Mon, 21 Jul 2003

Shifting to a newer paradigm a must

Febriana Damayanti Contributor Jakarta

Two international environmental institutions, the World Wildlife Fund and the Swedish Society of Nature Conservation, recently pointed their fingers at two of the country's major paper manufacturers: Indah Kiat Pulp & Paper owned by Asia Pulp & Paper, and PT Riau Andalan Pulp & Paper belonging to Asia Pacific Resources International Limited (APRIL).

Both companies were accused of damaging some of Indonesia's tropical forests by turning thousands of hectares of irreplaceable natural treasure into eucalyptus and acacia plantations to grow the raw material for their mills.

The pulp and paper industry has for years now been strongly criticized for destroying nature. Communities surrounding plant sites are not only extremely angry, but totally reject the presence of these plants.

One of the reasons behind the problems experienced by many paper and pulp manufacturers is their inability to build competitiveness, especially in the area of creating a positive corporate image. With their huge investments it is surprising that these giant-sized entities fail to comprehend recent developments in regard to people's concern and attitude toward the environment.

Some analysts lament that while these companies have a wide range of almost unlimited resources and all the necessary means to "make amends", to date they have not done anything substantial. Perhaps they think that being just a few in number, as this type of business is not a "small amount" game due to the massive investment required, they can afford the current leisurely pace in responding to the constant outcries.

Another reason why these companies fail to grasp the current situation is they are still firmly entrenched in their antiquated beliefs. They wrongly believe that much of competitiveness lies in cutting down costs, like paying low wages, increasing tonnage and above all securing government protection to keep their business "safe and sound".

Their old beliefs and outdated mind-set have created a myriad of problems that affect the entire pulp and paper industry. Treating themselves as merely commodity producers in today's world of branded products, they have not been able to do much about modern marketing.

Tragically, oversupply also often occurs due to a lack of capability in proper estimates and forecasts. The archaic "weapon" -- price -- is still seen as the only effective tool in their fight in the market. Their biggest weakness is the ineffective communication of their "vision and mission statement", which should have been translated into their actual activities to acquire public empathy or at least cool down the heat with real sympathetic action.

It is high time that the country's pulp and paper industry leave the old paradigm behind and turn to a total concept of competitiveness that nowadays incorporates a positive corporate citizen philosophy. In today's world, to last a lifetime or even more, companies have no choice but to be contributing members of society. It is now recognized that their competitive edge and competency should include not only the high values of products and services they deliver, but, most importantly, the inherent as well as concrete "spirit of participating" like providing reasonable wages, benefits and care for employees as well as the surrounding community and environment.

A revamping of internal mind-set, especially from the top level executives down to those who carry out the day-to-day work, is obviously instantly needed.

The "Cluster Model", as recommended by Michael Porter in his best-seller On Competition, can be helpful. This model describes the success stories of numerous world-class companies in building up their competitiveness that comprises a spirit of active participation and togetherness. The cluster is an integrated cooperation and mutually supporting action among various institutions, such as research agencies, companies' association, academics, colleges and universities, NGOs, respected figures and related government offices. Not only discussions are conducted but implementable solutions are actually found by this cluster. The essential aim and ultimate purpose is saving both the company and the whole society. In fact, a harmonious fusion is created.

Quality of the national business environment is also crucial. This means, as a regulator, the government, through its well thought-out regulations, should be able to create a conducive climate for the business world, including the pulp and paper industry in the country. This way the competitiveness and productivity of these companies should not be looked at partially or only from the macro-economic point of view. For effective results, for the good of both pulp and paper companies as well as the environment, an integrated and solidly interrelated activity among institutions is called for.

Several years ago, one of the country's leading research institutions found that Enceng gondok (a kind of water hyacinth) or hibiscus cannabinus in Latin, which is abundant in most parts of Indonesia, is suitable as the raw material for making pulp. However, due to lack of coordination as the cluster referred to above is not in existence or dormant, this piece of valuable information is simply lying in a drawer somewhere.

With a new paradigm, probably resorting to a close cooperation, as reflected in the cluster model, the country's pulp and paper companies will be able to overcome most of their current problems. This way these large corporations will be performing better, both in increasing their profits as well as highly contributing corporate citizens.

Next to the vital role of the pulp and paper industry for the country's revenue, it will be another plus when you can say that the paper you write on is produced by a company who cares about your environment. And that day seems to be not too far away.