Wealth is a mind-set and so is entrepreneurship

Wealth is a mind-set and so is entrepreneurship

Sandiaga S. Uno, Jakarta

With a little more positive thinking, around 40 million
Indonesian entrepreneurs -- all categorized as SMEs -- can make
this country's economic growth and development among the world's
highest. But what's the catch?

Acknowledgement and praise for Indonesia since the reform
period began in 1998 has flows thick and fast. Yet, little of
this praise has translated into a sufficient level of foreign and
domestic investment.

"Many factors make sticking around seem increasingly
unjustifiable," said a spokesperson from a multinational company
after announcing their pullout from the country. "Years of
hoping, waiting and lobbying have ended in futility," he added.

However, more resilient business outlets say, "Nowadays, when
business performance is determined as much by the running indices
of the world's main capital markets as it is by top management
boards, so what else is new?"

To make matters worse, Indonesians are not helping themselves
by being pessimists. Now that reform and democracy are household
words across the archipelago, most Indonesians still ask how to
best recover from the crisis. It is true that roughly 54 million
Indonesians still live in poverty, up from less than 20 million
before the crisis. However, does not progress -- no matter how
small -- command appreciation?

For better or worse, the majority of better-off Indonesians
continue to dwell in the past, not because they are expressing
solidarity with the less well-off, but rather because many lack
the positive mind-sets to be grateful, to progress, and to
celebrate even greater success.

As shown by a recent market perception survey conducted by a
group of students from Oxford University, UK, the cause of this
pessimism may be broken down into two reasons. Firstly, some of
them simply have not felt that their lives have returned to
"normal" (the pre-crisis condition). Secondly, many more have not
realized that their surroundings have changed significantly both
in terms of structure and morphology.

Luckily, there is another group of neither pessimists nor
optimists who just cannot be bothered with indexes and exchange
rate movements. They are busy working and battling the economic
ups and downs on a daily basis. This group has a lot to teach the
other two groups about economic and social resilience resulting
from hard work and positive thinking.

The survivor group knows that competition has always been
paramount and no one deserves access to wealth automatically. It
must be earned!

For over three decades until the 1997 Asian financial crisis,
the words wealth and entrepreneurship were unknown to many
Indonesians. Wealth was narrowly defined as asset accumulation,
and entrepreneurship was a privilege reserved for a few
Indonesians. For these people, a sacred relationship with
bureaucrats kept them a safe distance from real and merciless
competition.

But, that was then, and this is now. The Asian financial
crisis really did prune the deadwood from the fruit trees.
Satish Mishra, a respected economist who is also chairman of the
United Nations Support for Indonesian Recovery (UNSFIR),
confirmed this some years ago.

"A crisis of that magnitude would almost certainly change the
social consensus among Indonesians, which defines the position of
one group against the others," said Satish. In other words,
things have changed too much to continue making comparisons to
pre-crisis conditions, and it is not a valid reason to not
appreciate progress.

Over seven years have passed and Indonesia is left relying on
over 40 million survivors throughout, according to data released
by the Ministry of Small and Medium Enterprises. Consciously or
not, these survivors have managed to pull through both the good
and not-so-good times because their mind-sets guide them to think
that way. Whether they have heard it or not, such mind-sets have
a modern term: Entrepreneurship.

Unfortunately, despite providing employment to around 80
percent of Indonesia's existing workforce, not a few well-off
Indonesians and foreigners still look down on this group. The
reason behind it? They (physically) appear in ways far from the
global perception of entrepreneurship that every business school
textbook has worded so nicely.

"Say again?!" said Tedjo, a sock producer who distributes his
products to a nearby Adidas factory for quality checking, brand
stamping and distributing, and nets US$500 a month. He looked
confused when asked about his business' monthly bookkeeping; and
forget about asking him about "good corporate governance".

Leila graduated from a renowned secretarial academy and used
to be a secretary for the board of commissioners of a local
textile trading company.

Leila -- unlike Tedjo, who has run his own business from day
one -- decided to use her severance pay after her employer closed
down in 1998 to start her own income-generating business. She
runs a traditional tailor shop that takes orders ranging from
school uniforms to wedding dresses. At present, Leila earns
around US$925 net a month, or 300 percent higher than her old
salary as a secretary. Leila is even considering opening another
shop next month.

Slightly more educated than Tedjo, Leila knows a fair amount
about bookkeeping. Though far from familiar with the terms
"return on investment" or "assets", she knows at least how to
avoid losses.

Thanks to Tedjo and Leila who keep their money in traditional
savings and time deposit accounts, Indonesian banks have not only
weathered the crisis but can start thinking about expanding
again. Try offering them mutual funds or insurance products at
this point, and you will probably be wasting your time.

As a result, the two have remained intact, unbothered,
thinking positively, and explored what turned out to be a
profitable opportunity five to seven years ago.

People like Tedjo and Leila have kept the country's economy
running by keeping consumption at a high yet sustainable level.
The 68 percent-consumption driven economy will remain into the
foreseeable future, with or without the government's direct
intervention.

Indonesia is not China, because we do not have as much cheap
labor. Indonesia is also not India, because we do not have that
many English-speaking talents and research centers. But we do
have 40 million people with an entrepreneurial mind-set and
spirit blended into a much younger and more dynamic population.
All of these allow better resilience and stability for the
future.

Combined with the country's abundant natural resources, they
are the essence of Indonesia's present and future. The challenge
is to provide them with access to markets, improve their
managerial skills and capital, to fund their business so that
small businesses grow into larger outfits and local players to
turn into regional powerhouses.

Finally, maybe Leila will actually go ahead with her plan next
month to open a new tailor shop employing three to four more
people. Or maybe Leila will need a partner, be it foreign or
local. Just a further maybe; maybe Leila will be able to fund her
shop's expansion via an SME credit at a cheap rate provided by a
local bank.

With all this in mind, I wonder if there are really 54 million
poor Indonesians in need of saviors of the caliber of
Prof.Jeffery Sachs and the cool singer Bono, who both tirelessly
pursue the end of poverty.

Maybe, just maybe, it is the other way around.

The writer is Chairman of Indonesian Young Entrepreneurs
Association (HIPMI).