asahan river has eroded over the years the water level came down to the current level. Three dams, with a combined 606MW of power generating capacity, were built at the outfall of Lake Toba, where a canyon marks the start of the Asahan River.
As per an expert hydrologist whom we met[9] at Toba, who had spend quite of lot of time around the world including India studying water, the lake water is 90% pure compared to drinking water and we can seldom find such pure water in India including from the urban municipal water supplies. (I say I was not at all surprised especially after looking and tasting the Chrystal clear water of Lake Toba)
The Samosir island rises above the water level like a rock fort. On one side of the island there is ‘Tuk Tuk’ Peninsula which is small circular appendage of land less than one sq km and this is where most of the tourist resorts are based. In good old days, Tuk Tuk peninsula was a crowded place, offering all imaginable tourist facilities, with its continuous ribbon of hotels, guesthouses, restaurants, minimarts, curio shops, bicycle and motor cycle rents, bookshops, internet cafes and tour companies following the road along the perimeter of the peninsula. Today, with relatively few tourists around, many hotels are closed, coffees hops have been abandoned and are falling to pieces, many shops and internet cafes are only open when their owners have some time to spare.
We were headed to a resort in this historic island. The last half an hour drives to the lake is winding down the crater and the vegetation is quite different from the rest of Indonesia. Thick green vegetation also included the kind of vegetation that is normally seen in semi cold climates as the lake is at an elevation of 900 meters and the ridge around it about 1300 to 2700 meters.
We reached the Prapat (township touching the lake) at about six in the evening and took a chartered boat to the resort. The choppy ride to the island took about 40 minutes. The ambience in the resort is truly heavenly. It was smoothening experience to sit out in the open with a cold beer staring at the stars and listening to the waves lashing at the jetty.
The people in this part of Sumatra are called Bataks. The Bataks were once a tribe of people who practiced cannibalism till early-mid nineteenth century although they had quite developed culture in many ways. Ceremonial feasting on the meat of the slain enemies or executed traitors were considered a matter of honour till the Christian missionaries converted them and persuaded them to put an end to this gruesome practice. Marco Polo wrote in 1292 that the Batak ate their parents when they became too old for work, and Raffles in the nineteenth century stated that for certain crimes a criminal would be eaten alive. The eating of human flesh was always a highly formalized ritual, however, involving specific religious beliefs, and only outsiders, consenting old people and certain kinds of criminals were consumed. When a Batak from another village, accused of one of the few capital offenses, had been duly tried and convicted, the sentence could only be carried out after the raja of his own area had acknowledged its justice by sending a cloth to cover the face of the condemned and a plate of salt and lemons as a garnish.
The Batak horn shaped roof is different from the Padang one. The roofs are slanted and mostly with tiles though tin sheets are quite common. But the horn shape of the roof top is different from the Padang Style. In the Padang style the horn is more curved, narrow and long. In Batak Architecture it is less curved, broad and short. The typical old houses used to be on stilts and the roofs are covered by thatch, including fine painted wood carvings. The living space consists of the entire floor, the fire and cooking place being its centre and the sleeping areas are superposed against the roof. The area between the stilts is fenced off with wood and this is where the domestic animals live and are fed from above with the cooking leftovers.
This was the second week of our trip around Sumatra and we decided to spend it chilling out here. The resort called ‘Tabo Cottages’ is run by Annette from Germany married to Antonius from this Samosir Isalnd. A law student from Germany, she had visited Lake Toba as a tourist and fell in love with Toba. Later she met Antionne here and married him and after dumping her law career and set up the cutest resort of Samosir Island.
She runs quite a place. The cottages are really beautiful. The villas are two storied and have a pair of suites each in both the floors. The suite we stayed was really cool. With wooden flooring, bedroom nice large four poster bed and a nice loft up for the baby, a large balcony with cane chairs and hammock these villas are meant to relax the mind and body. Just sit there at the balcony looking around, at the lake and the edge of the crater around the lush green treetops swaying in the breeze you will melt with the Mother Nature.
Nice clean bathrooms with running hot water and a large bathtub make the bath an experience itself. The resort had a nice garden in the front with few open gazebos. The garden was spoiled when lake stretched her arms after the incessant rains few weeks ago. The large pool with brilliant lotus flowers is still intact. We had taken over one of the gazebos and made it our hangout and place for our long sessions of ‘teen pati’
It was fun to laze in the balcony listening to the coos of the birds and typing this little attempt of a travelogue. When I felt that I have done a good day’s work I sauntered to the lake. Water is quite clean and cold. Half an hour of swim in the lake, and then floated around lazily looking at the scenic beauty of the hills around. Pure luxury.
Then we borrowed a bike and went for a ride along the village roads in the Tuk Tuk area. There are so many restaurants offering a wide variety of gourmet cousin to satisfy the tastes of the tourists from around the world. There are shops that offer variety of goodies like artifacts, second hand books, premium scotch and even magic mushrooms. A backpacker’s paradise !!
Tuesday was the classic chill out day. Early morning my daughter and I went for a cycle ride along the village roads. Then we borrowed a mobike and took a longer ride. The hills are a site to see. Mostly covered with green grass; between there are many coniferous trees. The vegetation here is quite different from the vegetation we have seen in other parts of Sumatra.
Then we played cricket for couple of hours which was followed by a swim in the lake. After the swim we went for a paddle boat trip in the lake with the children.
On Wednesday, the last day of the year, we went for an expedition of the island on the bike. The idea of biking around the country side itself was an adventure for me, as I was riding one after about 20 years. The road from Tuk Tuk to the main island is narrow and winding upwards. But as you see in most part of Indonesia that I have visited, both in main town and small villages, the condition of the road is quite good in comparison with the Indian roads although this is an equally (if not more) corrupt country and has torrential rains like we have in India. Mostly these roads were constructed during the Suharto regime[10].
The ride up the winding road of Samosir island gives breathtaking views of the Lake Toba. The lower part has thick blanket of tropical vegetation. As you go up, the mounts are normally covered with grass patches interspersed with rice and corn fields in well laid out terraces. With a significant segment of population following Christian faith, there are number of small and big churches along the way. Some of them are very old. A mixture of Batak and European architecture.
Batak tombs are very special, usually topped with a restrained Batak house made of brick and stucco. Most of them are comparatively modest, but some are grandiose structures, with several storeys, pillars and ostentatious ornamentation combining Christian and traditional symbols.
After a sumptuous lunch in a small restaurant along the way we bumped into a small Batak Museum. This was located in one of the small by lanes of the village. A Batak house filled with old artifacts of the region. The caretaker there also showed us a collection of modern day wooden imitations of old Batak artifacts. He looked like a smart dealmaker and willing to negotiate the prices of the goodies he was selling. Looked like he was ready to be persuaded to get us some authentic antiques at the right price. I have to admit that for an amateur like me many of the items in display looked authentic antiques. But I was not sure of what I would end up buying. So after dropping some money in his contribution box, we decided to retreat back.
Outside the museum there was an arrangement of stone sculptures depicting the scene of human sacrifice. It was quite an eerie site. Lucky to be standing there now as a visitor and not as the sacrificial lamb. Many of the wood carvings and sculptures have variations of buffalo, lizard and tiger motifs. The usual motif in the sub-tribe Toba is tiger, to give protection to its owner and repulse torment. While in sub-tribe Karo, they often create lizard motif.
After this Isabella and I rode up the mountain on the bike. It was late in the evening; almost getting dark. Both sides of the road had thick foliage of the jungle. Straight out of the museum with images of human sacrifice darting in our minds, we shared the excitement (a bit of fear in Isa’s mind) of this evening adventure. There was a spot up in the mountain from where we could look at the marvelous beauty of the country side bordered by Lake Toba in her full majesty. The roads were a bit patchy and with my mobike riding skills a bit rustic there were many occasions when we were almost near to kissing the mother earth. But this was the first trip I had with my little girl hanging on to my waist and it felt better than all the ‘exciting’ bike rides that I had in my younger days on my ‘Yezdi’ motorcycle of yesteryears.
We were back in the hotel at about 8 pm for a shower before the new-year party. Annette had arranged for a nice buffet dinner. At 12 pm the fireworks commenced to welcom the New Year. Coming from the land of deepavali (the festival of lights and the occasion to paint the skies with nonstop fireworks) the the Tabo fireworks was tiny. But standing there in the starry night at the lakeside, the vibrant colours of the fireworks up in the sky and its reflections in the waves of Lake Toba had a mesmerizing effect. Then all of a sudden one of the pallets of the serial rockets tilted. Instead of the missiles going up, they were darting to where we stood and exploding around us. We ran for our lives and the drowsiness of the tiring day and the single malt in the belly vanished. We were all alive and ready for round of poker again; gambling to the new-year, reminding us that the life itself is a game of poker. Half dependent on the cards that are dealt and the other half on how we play and risk we are willing to take.
Thursday was again a day to laze. Some swimming and some games. There was quite a heavy shower in the afternoon. As we were anyway relaxing with no outdoor trips planned, the cool shower was really welcome. Specially, since the weather god was too kind to us all during our trip. Sat there at the gazebo listening to the drumbeats of the large drops of water on the tiled roof and the waves of Lake Toba, like the hands of ‘Zakir Hussain’ dancing on the ‘Tabala’ at lightning speed.
Friday was the last day at Toba. Packed our bag and got into the ferry to a ‘Sunrise Cruise’ across the lake to the bus that was waiting for us. The awesome view and the twinge of pain on account of the end of this marvelous trip made all of us continuously click our cameras at everything and everyone around us. The boat chugged along towards the rising sun, filling our hearts with a sense of anticipation and expectation of the new-year ahead.
During relaxing days of the trip, I tried a few drags cigarette, a habit I had quit some time ago. Then my daughter was upset and asked me later why I did it. I casually replied that I was just joining the crowd for a change. She turned back and asked my “Daddy cant you follow the road less travelled?” I was awfully moved by the pearls of wisdom coming from that little heart that cared.
Bye Bye Jakarta..
Back to Jakarta by the evening after a four hour drive to Medan airport and then a two hour flight. Late in the evening we were out again to experience the variety of the Jakarta city with a dinner at “Sushi Grove” the restaurant chain, offering fusion Japanese food. As my most favorite cuisine is Japanese, this idea of a fusion was a treat that I could not resist and decided to hog like a pig though that is not what the doctor suggests for a couch potato like me.
Late at night at Sachin’s house we attempted to look at the photos that we clicked along the way; I was so tired that I dragged myself to the bed and was soon knocked out. A good night sleep with lots of dreams about the days then went by.
Looking back, the Indonesian retreat is a collage of experiences. Unlike our day to day life in the concrete jungle of Mumbai, for fifteen days we were one with the nature. Instead of the gray concrete and the light from the incandescent lamps that our eyes are used to, the diverse colours of the nature; the grass, trees and flowers of the oriental jungles soothed our frayed nerves. The starry nights at the banks of the majestic expanse of Lake Toba which is the aftermath of the biggest natural fireworks in the earth in the last 25 million reminded once again the insignificance of our life and our race in the infiniteness of the universe around us. Instead of our day to day interactions with business associates, we spent the days enjoying the companionship with family and friends. It is seldom that we seldom take time reflect and cherish and to enjoy life’s small and big gifts.
Some of this will be erased in time like the suntan we got from being out in the open. But some will stay back to bring an occasional smile and to remind us we need to recharge our batteries once in a while.

Sunday evening we boarded the flight back. Hearts were overflowing with sadness for what we left behind. But we were all ready to take on the world, to be back in that little pond of time with family, friends, foes and work.
[1] This is a file picture from http://www.nationmaster.com/encyclopedia/Image:Taravadu.jpg which has been made available in public domain.
[2] Situated between India and China, Southeast Asia has been the birthplace of several cultures, some of which rank among the world’s greatest civilizations. Among the Indianized kingdoms which sprang up in Southeast Asia before the Common era, the great Khmer civilization and its capital, Angkor, in modern day Cambodia. The advent of Indians in Southeast Asia has hardly a parallel in history. In view of the ethnic affinities between the prehistoric Austro-Asiatic races of India and those of Suvarnabhumi, contact between the two regions may well go back to the remotest antiquity. Most of the countries of Southeast Asia came under the cultural and religious influence of India. This region was broadly referred to by ancient Indians as Suvarnabhumi (the Land of Gold) or Suvarnadvipa (the Island of Gold). Vedic Indians must have charted Java, Yawadvip, thousands of years ago because Yawadvip is mentioned in India's earliest epic, the Ramayana. The Ramayana reveals some knowledge of the eastern regions beyond seas; for instance Sugriva dispatched his men to Yavadvipa, the island of Java, in search of Sita.
Southeast Asia was often called by many British, French and Indian scholars as Farther India, Greater India, L’Inde Exterieure, and the Hinduized or Indianized States. The whole area was so influenced by India, that according to a European scholar who wrote in 1861, that "the Indian countries situated beyond the Ganges hardly deserve the attention of History." The various states established in this region can therefore be called Indianized kingdoms. Invasion nor proselystism was by no means the main factor in the process of Indianization which took place in the Indian Archipelago. International trade was very important. (reference http://www.hinduwisdom.info/ Sacred_Angkor.htm
[3] Since our return, we heard that about 7000 tons of fish were dead in this lake during the last week of 2008 and first week of 2009 on account of increased volcanic activity and unchecked fish farming.
[4] Source Wikipedia
[5] A caldera is a cauldron-like volcanic feature usually formed by the collapse of land following a volcanic eruption
[6] Acharyya S.K., and Basu P.K. 1992. "Toba ash on the Indian subcontinent and its implications for correlation of late pleistocene alluvium." Quaternary Research 40:10-19
[7] Scrivenor, J.B. 1931. The Geology of Malaya (London: MacMillan), noted by Weber.
[8] A dome formed by swelling or rising of a caldera floor due to movement in the magma chamber beneath it. Unlike a lava dome, a resurgent dome is not formed by the extrusion of highly viscous lava onto the surface, but rather by the uplift and deformation of the surface itself by magma movement underground
All the above references are from Wikipedia.
[9] This is a Dutch man who fell in love with Lake Toba when he visited Lake Toba for a day and left his life, wife and career to settle down here.
[10] The explanation I could think of is as follows. During the autocratic rule of Suharto who had to relinquish office on account of allegations including rampant corruption and nepotism, during his 30 years of rule gave enormous focus to development of the country and its infrastructure. The corruption in most of the projects was on and above the cost of cost for a good quality implementation. In India the contracts going mostly to the lowest quote, the corruption leads to poor quality implementation which is less transparent and difficult to prove. We need to find a solution to this dilemma. How can we strengthen the quality of implementation of our public good projects without compromising the democratic governance structure we have established successfully? (Shall do some brain storming later outside of this travelogue)