Success story of a partnership program (2)

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)