Consumer protection spells reform

Ronald Nangoi, Contributor, Jakarta

Much progress has been made with democracy in Indonesia as shown by the increasing number of political parties and media organizations, and regional autonomy, etc. Yet, the process of democracy has been challenged by undemocratic practices. Violence, terrorism, gangsterism,and weak law enforcement, have hampered the country's struggle towards democracy. Freedom of expression is still being repressed.

The protection of customers also remain poor. Customers in many cases are even powerless while reform to strengthen business is uncertain. This will be a handicap not only for the betterment of politics and economics, but also for that of the business society.

Uncertain reform in business is also reflected by continuous restlessness among employees. Decision making is often centralized and communication is top-down in nature. These styles do not fit in today's companies, which now must have strong customer or market orientation, though most family-owned companies are in favor of authoritarian leadership.

Under such a leadership, a "just to please the boss" mentality could spread among employees, rather than the mentality to prioritize customers. The company's control mechanism with a top- down approach would be ineffective. Yet many such companies are still found despite their supposedly modern management.

We just wish that our business leaders could learn two things much better than the previous conglomerates did. Firstly, past experience shows that the strong reliance of our conglomerates on power and close connection with bureaucrats has endangered the country's business and economy. Business competitiveness is less assured in an undemocratic society, given the lack of transparency and accountability.

Good corporate governance in global firms, which aims for transparency and accountability, is part of efforts to improve efficiency and competitiveness. We are witnessing global companies racing for good corporate governance, after the unpopular scandals of big corporations, like Enron, Arthur Andersen, WorldCom, Tyco in the U.S.; SK Corp in South Korea; Tokyo Electric Power in Japan, Royal Ahold, Marconi, and Vivendi Universal in Europe. It is beyond sensibility that not many Indonesian firms seem to have not been incited by the global business movements in the tightening worldwide competition.

Global forces have in many ways made economies and businesses improve the quality of management and services. Market forces have been playing prominent roles in business success. Large companies are subject to international conventions and regulations. Therefore, to a certain extent, worldwide communities have contributed to the betterment of business and the creation of democracy in business.

The global economy basically restrains bureaucrats from intervening in business. It's ironic that the government, instead of the private sector, has been the one taking the most initiatives to integrate the country's economy with the global economy.

Free trade and the global economy should trigger reform among Indonesian businesses. Foreign investment and trade basically demands improved transparency and accountability in local business. In companies, as BusinessWeek reported in May this year, it is those foreign shareholders who are among the loudest crying for corporate reform."

Business leaders should reconsider the implementation of industrial democracy within their companies, as they dream of a democratic society. Instability could occur in an undemocratic society, threatening all business activities. It's much better for companies to take anticipatory actions instead of being pressed by foreign investors or crippled due to the increasing access of global companies within the country.

They should not ignore political aspirations, but it doesn't mean that they should benefit from political access for their own interest. The business-bureaucrat close connection has weakened the country's economy and business. People at large do not sympathize with any gesture of conglomerates to form patronage ties with bureaucrats let alone have public service under their control.

For democracy in business to succeed, not only firms are obliged to empower their employees, but their employees should have strong will for self-improvement. As Konosuke Matsushita in his book As I See It states: " ... increase the understanding that democracy requires each citizen to strive toward personal growth and to respect the rights of other people."

The application of democracy at the company level lays a strong foundation for business reform. This could lead companies to have strong customer and market orientation with great care on stakeholders' interests. But companies should have their own rules and regulations, which would ensure the freedom of all employees in expressing opinions, ideas, and aspirations within their scope of work and responsibilities. As a consequence, the management is tasked to empower employees for having new ideas, innovation, improvement, and productivity. All this aims for better competitiveness.