Success story of a partnership program (2)

The Bali Declaration issued late last month by the chiefs of 100 of the biggest business groups in Indonesia addressed the need to enhance business partnerships between small, medium and large firms. The Astra International group, however, started its own small business development program more than 10 years ago. Following is the last of two installments of an article based on Sri Wahyuni's interview with Rini MS Soewandi who oversees the Astra program, and several small entrepreneurs who have been assisted by the program.

JAKARTA (JP): Disappointed that the village cooperatives under his care hadn't progressed despite the capital and equipment donated by the company he for, H. Linggo Suprapto decided to produce his own motorcycle components.

The 47-year-old owner of PT Adhi Wijaya Sentosa, who received the Upakarti award in 1992 for pioneering work, went into business for himself.

"Instead of doing a job without clear results, I'd better be on my own," said Linggo, who is from Surabaya.

Thanks to his determination, the technical high school graduate is now able to manufacture 208 motorcycle components with a turnover exceeding Rp 300 million (US$134,000) a month.

"I have 210 workers on my payroll, 11 of whom are university graduates," he said, failing to hide his pride.

The father of two daughters and three sons was designated in July as the Best Small Entrepreneur of 1995 at the national level. This was the latest in a series of achievements. He was named the best businessman at the Jakarta level in 1992 and he obtained first prize in quality control at the national level in 1991.

Linggo's success didn't fall from the sky. He had difficulties at first. "I was compelled to sell my 16-gram wedding ring to pay worker wages," said Linggo, recalling conditions when he started up his business.

"I didn't suffer losses but the profits were very small," said Linggo, one of the small businessmen assisted by Astra International under its business partnership program which is run by the Yayasan Dharma Bakti Astra (YDBA) foundation.

Astra, which enrolled him in its business partnership program in 1985, was not unknown to Linggo.

In 1971 Linggo joined one of Astra's subsidiary companies, PT Federal Motor. Having worked in the workshop for nine years, Linggo was transferred to the engineering department. He was then assigned to foster a number of village cooperatives in Sukabumi and Bogor.

The village unit cooperatives which were used to producing traditional agricultural tools such as sickles, long knives and spades, were guided by Astra to make simple motorcycle components.

"The objective was to give them a value added," said Linggo.

Having followed the training and apprenticeship programs organized by Astra International, they were given machines, working capital, and orders.

But the orders were not finished on schedule because they preferred to work in the rice fields during the harvest season than meet deliveries.

"There was no progress," said Linggo.

In 1985, Linggo asked permission to produce motorcycle components on his own. His request was approved and Linggo established a company under the name Wijaya.

With a bank loan of Rp 34 million, Linggo purchased a 63 and a 16 ton press for Rp 16 million. He spent the remainder on molds and working capital.

Assisted by six technical school graduates, Linggo started producing 12 Honda motorcycle components on order from Astra. His turnover was only Rp 4.5 million a month.

Now the Wijaya company, which changed its name to PT Adhi Wijaya Sentosa in 1993, also gets orders from other companies, such as Matsushita Gobel, for electrical components with a value of Rp 60 million a month; PT Array for rubber components worth Rp 90 million a month and Kawasaki and Vespa respectively for 57 and 30 items of motorcycle components.

"Orders from Honda constitute approximately 65 percent of our total turnover," said Linggo.

PT Adhi Wijaya Sentosa's assets, according to the latest audit, are now worth Rp 2.8 billion, with a cash flow of Rp 640 million a month. The company is now helping develop 15 smaller companies in Jakarta and Bogor. They help Linggo in carrying out orders.

The latest report of YDBA shows that the Astra automotive division alone now sources about 10 percent of its Rp 9 trillion total annual purchases from small and medium-scale firms. But procurements from small and medium-scale firms by the whole Astra group are projected to reach Rp 5 trillion or 25 percent of its total by the year 2000.

"Do not see the development of small businesses as troublesome. Consider it as part of a long-term investment, otherwise the program will certainly not run smoothly," he said.

"It is simple. If the product meets the standard, we accept it. If not, we reject it," he said. "That is the way I do business with the company that has fostered me," he added.

"Like being given fishing gear, we only provide some attractive bait," said Linggo.

What he has received from Astra is technical and managerial assistance, and marketing opportunities.

"What we need to do is to provide Q, C and D. Quality, Cost and Delivery. I always safeguard them. That is my bait," he said. (swa)