RI firms need revamp to survive free market

JAKARTA (JP): Indonesian companies will need to restructure themselves if they want to survive in the upcoming free market era, a management consultant says.

David Coleman of the American Management Association (AMA) said in a briefing with AMA members yesterday that external pressures, including competition from countries with lower wage policies, will give Indonesian companies no choice but to carry out restructuring strategies to increase their efficiency.

Yesterday's briefing was organized jointly by the AMA and the Jakarta-based Institute for Management Education and Development (LPPM).

Restructuring, according to several major American firms, is a market-driven process, helping companies to compete more effectively and react more quickly to market changes so they can maintain their growth targets.

While restructuring is often costly and can result in "painful" experiences for a company -- such as when it has to trim down its workforce and reorganize or break up its management -- it can improve the performance of a company, Coleman said. Its effects include leaner, de-layered structures within a firm and the introduction of new cultures and technologies, he added.

Commenting on Indonesia in particular, Coleman said that corporate restructuring was taking place very slowly.

"But external pressures will speed up the downsizing process," he said.

Coleman said Indonesian companies should conduct restructuring strategies in an "Indonesian way" to avoid the "painful mistakes" that many Western companies have made.

"Indonesian firms should use a systematic approach which applies to the local culture. Restructuring should be done in a sensitive and considerate way," he said.

Chairman of the LPPM Foundation Frans Seda said at yesterday's seminar that internal pressures, both from within a company and within the country, may also force a company to undertake restructuring strategies.

National companies currently engaged in unethical practices such as collusion and corruption will gradually have to change to face the internal and external pressures, Frans said.

LPPM President Anugerah Pekerti pointed out that many state- owned firms with poor performances in the past had to undergo major restructuring when they decided to go public.

"It becomes a requirement... because restructuring can lead to increased efficiency, transparency and higher public accountability," he said.

During the seminar, a memorandum of understanding was signed between AMA and LPPM to form a partnership that will organize a number of seminars, training programs and conferences.

The deal was signed by the president of AMA International for the Asia-Pacific Region, Peter M. Absalom, on behalf of AMA, and Anugerah Pekerti on behalf of LPPM. (pwn)