~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."