~Advertorial: Freeport -- April 6
~Advertorial: Freeport -- April 6
SMEs: Seeds that Spawn a Growing Local Economy
Anastasia Tekege is currently expanding and diversifying her business operations to increase and stabilize her earnings. She devotes time every day to personally inspecting the progress of the operations, recording and monitoring data about her business in her computer.
A native Papuan, Anastasia was born in Paniai and now resides in Timika, where she owns and operates a landscaping service, a construction service, and a small, retail goods shop. A natural entrepreneur with a keen business sense, she plans to soon expand into the rental market to meet the housing needs of a growing population with increasing purchasing power.
Anastasia's success is fundamentally rooted in her aptitude and work ethic. However, like many others in developing economies, insufficient access to capital and a lack of business skills training were impediments to realizing her aspirations of becoming a successful businesswoman in Papua.
PT Freeport Indonesia's small business development program was able to provide Anastasia with the tools and resources she needed. She entered the program four years ago, and today she is providing work opportunities for more than three dozen employees.
As part of its commitment to communities, PT Freeport Indonesia (PTFI) supports local business development because local economic growth increases the standard of living and opportunities for its neighbors. PTFI recognizes that local economic growth and entrepreneurship is critical to achieving sustainable development. The process is not unlike the company's reclamation programs: They plant seeds, which grow into plants that make more seeds and, ultimately, there is a thriving ecosystem. As local businesses grow and expand, they create more jobs, more wages, more spending, and, finally, more revenue to support more new enterprises -- building a local economic system capable of sustained growth and increased opportunities for generations to come.
"Our business development programs enable the local communities to build better lives for themselves by providing access to the necessary resources. The sense of empowerment I observe from this strategy is phenomenal," says Community Business Development manager Arief Latif.
The company's support for local businesses is not limited to providing capital and business skills. PT Freeport Indonesia is committed to engaging local small and medium enterprises (SMEs) by increasingly integrating them into its supply chain. The company recognizes its value to the local economy not just as employers and sources of capital, but also as local suppliers. Economic survey data from Mimika Regency, the local governmental district that contains PTFI's operations, indicates that nearly 500 of 650 SMEs created there were directly associated with its operations.
The emergence of a sustainable economy in Papua Province, which includes Mimika and 11 other regencies, is indicated in the results of a study conducted by the University of Indonesia's Commissioned Institute for Economics and Social Research.
The study found that PT Freeport Indonesia's share of the total economic output of Papua Province has steadily declined from 83 percent in 1992 to 48 percent in 2000 and is projected to decrease to 24 percent by 2010. This trend results not from decreasing economic output from PT Freeport Indonesia -- indeed, the economic impact of the company's operations has grown during this time. Rather, this trend reflects that the economic output of a diversifying Papuan economy, including SMEs, is growing much faster than that of PTFI's operations.
Different businesses have different needs. To meet this variety of needs, the small business development program offers a number of services. PTFI's financial services range from grants to uncollateralized micro-loans to low-interest working capital for larger enterprises. The company's business skills training and capacity-building services are delivered by a dedicated staff through a mentorship business development model.
PTFI pairs each business with a staff member to encourage a strong relationship that engenders a mutual understanding of the assets and challenges unique to each business. PT Freeport Indonesia believes the quality of these relationships is essential to the success of the SMEs that they support.
PTFI's current program capacity allows them to provide full- time support and assistance to approximately 40 SMEs, a figure that varies slightly as new businesses enter and others graduate.
PT Freeport Indonesia also actively seeks to develop partnerships to maximize its development efforts' impact. For instance, in the past, the local market's fish supply was limited because of the local fishermen's inability to transport their fish to the local market, as they had no means to handle, preserve, and process their fish properly and safely.
The company collaborated with the local government to promote market access for local fishermen, introduced appropriate fishing equipment, and provided local fisherman with training in the "cold chain system" and fish handling practices. Three years ago, operations began at an ice factory and simple fish processing plant. In addition, they were instrumental in having the local government construct a fishing dock near the processing facility. As a result, local fishermen now have a much greater opportunity to market their catch.
Globalized marketing and the growth of the Mimika economy increasingly attract outside entrepreneurs and products that compete with fledgling Papuan businessmen. To meet this challenge, PT Freeport Indonesia supports human capital development through apprentice programs, local technical schools, and higher education assistance. Encouraging the application of appropriate technologies, providing business skills training, and supplying access to working capital promotes sustained local economic growth, aids the viability of existing and future SMEs, and decreases the impact on local SMEs as imports increase and companies with greater cost efficiency enter the local economy.
"We recognize that as the local economic environment evolves, we must adapt to meet its changing needs." says Arief Latif. Looking forward, he adds, "For the next five years, we have set goals to support the development of 10 new SMEs and 200 work opportunities annually."