Success story of a partnership program (1)<\/p>\n
The Bali Declaration, issued late last month by the chiefs of
\nthe 100 biggest business groups in the country, addressed the
\nneed to enhance business partnerships between small, medium and
\nlarge firms. The Astra International group, however, started its
\nown small business development program more than 10 years ago.
\nThe following is the first of two articles based on Sri Wahyuni's
\ninterview with Rini MS Soewandi, who oversees the Astra program,
\nand several small-scale entrepreneurs who have been assisted by
\nthe program.<\/p>\n
JAKARTA (JP): Financing business partnerships with small firms
\nhas not been a major problem for large private and state
\ncompanies, Yayasan Dharma Bhakti Astra's (YDBA) experience has
\nshown.<\/p>\n
\"YDBA has received many requests from state enterprises to
\nparticipate in our small business development programs or for
\ncooperation in similar schemes,\" said Rini MS Soewandi, the chair
\nof the YDBA management board.<\/p>\n
According to Rini, many state enterprises are financially
\ncapable of helping develop small businesses, but lack the
\ncapacity or experience to implement such a program.<\/p>\n
YDBA, known for its success in carrying out business
\npartnership programs with small firms, has therefore been invited
\nby other firms to implement such programs.<\/p>\n
Pertamina and YDBA, for example, are now exploring a
\npartnership project in Dili, East Timor. Together with a West
\nJava venture capital company, YDBA is also studying a rubber
\ntraining project and a product development and processing
\nimprovement scheme.<\/p>\n
The foundation was set up in 1980 because of PT Astra
\nInternational's commitment to help develop small and mid size
\nbusinesses, as reflected in the Astra corporate motto:
\n\"Prosperous with the nation and being a useful asset for the
\nnation and country.\"<\/p>\n
\"That is actually the basic philosophy which underlies the
\nbirth of YDBA,\" said Rini Soewandi.<\/p>\n
In order to realize its commitment, Indonesia's largest
\nautomobile group has allocated 3 percent of its net profit for
\nits business partnership programs, two percentage points of which
\nare channeled through its venture capital company called Astra
\nMitra Ventura. The remaining 1 percent is extended through YDBA
\nfor financing training programs in production processes and the
\nmarketing, management and financial fields.<\/p>\n
PT Astra International's net profit in 1994 amounted to Rp 242
\nbillion.<\/p>\n
\"We estimate our net profits for this year at Rp 350 billion,\"
\nsaid Rini Soewandi, who is also the financial director
\nPT Astra International which has now become a widely-diversified
\nconglomerate with stakes in heavy equipment, plantations, office
\nmachines, electronics, plantations and telecommunications.<\/p>\n
YDBA initially organized training for small businesspeople.
\nHowever, Astra subsequently realized that in order to become
\nstrong it needed supporting companies as vendors and sub-
\ncontractors.<\/p>\n
It was this awareness that prompted Astra to launch projects
\nto develop small enterprises in industries related to the
\nautomotive and heavy machinery industries. Since then YDBA has
\ngiven special attention to the metal industry because it has the
\npotential to be a sub-contractor for the Astra business group.<\/p>\n
One place singled out at the outset was the small industrial
\ncenter for metal casting in Ceper, Central Java. Having
\ninvestigated the area in 1986, YDBA designed and carried out a
\ntraining and apprenticeship program for small businesses in the
\nregion.<\/p>\n
The apprenticeships took place at Astra's subsidiaries.<\/p>\n
\"Now the former trainees and apprentices have become Astra
\nsub-contractors and vendors,\" said Rini.<\/p>\n
According to Rini, not all small and medium businesses under
\nYDBA's program automatically become Astra sub-contractors. Many
\nof them also sell their products to other companies or business
\ngroups.<\/p>\n
In this case, Rini said, apart from training and
\napprenticeship, we also provide assistance in the form of seed
\nand working capital.<\/p>\n
This capital aid is channeled through Astra Mitra Ventura or
\nBank Universal, a commercial bank owned by the Astra group.<\/p>\n
YDBA has helped 787 small and middle businesses under its
\nbusiness partnership program. They are located in Greater
\nJakarta, Bandung, Sukabumi, Tegal, Semarang, Surakarta, Sidoarjo
\nand Surabaya.<\/p>\n
Of the total, 277 are now sub-contractors to the Astra
\nbusiness group, 208 are vendors and of the remaining 197
\nmanufacturers, 105 businesses are totally unrelated to Astra's
\nline of business.<\/p>\n
\"We are of the opinion that partnership programs need not
\nalways be implemented with related businesses,\" said Rini.<\/p>\n
Many of the unrelated businesses have become successful. For
\nexample, the hand pumps manufactured by Rumini have penetrated
\nthe markets of several Asian countries.<\/p>\n
Many of the vendors and sub-contractors -- 286 small-scale and
\n199 mid-scale enterprises -- manufacture motorcycle components.<\/p>\n
\"This type of industry isn't difficult for small and middle
\nbusinessmen,\" said Rini.<\/p>\n
Linggo Suprapto, the 47-year-old owner of PT Adhi Wijaya
\nSentosa, booked a turnover of Rp 4.5 million a month when he
\nstarted his business in 1985.<\/p>\n
Adhi Wijaya has become a sub-contractor for Astra and now has
\na monthly turnover of more than Rp 300 million.<\/p>\n
\"The orders I receive from Astra are based on pure business
\nconsiderations. They are not for charity reasons,\" insisted
\nLinggo Suprapto who graduated from a technical high school.<\/p>\n
The same feeling is shared by 54-year-old Rasyidi, who has
\nbeen successful with his PT Lencana Madya. This manufacturer of
\nbadges, who once only made Rp 500,000 a month, is now able to
\nproduce 25 motorcycle, automobile and musical instrument
\ncomponents. His monthly turnover ranges between Rp 25 million and
\nRp 30 million.<\/p>\n
\"I have reaped great benefits from YDBA's program,\" Rasyidi
\ntold The Jakarta Post.<\/p>\n
Rasyidi said the training and other forms of assistance he got
\nfrom YDBA are very helpful for new businesspeople. He now knows
\nabout production tools, quality control and production systems.<\/p>\n
\"Without the business partnership program I might also be
\nable to develop my business, but it would certainly take longer.
\nYDBA has acquainted me with the business world in a quicker way.
\nThe quicker the acquisition of knowledge the quicker the yield,\"
\nhe regurgitated.<\/p>\n
To support the partnership program for small and middle
\nbusiness, YDBA has set up a number of industrial clinics called
\nsmall industry information units in some regions. They serve as
\ncenters for consultation and information.<\/p>\n
The unit in Bandung organized a meeting last week which was
\nattended by 20 potential small businesspeople and 60 established
\nentrepreneurs from Jakarta.<\/p>\n
The meeting was designed to promote the small businesses'
\nproducts to the big businesspeople to expand their markets.<\/p>\n
At present YDBA has information units in Jakarta, Bandung,
\nCeper and Surakarta, and Waru in East Java. Four other units are
\nscheduled to open in Bukittinggi, Jambi, Riau and Dili.<\/p>\n
YDBA will open a similar information unit in the United States
\nbut its exact location has yet to be chosen.<\/p>\n
According to Rini Soewandi, the American unit will find market
\nopenings for small and mid-size enterprises focusing on products
\nunrelated to the Astra group.<\/p>",
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"sponsor": "Okusi Associates",
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