Indonesian business still far from ruin

Indonesian business still far from ruin

Suparwanto Chairman of the Indonesian Association of Employers (Apindo) Jakarta

It's all too easy to take a superficial, inevitably dim view of prospects for the business world in Indonesia in the next five to 10 years, a perspective shaped by the gloom from the lingering economic crisis. Fortunately, true entrepreneurs always know how to get themselves out of a quandary. There is no denying the fact that the business sector is having a rough time, with the internal plight resulting from the protracted crisis coupled with unfavorable external factors. It is particularly apparent in macroeconomic conditions, which have so far remained less than hospitable to business management by entrepreneurs. The uncertain domestic situation has given businesspeople much pause for thought before making decisions. Today's dull economic fortunes are inseparable from the upheaval in national politics. Business need tranquility, an environment which is politically, economically and socially conducive. In our current state of confusion, with many uncertainties and a global economic downturn, it is almost impossible for entrepreneurs to rely on predictions and projections. It is tough enough to make long-term forecasts, let alone for the next 10 years, and predictions for the next two years are offered with trepidation. If survival is their goal, entrepreneurs should ensure their options by focusing on the areas they are engaged in and prioritizing them, while keeping on a constant lookout for opportunities, no matter how small. The current situation is a product of the past, but proper management should be able to deal with all problems. All relevant parties are expected to be capable of perceiving advantages and disadvantages, and there is reason for modest optimism about better options in the future. We need some social capital that, as all of us are aware, has to be built out of the spirit of common interests. The dependence of businesspeople arising from the New Order economic system was more due to the presence of a "pseudo" market created by the government. It was not real, because the government also depended on foreign loans, which have now come back to haunt businesses in the form of debts. People have finally concluded that self-reliance is a must for a country, company and individual. Lulled into a sense of prosperity by the various loans that came our way, we awoke with a jolt to the reality that we were required to repay them, a realization that came too late to deal with the negative consequences. Business problems have also resulted from errors in the government's prioritization in the national development policy. The priority given to economic growth was inappropriate because the distribution and equitable spread of development gains, originally expected to automatically follow the rate of economic growth, failed to materialize as desired. This mistake must never be repeated, and a supportive environment in the form of democracy and national stability is needed to bolster economic growth. The lesson from the crisis is that one has to pay a social price for the creation of strong and solid economic fundamentals. It is unreasonable and ultimately psychologically counter-productive to agree with those critics who charge that Indonesian business and human resources are less competitive than other countries. The achievements of our younger generation on the international scene are impressive, standing as a rebuttal of such criticism. However, a corrective learning process does need to take place. Indonesia, home to the fourth largest population in the world, is a very attractive market, but when the crisis ensued we realized that our fundamentals were not secure, leaving the nation vulnerable to capital flight. The government's priority for the future must be to design more solid industry instead of the present mere assembly industry. Most suitable to the nation is a grassroots-based industry, with plus points in resources, competitiveness, labor-cost efficiency, etc. With its abundant potential, the country is still far from ruin. Yet, we all realize that no nation can survive on its own today. The implication of being a member of the international community is that we inevitably have to accept the impact of globalization. Revelations about he "octopus" structure of most of the country's widely diversified conglomerates, with subsidiaries established to serve the needs of the business group, showed that many national firms were not built on the basis of strong fundamentals. Most of the conglomerates were born from the largesse and patronage of the ruling power, and few made it on their own without resorting to corruption, collusion and nepotism (KKN). Some did stand on their own feet without being handed monopolies or special favors, particularly small and medium enterprises (SMEs). They have experienced difficulties in the crisis, but their capacity and deeply rooted strength must never be overlooked. President Megawati Soekarnoputri's declaration of 2003 as the year of investment has been a morale booster to the business community. In order to empower our natural resources we still need investment, but commodities with local contents are ideally covered by domestic investors. Even though foreign investors are needed, they should be able to give leverage for the enhanced value of our resources and at the same time initiate a learning process in society. The business community is looking ahead to the general election of 2004. Entrepreneurs are anticipating advancements in the process of public administration among an increasingly discerning public. It is hoped that the elected leaders will instill values and induce cultural change instead of merely mouthing off empty political and economic promises. While the last five years have been difficult for entrepreneurs, the next five years will give us enough opportunities to learn and make sound decisions based on the conviction that Indonesia will become a strong country some day. Indonesia needs leaders who can give motivation, arouse the spirit of citizens, stimulate their creativity and promote mutual trust, instead of relying on the old approach of top-down decision-making. Entrepreneurs must develop a strategy to overcome these hard times. Experience has taught businesspeople that the past attitude of dependence was unfavorable, and they need to become strong and independent. It is true that we should cooperate with all parties, including the government, which has to maintain the business environment in macro terms, but self-reliance is essential. Constraints faced by entrepreneurs in connection with high bureaucratic costs need to be handled wisely. They cause inefficiency, and will ultimately be overwhelmed by the strong public demand for transparency. We are tired of the present situation which has brought the nation to its lowest point, but we are also confident in the knowledge that there is a limit to what society can stand. There is always a struggle between light and dark forces in a society, and we are currently undergoing a process of enlightenment, one that hopefully will not last too long before stability is reached. Too short a time span will mean revolution, which is an impossibility for a functioning society, but neither should the process take so long as to negate opportunities. No less important is the welcoming of free trade as a consequence of Indonesia's participation in the Asian Free Trade Area (AFTA). In the next five to 10 years, businesspeople will have to work extra hard, but the key is to make our leaders aware that the nation is lagging behind in the international arena. If the legacy of KKN still prevailing in society cannot be eradicated, then how do we expect to compete with other countries? The problem is that it's a race against time, because other countries have already put in place the preparations to compete. The great irony is that Indonesia, blessed with a huge population and rich resources, has failed in the competition to garner its own market potential. How we measure up to international competition in the coming years will mean the difference between prosperity and poverty for our people. Ultimately, we need to become masters in our own country and learn to rely on nobody other than ourselves. When both of these conditions are met and become part of our national awareness, then it will only be left to us to set the speed of our advancement.

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