Jewelry craft a goldmine of opportunity
By Jupriadi
UJUNGPANDANG (JP): The economic crisis in Indonesia has not, apparently, wiped out every kind of business. Some have even progressed, one of which is gold handicraft business.
Data from the Perak (Silver) Foundation, a non-governmental organization working toward advancing people's livelihood, states that the income of gold craftsmen in Ujungpandang has increased, with initial incomes nearly tripling, as a result of the crisis.
This is confirmed by goldsmith Lantara Daeng Nai, 45.
"At present, gold artisans are enjoying an adequate income due to the crisis," Daeng Nai told The Jakarta Post.
According to this father of four, the greater demand for gold is directly connected to increased prices of export commodities like cocoa, coffee and shrimps.
"Farmers with big harvests are those who mostly buy gold jewelry," said Daeng Nai, who is known as a successful businessman by the community in Borong, near Ujungpandang.
An economics high school (SMEA) graduate, he started a logging business in 1974. He did not make any headway in the business and switched to silver handicrafts in 1975. He had no luck in this business either. After seeing people whose welfare improved by working on gold crafts, he became an apprentice to his brother, who was already a gold craftsman. A year later, in 1976, Daeng Nai opened his own gold jewelry business.
"I started my business with 20 grams of gold. At the time the price of gold was Rp 28,000 per gram," he recalled. Now, after 23 years, he has reached a turnover of Rp 400 million.
Orders from investors require an average of one kilogram of gold a week. One kilogram of gold can be turned into 50 jewelry sets. A set consists of a bracelet, a ring, a necklace, a brooch and earrings. Not surprisingly, Daeng Nai has a net profit of Rp 15 million a month.
To keep up with the development of his business, Daeng Nai now employs 60 craftsmen with an average income of Rp 2 million each per month, an increase of nearly 300 percent of their previous income of Rp 700,000. Daeng Nai said his workers can finish 800 pieces to 1,600 pieces of jewelry per month.
Daeng Nai's high turnover is partly due to his shrewdness in developing kandawari (plaited) gold pieces. Kandawari was initially marketed in the areas around Ujungpandang but has now spread -- thanks to Daeng Nai -- to Surabaya and Denpasar. In eastern Indonesia, including Surabaya and Denpasar, the product is better known as Kendari handicraft. Its marketing has expanded to Singapore, Malaysia, Japan, the Philippines, the Netherlands and some Middle East countries like Saudi Arabia and Egypt.
Daeng Nai said that kandawari handicraft is in great demand because of its good quality. It is fashionable and very refined.
"Yes, I think the quality of our handicraft will keep because our children have learned from early childhood to plait gold," said Daeng Nai.
He said that as for designs, he followed the latest fashion so his creations remained trendy.
The current demand is mostly for plaited rings and bracelets weighing 3 grams to 7 grams. Gold prices now vary between Rp 55,000 per gram for 24 carat gold and Rp 45,000 per gram for 23 carat gold.
Another goldsmith, Thamrin, 46, has been in the business since 1969. He learned the craft from his parents and his uncle. After five years of learning, he started his own business in 1974 with an initial capital of 100 grams of gold.
Thamrin, who revealed that he has never received a bank credit, said that since the economic crisis, he has had a net profit of Rp 7 million a month. His turnover is around Rp 250 million.
Apart from being marketed in the city and other towns in South Sulawesi, Thamrin's goods, created by 40 craftsmen in his house on Jl. Satando, Ujungpandang, also has markets in Manado, Kendari, Palu, Gorontalo and many parts of Irian Jaya and Kalimantan. He obtains his material generally from shops on Jl. Somba Opu, the busiest gold jewelry trading site in Ujungpandang.
Both Daeng Nai and Thamrin say that in the past few months the demand for their gold handicrafts has tripled; most of the time, the orders pile up.
"Currently the highest demand comes from Ujungpandang itself, Surabaya and Irian Jaya. For exports, the majority comes from the Middle East, especially Dubai," said Daeng Nai.
But, not all orders can be filled, due to limited raw material and capital. "Those are our main handicaps," he said, adding that another obstacle was their very simple equipment, which slowed down the work process.
Another factor is, according to Thamrin, their minimum knowledge of the export business. "We don't have a strong access for our exports," said Thamrin, who has made the haj pilgrimage to Mecca seven times.
Apart from working on their own gold, goldsmiths like Daeng Nai and Thamrin also act as chief craftsmen. They generally accept gold bars from investors. From each 100 grams, a chief craftsman gets six grams, while a worker obtains three grams.
Gold jewelry from Ujungpandang usually takes the form of necklaces, rings, brooches, pendants, ear studs and earrings. In keeping with market demand the craftsmen also create new products such as purses, bags, jewelry boxes, miniature houses, phinisi (Bugis cargo boats) and decorative fish. These handicrafts generally dominate 90 percent of markets in eastern Indonesia.
According to data from the Ministry of Trade and Industry's Ujungpandang office, there are about 15,000 gold craftsmen, a sharp increase from 1,247 in 1992. The craftsmen are headed by 200 chief craftsmen, each of which usually employs 10 to 20 workers. Each group of chief craftsman and workers produce an average of 80,000 pieces to 160,000 pieces of gold jewelry a month.
These groups are now temporarily supervised by the Perak Foundation through the Logam Mulia (noble metal) Craftsmen's Cooperative, established by the foundation in 1997. Nowadays, thanks to the increase in demand of gold crafts, the gold handicraft centers in Ujungpandang like Borong, Satando, Tinumbu and Somba Opu are experiencing rapid development.
According to Salam, a coordinator of the Perak Foundation, the prospects for gold handicrafts are very promising. There are a number of reasons for this, such as population growth and increase in income, especially of cocoa, coffee and shrimp farmers. These people are the most eager in purchasing gold jewelry, he said.
Also, people's tendency to invest in gold is increasing as its price keeps going up. Salam said that this business is very practical because the payments were always made in cash. Credit is sometimes allowed, with payment made within one week purchase.
The development of the gold handicraft business has also considerably boosted the revenues of the regional government.
According to precrisis data from the Perak Foundation, of the two million inhabitants in Ujungpandang, about 15,000, or 0.75 percent, are gold craftsmen. It stated that the number must have increased since the crisis, along with the high demand for gold.