Mon, 07 Feb 2000

Djajanti breaks East Indonesia's isolation

By Johannes Simbolon

JAKARTA (JP): When fishing and forestry company Djajanti Group started its fishery project in 1995 in Wanam, Kimaam district, Merauke regency -- a remote and isolated village on the Southern coast of Papua -- the area lacked everything necessary for business including infrastructure, clean water, power supplies, skilled human resources and a modern economic system.

Moreover, the Papuans living in the area, hunting for a living and engaging in a barter economy, were often involved in tribal warfare.

"What made us determined to invest here is the fact that this area abounds with fish. The (expensive) arawana aquarium fish, for instance, is very easy to find here. You simply go to a ditch, take a cup of water and you'll see the fish in your cup," said Vinsentius Hendra, general manager of Djajanti's subsidiary Djarmu Aru, who spoke with reporters in Wanam last week.

The village is now home to a sophisticated fish processing plant with more than 5,000 workers and an output of more than 150 tons of shrimp and fish per day and 250 tons of fishmeal per day.

The fish are shipped to export markets; the fishmeal is for the domestic market.

The fish processing site is equipped with, among other things, reservoir and water treatment facilities to process the area's water into clean and potable water, a modern health clinic, a 2- Megawatt power generator, a roughly 4,000-square meter dockyard, and an airport with an 1,800-meter runway.

"Of the trillions of rupiah we invested in the project, 80 percent was spent for on infrastructure. We did not receive any facilities or tax holidays from the government," Vinsentius said.

The local Papuan people have gradually begun to engage themselves in the modern economic system with some of them turning to agriculture, planting vegetables for the company-run supermarket, and becoming fishermen themselves using boats provided by the company.

The company leases the vessels on a production sharing basis to enable the people to buy the boats in affordable installments.

"When we started our project five years ago, the Papuans mostly preferred barter transactions. They sometimes accepted bank notes, but only the red-colored Rp 100 bank notes. They rejected other bank notes despite their higher value.

"Now, they know the true value of all bank notes and have done well in learning price negotiation techniques," a Djarmu Aru worker said.

Of the more than 5,000 workers in the company, only between 20 to 30 percent are Papuans.

"It's still difficult for the local people to adjust themselves to a regular and permanent job. I think it takes time for them to learn," said Visentius, an ethnic Chinese Indonesian.

Djajanti bought the land for its fishery plant from the Papuan community for Rp 100 million plus two tree-cutting machines and two fishing boats. The compensation was set by the Papuans themselves in negotiations with Djajanti.

East Indonesia

The Wanam project best illustrates the strong commitment of Djajanti Group to investing in the eastern part of Indonesia, an area neglected by former President Soeharto's 32-year regime in its development programs.

Djajanti is in fact the only national conglomerate very active in the Eastern part of Indonesia. Most national conglomerates have been focused on Java and other islands in West Indonesia which have better infrastructure, skilled human resources, and other prerequisites for investment.

The group, controlled by an Indonesian of Chinese origin, Burhan Uray, began its business in the region in 1978 with a subsidiary, PT Daya Guna Samudra, which ran a small fish processing plant in Benjina on Maekor island, part of the Aru islands, Maluku.

Company operations director Hadi Budoyo said Benjina, which then had only around 200 fishing families, has now developed into a home base for a major fishing industry with more than five thousand workers and an airport with a 1,300-meter runway.

"Pak Burhan, who was then only active in logging business in Kalimantan, began paying attention to this area after repeatedly hearing reports of foreign vessels illegally fishing in these waters," Hadi said.

Now, 22 years after entering the region, Hadi said, Djajanti has eight fishing companies in Maluku and Papua provinces.

The eight companies include five companies located in Maluku, namely PT Daya Guna Samudra in Benjina; PT Mina Seram Lestari in Arara village, Wahai district, Central Maluku regency; PT Wana Eka Sari in Wahai's Pasari village; PT Seram Nusa Windu in Wahai's Pamali village, and PT Hasil Tambak Amboina in Wahai's Opin village.

The three other companies are located in Papua, namely publicly-listed PT Bintuni Mina Raya in Wimro, Babo district, Manokwari regency; PT Biak Minajaya in Biak regency's capital of Biak, and Djarmu Aru in Wanam.

The companies have an investment of US$2 billion in their enterprises, employ a total of 50,100 workers and operate a 660- strong armada of fishing vessels, Hadi said.

The fish processing plants owned by the companies, except for Biak Minajaya, are located in remote places where boats and aircraft are the only means of access and transport.

Djajanti built their own airports as in the cases of Benjina and Wanam, or rehabilitated airports built by the Japanese during the Second World War.

"Most people are not interested in investing in this area due to its remoteness and the lack of infrastructure. But we did it without any facilities from the government," Hadi said.

Except for Biak Minajaya, where 90 percent of the 4,300-strong workforce are Papuans, all the companies are dominated by workers from Java and South Sulawesi. The latter are known for their remarkable fishing skill.

"It's a process. Our dream is that all the companies will be wholly run by the local people. But at present, most of them, especially those in remote areas, are not yet used to regular and permanent jobs," Hadi said, calling on the educated Papuans in Jakarta to return to build their homeland together with Djajanti Group.

The Papuans are apparently happy with Djajanti's operations.

"Djajanti Group and Burhan Uray belong to Papuans. Throughout the New Order era, none of the national conglomerates who enjoyed a variety of facilities from the government would invest in the land of Papua for various reasons.

"But, Djajanti Group, which has never received facilities from the government, made a breakthrough by investing in Papua in the 1970s," said Nehemia Wospakrik, human resources general manager of Biak Minajaya.

Nehemia, a former university lecturer in Jakarta who claims to have been strongly persuaded by Djajanti to take a job in Biak Minajaya, blasted the government for neglecting Papua in its development programs.


The current social and political upheaval in Maluku and Papua has brought disaster to Djajanti.

Djajanti's marketing director Joseph Siswanto said the one- year-long bloody communal violence that claimed thousands of lives in Maluku, and the intensifying campaigns of the free-Papua movement in Papua have much affected the company's operations.

Joseph said Djajanti closed its Maluku regional headquarters in Ambon for security concerns, while its logistics office in Tual recently ceased operations for the same reason.

Production, however, still continues as the operational sites are located in areas well protected from the repercussions of communal unrest, but continues only at diminished levels. Fifty percent of the company's workers from Java and South Sulawesi have fled the region due to the unrest.

The company recorded US$194 million in sales in the first nine months of last year, a sharp decrease from US$305 million in 1998.

Joseph said that this year the company expects its sales to reach 1999 levels provided that the social and political conditions in the region do not worsen.

"We are safe from the impact of the downfall of Soeharto since we are not one of his cronies. But the value of our shares has dropped because of the social unrest in the region," Joseph said.

Joseph also said Djajanti was facing a debt problem following the sharp downfall of the rupiah against the dollar in mid-1997.

The group is the ninth largest obligor of the Indonesian Bank Restructuring Agency (IBRA) with a total debt of Rp 2.6 trillion plus US$24 million.

Joseph said the debt was owed to Bank Dagang Negara by one of Djajanti's forestry units. Aside from fishing companies, Djajanti also holds forest concessions in the eastern part of Indonesia.

The debt originally amounted Rp 600 billion but suddenly rose to Rp 2.4 trillion amid the monetary crisis because Djajanti had switched the debt from rupiah to dollars prior to the crisis, lured by the low interest of the dollar loans.

"We are open to any solutions offered by IBRA. But whatever the solution, it should not ruin the business that has proved profit-making and brought benefits to the local people," Joseph said.