INDONESIA EXPERIENCE ON ENTREPRENEURSHIP DEVELOPMENT: ON THE PERSPECTIVE OF REGULATION A. Introduction By: I Wayan Dipta Advisor to the Minister of Cooperative and SME For Technology Utilization Indonesia has started to focus on entrepreneurship development since the beginning of the sixth of the Five Year Development Plan of the President Soeharto era. During this era, President Instruction number 4 of 1995 has been enacted to promote entrepreneurship development. In addition, in the framework of APEC, starting from 1996 Indonesia has also proposed an APEC Center for Entrepreneurship, a virtual center, which will benefit all APEC member economies for entrepreneurship development in the Asia Pacific region. Having hit by the economic crises, which finally become multidimensional crises, Indonesia has realized the important of entrepreneurship development, particularly to cope with the increase of unemployment every year. Many people in the country have lost their jobs because many companies where they had worked had closed, and the new generations of workers graduated from the universities and schools have been waiting for the jobs. Approximately now around 40 millions people in Indonesia are seeking for the jobs. The situation is very dangerous because the large amount of unemployment will create social problems such as the increase of criminal cases and the decrease of quality of life. In addition, Indonesian economic capacity to create the jobs is limited, also Indonesian government has limitation to receive employees from the society because of the zero growth government policies. On the other hand, as we know entrepreneurship will create the jobs and will develop the economy. Therefore, entrepreneurship development in Indonesia is a must. B. Problems and Challenges There are so many problems faced by the Indonesia to develop the entrepreneurship throughout the country. First of all, Indonesia faces lack of professional training institution and professional educational institution to produce professional entrepreneurs in the country. Secondly, Indonesia confronts with 1
unfavorable climate for the growth of the entrepreneurship society. Thirdly, Indonesia has lack of good entrepreneurs who can teach, train, and educate common people to become entrepreneurs. Fourthly, most of Indonesian people because of the cultural influence prefer to government officers than entrepreneurs after finishing their education at the universities or academies. Finally, Indonesia faces lack of good programs for entrepreneurship development. Beside the above mentioned problems, in Indonesia will also face the challenges of fulfilling the need of necessary strong entrepreneurial growth in order to shorten the gap between developed and developing economies. Indonesia feels that the requirement of strong competitive knowledge-based entrepreneurs should be grown up to increase competitiveness of Indonesian economy. C. Government Regulation and Policies Starting from the fifth of the Five Year Development Plan, the Government of Indonesia has launched regulations and policies on entrepreneurship development. The government has strong commitment to develop entrepreneurship spirit in order to fulfill the need of entrepreneurs who have strong entrepreneurship spirit. Those regulations and policies can be summarized as follows: 1. Presidential Instruction number 4 of 1995 As mentioned above, during President Soeharto era, Presidential Instruction of number 4 of 1995 about National Movement for Socializing and Cultivating Entrepreneurship was enacted. The instruction stated that the society should actively involve in the development of nation economy, therefore they should have entrepreneurship behavior that will support their businesses. In the relation to that, then the government decided to socialize and cultivate entrepreneurship among the society. Under the coordination of the Ministry Cooperatives and SMEs and supported by the other Ministries, provincial governments, and business people. The national movement of socializing and cultivating entrepreneurship programs were implemented for several years. The programs consist of three main programs, namely : a) Institutionalizing Entrepreneurship; the activities include preparing software of entrepreneurship (concepts, manuals for building entrepreneurship skills), preparing networking development for SMEs, 2
coordinating programs for SMEs development, developing consultation and information center for SMEs development, building capacity for field workers for SMEs development, and mobilizing and training for the Extension Workers, Field Consultants, and other Strategic Groups. b) Socializing Entrepreneurship; activities of the programs consist of developing strategic group participation, developing general society participation, campaigning through mass media, giving information and extension for society leaders, journalist and reporters, conducting workshop for business people, and including entrepreneurship in formal education curricula at the earliest level till the highest level. c) Cultivating Entrepreneurship; activities comprise of implementing entrepreneurship training programs, giving consultation and guidance, conducting comparative study and on the job training, implementing business matching and business promotion, preparing and distributing self learning facilities, developing appropriate technology for local industry, developing access to local, regional, and international market, and assisting financial access for SMEs. 2. Lesson Learnt from APEC Center for Entrepreneurship The idea of developing APEC Center for Entrepreneurship or ACE is not only for the benefit of Indonesia but also for other APEC member economies. There were 5 strategic objectives suppose to be taken by the ACE, namely: a) Targeted training for SMES; this objective is to limit and to focus the target group of SMEs for capacity building, particularly on required training programs. b) Adoption to globalization; not all SMEs aware of globalization, therefore, this objectives is supposed to bring awareness of globalization for SMEs. c) Best Practices on policies and programs; this center is also hoped to share experiences in terms of policies and programs for SMEs development. d) Strategic Alliances; through ACE facilitation SMEs in the APEC region can also create strategic alliances to strengthen their competitiveness. 3
e) E-commerce; as a virtual center, ACE has already intended to facilitate SMEs in the APEC region to enter the paperless trading program, which is now well known as E-Commerce. Acknowledging the important of the ACE for private sector development, the government of Indonesia aware to give the chance to private sector. In this regard, Chamber of Commerce and Industry (CCI) had been given the chance to lead this center. In fact, due to limited professional staffs, the ACE was unable to run properly. The BRI as the biggest SMEs bank has been working together with CCI to operate the Center of Development for SMEs (CD-SMEs) under the G-15 program. This center has also supported by the government of Korea through KOICA. The KOICA has granted facilities amounted of US $ 2.5 millions. Up until now around 2,000 SMEs have become the members of CD-SMEs. In addition, 18 SME-Centers have been developed in Indonesia with the cooperation of CCI, PT. BRI, and PT. Telkom. The development of CD- SMEs has given a positive impact to the domestic concerns of other banks to establish SME-Centers. Beside under the BRI, other banks such as PT. BNI, Bank Mandiri, and Bank Danamon have also developed SME-Centers to support entrepreneurship development. 3. Technopreneur development policy Indonesian Government under BPPT (The Agency for Technology Development and Technology Implementation) has developed a policy to develop technopreneur as follows : Decentralization of Government should be followed by sufficient support for capacity building of local official and stakeholders to assist and to develop technopreneur Strengthening of scientific and technology activities in region to enhance competitiveness of technopreneur cluster through dissemination and implementation of R& D product from research centers and universities producing innovative technology. 4
Develop technology- based technopreneurs through services and business communication establishment. Provide direct support such as institutions or board, financial assistant, and direction of market access especially to new technopreneur to rise up competitiveness. 4. Entrepreneurship Curriculum for Formal Education Acknowledging the important of entrepreneurship development, the government of Indonesia pays special attention on entrepreneurship spirit for universities and academies alumni. Due to the culture influences, most of universities and academies alumni usually do not have interest to become entrepreneurs. For this reason, the government introduces entrepreneurship curriculum for formal education starting from junior high school until universities. Besides, some universities also promote business incubators in order to promote knowledge-based entrepreneurs. These incubators also get the support from the government and big companies. Although there are still very limited good business incubators, it seems likely that these incubators will become the prime mover for entrepreneurship development in Indonesia. D. Entrepreneurship Development Strategies Some strategies to develop entrepreneurship in Indonesia can be mentioned as follows: Entrepreneurship development through SME Clusters To increase the number of entrepreneurs in the country, it is important to develop entrepreneurship society in the country. The government has given assistant to Indonesian society to develop the SMEs clusters by so many programs such as to increase the capacity of the Business Development Services Providers by giving the operational financial assistant, Financial assistant for SMEs clusters through Cooperatives, and training to build the capacity of entrepreneurship the SMEs. Around seven hundreds Sees Clusters already exist all over the country to develop the entrepreneurship society along with the development of the business of the clusters. 5
Business Creation, capital formation, and financial access for SMEs and Micro Enterprises. Business creation, capital formation, and financial access for SMEs and Micro Enterprises are very valuable to develop entrepreneurship society in the country. So many people benefit from the business creation because of the economic development in the certain location such as trading or market center, tourist objects, and production centers or industrial centers. In company with the business creation, capital formation and financial access for SMEs and Micro Enterprises are very important to create new entrepreneurs even to develop experienced entrepreneurs. Capacity Building for and addressing the impediments to SMEs Exporters So many SMEs in Indonesia face the impediments to market their products abroad even though their products have the competitiveness in export market. Therefore, it is important to build the capacity for SMEs exporters for addressing the impediments for market export. At the end, the efforts will create and enhance the entrepreneurs from the SMEs in Indonesia and APEC region. E. Intermediate Action Plan to develop entrepreneurship in Indonesia Indonesia has developed the intermediate action plan for entrepreneurship development. The plan has aimed to develop entrepreneurship behavior among the SMEs, and the objective is to create the SMEs that own entrepreneurship spirit, cooperative spirit, professional, and giving attention and applying the business conduct and business ethics. The plans cover the program as follows: Providing the incentives and entrepreneurship promotion to create new entrepreneurs. Developing and strengthening the entrepreneurship training and education institution throughout the country. Developing cooperation and networking system especially on transferred technology, export marketing, and human resources development. Providing incentive system and facilities for Exporter Entrepreneurs and Entrepreneurs that develop local creation and innovation. 6
Upgrading the quality of human resources of Entrepreneurs including the Women Entrepreneurs. 7