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).