Don’t Bankrupt Your Leadership!

Dr. John Maxwell

"Leadership is a dealer in hope"
~Napoleon Bonaparte~

By Agustinus Gius Gala

“We need to keep some confidence in the system.What the Fed is doing … is taking every step possible to keep confidence in the financial system” (CNN). AIG chairman and CEO Edward Liddy said this Monday, after the insurance giant had received a pledge of $30 billion in bailout money. This was in addition to the $150 billion it had already received. And in spite of those large sums pouring into it, that very same day, AIG posted a 4th-quarter loss of $62 billion.

I’m sure with his words Liddy was trying to persuade the public that AIG would make good on the investment.
He even went on to say, “In the United States of America when you owe people money, you pay them back” (CNN Money). So how reassured did Americans feel?
Well, the Dow plunged to record lows, closing below 7,000 points.
Why? Why weren’t Liddy’s words of reassurance enough? Because in past months, the financial industry had lost credibility and thus people’s trust.

It’s hard for a financial institution to perform without credibility. It’s equally difficult for a leader to do so. Why? Because credibility is a leader’s currency. With it, leaders are solvent. Without it, they’re bankrupt. I think leaders in Liddy’s situation – trying to establish or re-establish credibility – need to remember:

1. Establishing credibility takes time.

When leaders are just starting out, this might not be obvious at first. That’s because for about the first six months of a leader’s tenure, followers put more stock in communication than in credibility. After all, they haven’t had time to judge leaders’ actions, so they listen to their words.
But after six months, followers have seen enough of the leaders’ actions to start deciding whether they’re trustworthy or not. At this point, words begin to matter less and less. And the effectiveness of the communication will depend more on the character of the messenger than on the content of the message. For credible leaders, the longer they lead beyond this point, the better it gets. But if leaders are not credible, then the longer they lead, the worse it gets.

2. Established credibility equals trust.

And trust carries huge rewards. It means confidence. It erases worry and frees you to get on with other matters.

Stephen R. Covey, in his book, The Speed of Trust, said,

Low trust is an unseen cost in life and business because it creates hidden agendas and guarded communication, thereby slowing decision-making. A lack of trust stymies innovation and productivity. Trust, on the other hand, produces speed because it feeds collaboration, loyalty and ultimately, results.

Good leaders know that if their followers don’t trust them, they’ll stop following them. Credibility is truly your currency as a leader. People believe that you’ll do what you say when you do what you say. Consistently live what you communicate, and over time you’ll establish solid credibility. With that, your followers will feel free to trust you. And they’ll be willing to partner with you in achieving great things for your organization. And that’s especially important in times like these when people are wondering what – and who – they can trust.

~From John Maxwell~

CSR for Education, UGM’s Perspective

Management Thought

CSR for Education, UGM’s Perspective. Amidst a long debate on the failure to allocate 20 percent of national budget for education, here’s a new idea from a Gadjah Mada University (UGM) management expert, Dr Hargo Utomo who is the Director of UGM’s Master of Management Program. In an interview with Tommy Fitriadi from Campus Asia, Dr Utomo said that the idea of producing a regulation to encourage business corporations’ contribution to education is feasible, yet it must be carried out cautiously.

How do you see Corporate Social Responsibility (CSR) in Indonesia nowadays?

In my opinion, nowdays CSR is seen as a jargon. It has emerged because the government wants to set aside a percentage for social care activities. In my opinion, this is a repackaged old stuff.
The best thing to be concerned with is whether CSR is mandatory or voluntary. If it is mandatory, questions may arise as to how much [needs to be given] and how to control this kind of CSR. After all, as implied by the term itself, is it only the corporations which [should] take the responsibility? What about society? People fiercely criticize industry as the cause of pollution, but don’t they also cause pollution? When we talk about CSR, it would be unfair if it is just the company that receives exposure because it would mean that the government does not teach society to be socially responsible as well. I support the existence of CSR, but it is merely an instrument to assert that companies have an obligation. The government has asked the corporations to take part and that should be followed by asking society too. So, both corporations and society must be socially responsible.

What should the government do to companies that have not implemented CSR properly?

CSR is being limited to a marketing gimmick only, so what happens now is that companies would appear to have done something good if they implement CSR. But CSR actually comes in many forms. It is not just a marketing gimmick. Surely it will improve the company’s image, but the thing that’s more important is that CSR needs to return to its original state. To illustrate this, does the product maker use safe material in production? Does it recruit those who are socially responsible? If the companies give five percent of their profits in the name of CSR, such gimmick will be meaningless. What is needed now is not to mislead people. Return CSR to its original state.

Have companies aroused understanding about people’s social responsibility? How can people be asked to be responsible if they have never been taught how to do it? Companies often blame education. In my opinion, if we want a good CSR, let us talk about it together. There has been a gap between education and industry. Let us talk about how to define education that covers both interests.

CSR seems to be for community development and charity. In your opinion, can CSR in Indonesia be expanded for instance by requiring companies to provide scholarship?

That’s a good and interesting idea. However, if it is obligatory, a big reluctance or resistance will emerge from the industry. If it is an obligation, it will be a burden eventually, because it is related to the belief that “nothing is free in this world”. But the idea of giving scholarship is interesting. Such scholarship can be given in the form of internship or joint research to harmonize the interest of education and industry. So, the fund will bear fruit in the form of repairing process. It should not be spent merely as grant to build a campus.
How many companies have allocated a percentage of their profits for research purpose? Few do. Most companies do not care about research. Instead of conducting research by themselves, they would rather buy research results because it is faster and cheaper.

So, if CSR is made mandatory, I do not think it will fit here in Indonesia. If it is made voluntary, who starts first will have an effect on how everyone learns together. The problem is ,who will take the lead. Actually, we have begun and it can be seen from the existence of corporate universities, which is actually a reflection of universities being incapable of responding to the needs of industry. Many big banks have their own training centers. If there is a university that can be a facilitator, corporate universities are not necessary. CSR can penetrate into that area. Let us sit together as an effort to be a bridge between education and industry. That is why it is called an old idea that has never been real. “Missing link and mismatch” will happen. That is why everything seems to go their own way. So, in my opinion, voluntary CSR is better than the mandatory one. If it is voluntary, the areas that will drive the economy must be selected. When it comes to which industry, it is only a matter of choice.

In your opinion, has the time come for companies to do CSR for education?

There will be pros and cons if there is a forced CSR concept which interferes with a company’s policies too much because resistance will emerge. It may even be called an abuse, because education is normative (should do) in nature, and CSR is in this normative area, whereas companies are not normative in nature but objective (have to do or must do). So, in my opinion, there should be the same perception between what must be done and what should be done. Education can become a tool to organize what must be done, and then it becomes a case of “laundering”. But companies can defend themselves using the excuse of CSR.

And when education has been used as tool, the intervention from business interest will be a very hard thing to deny. So, if it is said that the time has come, yes indeed the time has come to do some fine-tuning or to make the same perception about CSR from both education and business angles so that CSR is not merely a tool for promotion or marketing.
We know that education also needs media to deliver its idea and it is the industry that has it. Education also needs to be more open. So far, education is too normative in nature and seems to see business as an enemy. Is there a school in this world that can survive alone? Big educational institutions in America are handled by business. Take Harvard, a private university, for example.

So, are you really not for mandatory CSR?

If it is implemented, there will be pros and cons. That is why what we need to do is redefine the concept of CSR. I agree 100 percent with CSR, but the way CSR is implemented will determine whether it is effective or not. If a company is forced to keep one percent of profit for education, it will still do it but later on people will grumble. So, what is needed is making it clear what the one percent given is for and prevent it from becoming a source of exploitation or “laundering”. It is common in Indonesia, though, that sometimes if things are not compulsory, people don’t work. But this is another problem. This is related to how to educate the masses. It is the responsibility of the mass media to make this appear mandatory but realized voluntarily.

So, as a representative of UGM, what is your assessment about CSR for education?Let us define CSR as a symbiotic mutualism. It means we do not want education merely to be the tool for justifying an activity in an industry. For instance, a company has conducted research and it claims that it has done CSR. What must be done is to see whether the research brings forth a meaningful impact to educational community. So, let us think together about CSR so that it does not become a source of exploitation. If a new form of CSR needs to be defined, let us talk about it together.

If there is a rule that requires companies to set aside one percent of profit before tax for educational CSR, do you think it is feasible?

It is. It is very feasible. However, a great deal of caution must be taken, because pros and cons are bound to emerge. But I personally support the existence authority that forces companies to keep their profits for education.

Indofood consolidates amid global crisis

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-15 November 2008. After a number of acquisitions during the past 12 months, PT Indofood Sukses Makmur Tbk., the world's largest instant noodle maker, is now entering a consolidation stage but doesn't plan to ignore opportunity if it knocks. In late August, Jakarta-listed Indofood became the talk of punters in the stock market amid rumors that the company planned to acquire a controlling stake in dairy producer PT Indolakto. A month later, Indofood announced it had signed a conditional sale-and-purchase agreement to acquire the company. “After this latest acquisition, we'll be entering a consolidation phase until the global financial condition recovers. We're feeling very full right now,” Indofood vice president director Franciscus Welirang told GlobeAsia late in September.

Indofood will acquire 100% of Singapore-based Drayton Pte. Ltd., which owns 68.57% of shares in Indolakto, one of the major producers of milk products in Indonesia, for $350 million. Indofood, which has paid 15% of the purchase value up front, hopes to be able to complete the transaction in December after securing approval from shareholders and authorities in Jakarta and Singapore.Franciscus says between 30-50% of the acquisition cost will be financed by internal funds, while the remainder will be funded with loans. He declined to provide details. The acquisition of Indolakto followed the purchase of sugar producer PT Laju Perdana Indah this year, and Jakarta-listed plantation company PT Perusahaan Perkebunan London Sumatera Tbk. (Lonsum) late last year.

The acquisition drive is seen by analysts as an effort by Indofood parent the Salim Group to regain some of its businesses lost in the wake of the late 1990s Asian financial crisis. The Salim Group, founded by tycoon Sudono Salim, one of Indonesia's richest men, had to unload some of the jewels in its crown including Bank BCA, Indolakto and plantation firms in the late 1990s to repay debts to the government. But under the leadership of Anthoni Salim, Sudono's son and group crown prince, who is also president of Indofood, the group last year began making new acquisitions both at home and overseas.The move followed a successful business restructuring at a time when strong commodity prices during the past couple of years and the region's relatively good macro-economic condition provided ample cash and a conducive environment for acquisitions.

Consumer driven

With the looming global economic recession and financial crisis, which has dried up liquidity markets and pummeled stock markets around the world, there are concerns that Indofood will be aversely affected. Franciscus plays down such concerns. The company's food business, which produces the popular Indomie-brand instant noodles and other consumer food products such as food seasonings, snacks and nutritional and specialty foods, will continue to deliver strong sales and profitability, he insists. He points out that the country's economy will remain strong, with growth projected at more than 6% both this year and next, driven by consumption.

Growth in demand for food products will be in line with economic growth, he predicts. “Spending will also increase during the general election next year, which bodes well for food companies.” Prices of raw materials have been falling over the past few months and Indofood also expects profit margins to improve as the cost of production declines, while the price of products will be maintained. In the first half of this year, Indofood's net profit more than doubled to Rp827.45 billion ($87.1 million) from Rp367 billion in the same period last year, mostly attributable to the strong sales of its food division. Sales of wheat flour are also expected to remain buoyant as demand for food products will increase during the election campaign.

Franciscus, who is also chairman of the Indonesian Wheat Milling Association (Aptindo), projects demand will grow by around 6.5% next year to 3.5 million metric tons in 2009 from an estimated 3.4 million tons this year. Lower flour prices will also push demand higher. Franciscus acknowledges the company's plantation unit may no longer enjoy the “extraordinary profit” of last year as prices of crude palm oil (CPO) have fallen. Analysts said however that the lower price of CPO will boost the profit margins of Indofood's cooking oil and fat products. The company had been planning to aggressively expand its agribusiness division, but the current unfavorable economic conditions may temporarily put a halt to this ambition. As part of consolidation, the agribusiness division will for the time being focus on planting unused land at its plantation concessions. “We still have a lot of planting to be done in the land we control,” says Franciscus.

Good reputation

Despite current tight liquidity condition, Indofood is optimistic that it will not find much difficulty in raising funds and loans to finance various activities, including the acquisition of Indolakto. “We have a good reputation,” stresses Franciscus. At the first semester of this year, Indofood also had about Rp4.8 trillion in cash reserves. For many business players, the current global economic downturn offers good opportunities to buy cheap assets so, despite the consolidation strategy, Indofood will not turn down opportunity if it comes along. “If there's a good opportunity, we're going to take it,” Franciscus said. Analysts agree that given the ample cash reserves and its strong credit worthiness, Indofood may just be able to do that.The analysts also welcomed Indofood's move to acquire Indolakto, which not only produces milk but also other dairy-based products. Danareksa Securities said in an October 7 note to investors that the acquisition is positive for the company's diversification strategy.

The prospects for the dairy industry are strong. Government data shows that milk consumption in Indonesia is still very low at 7.7 kg per year, the lowest in Asia, even though government campaigns and corporate advertising have been pushing milk consumption higher over the past five years. Indolakto, which has a number of popular dairy brands including Indomilk, Cap Enaak, Tiga Sapi, Orchid Butter and Indoeskrim, is the third largest milk producer in the country with 20% of the market after Nestle (25% market share) and Frisian Flag (22%). The analysts are still waiting for the acquisition details, particularly with regards to the loans Indofood will require. “Strong brands alone are not sufficient,” notes BNI Securities analyst Akhmad Nurchayadi.

Putting a Brake on Lending

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-29 Januari 2009. Putting a brake on lending Bank Central Asia (BCA), the country's second largest bank by assets, will drastically slow lending growth next year due to economic uncertainty. The mood among the country's leading bankers is cautious. Purse strings have been drawn tightly. While the global financial crisis is not expected to have as distressing an effect as the Asian financial crisis of 10 years ago, bankers are not playing down the latest catastrophe, adopting a consolidation strategy in the areas of lending and liquidity to help ensure survival.

“There are just too many factors out there that have forced us to be extra careful,” says Jahja Setiaatmadja, deputy president of Jakarta-listed BCA, the country's largest financial company by market value.

The bank is putting an abrupt brake on lending due to lingering uncertainty in the economy. Jahja says that lending in 2009 is targeted to grow by 15%, much lower than the central bank's target of 22-24%. “We are more conservative,” says the senior banker. Other major banks such as Bank Mandiri, the country's largest in terms of assets, and Bank Rakyat Indonesia (BRI), the third largest, are also adopting similar strategies.

A senior official at Mandiri was quoted as saying that the bank aimed at lending growth of less than 18%, while BRI projects 15-20% growth. This is in sharp contrast to the aggressive lending growth in 2008. The central bank estimates that lending growth in the year at around 33%. BCA was even more aggressive as lending in the first nine months of the year surged by more than 53% to a whopping Rp105.5 trillion ($9.5 billion), about 44% of which went to the corporate sector including telecommunications, consumer goods, property and plantation companies. The remainder was in the form of consumer and commercial loans and lending to small- and medium-scale enterprises. With full-year 2008 lending expected to reach more than Rp110 trillion, fresh loans this year will reach around Rp16.5 trillion.

Jahja says BCA will prioritize loans to existing customers with good track records.The bank, however, will not shun industries which are currently undergoing a downturn, including palm oil plantations and coal mining. The trick is that BCA has been disbursing loans to a diverse range of industries but focuses on the top players at each industry. “The top players have the experience and capital to survive any downturn. They seldom fail,” says the BCA executive.Jahja explains a strategy of lending money to a booming industry but avoiding it during a down turn is not a good “ethic” for banks as every business has its own cycle. He points out as an example that when the oil price surged from $26 per barrel to around $60, the plastics industry suffered deeply as its cost of raw material soared much faster than the price of the goods produced. “We consistently supported them, and they are now in much better shape.”

Rising NPLs

Jahja, however, acknowledges that given the current global financial meltdown and economic slowdown a rising level of non-performing loans (NPL) is unavoidable. The crisis sent the rupiah plunging to a 10-year low of Rp13,000 to the dollar in November and caused a weakening of consumer purchasing power at home as the stock market collapsed. Despite the difficult conditions, the bank projects its NPL level to “only” increase to between 1-1.2% of total loans from 0.6% at the end of September. “We think such an NPL level is still manageable,” he says. The bank's NPL projection is much lower than the central bank's projection for the industry at about 5% next year, from the estimated average of 3.9% in 2008.

BCA nearly went under when it was hit by a run in 1997 as the Asian financial crisis escalated, prompting the government to take it over from its former owner, the Salim Group. This time around, it has taken measures to deal with the expected rise in NPLs by boosting provisions for bad debts to 350% of the non-performing loan level at the end of September. Such excessive provisioning is raising questions in the market. “We feel that BCA may be too conservative, prompting questions over the real quality of its loan portfolio, especially given the current global economic turmoil,” says Arhya Satyagraha, an analyst at PT Trimegah Securities.

Jahja responds by saying that the policy is necessary given the current global economic uncertainty. “We have said that we're committed to continue supporting our large customers (debtors). That's why we have made preparations that in case one or two companies go under, we have already allocated sufficient provision so that it would not threaten our earnings.”

Going forward, says Jahja, it is important for banks to closely monitor their loan quality as interest rates stay high, the rupiah tumbles and consumer purchasing power declines, all of which could weaken appetite for new bank borrowings and undermine sales at a variety of industries, which in turn could affect their ability to repay debts.

Maintaining liquidity

Jahja explains another important strategy of the bank in coping with the current crisis is to have sufficient liquidity. “One of the reasons for us not to be too expansive in our lending is to maintain liquidity,” he stresses. BCA, now majority owned by the Hartono family, one of Indonesia's richest and owner of the privately held cigarette giant Djarum Group, seems to have no problem in terms of liquidity. It is one of a few large banks in the country which have recently seen third party funds soar, which some analysts say was a result of depositors from smaller banks switching to larger banks in a flight for safety.

BCA saw its third party funds jump to a record of more than Rp200 trillion as of November 22. In addition, the bank has some Rp30 trillion invested in Bank Indonesia SBI promissory notes. Another factor that has become the envy of industry competitors is that BCA has lots of cheap funds, in the form of savings and demand deposits as opposed to more expensive time deposits, thus allowing the bank to be able to enjoy a relatively strong net interest margin of 6.2% (at September 2008) without putting too much interest burden on depositors.

Indeed, BCA managed to “only” raise its lending rate from 11% to 14% at a time when liquidity was tight, as compared to the 18-20% rate charged by other banks. “We're quite comfortable with our spread level,” says Jahja, adding that the bank still has room to cut its lending rate in the future given the current declining trend in the central bank benchmark rate.

Network expansion

Despite the current uncertain conditions, BCA aims to keep expanding its network. Jahja says that the bank will open more than 30 new branches in 2009, adding to the current 819 branches spread across the country. “While we're consolidating in terms of lending, we're expanding in terms of network. There is still a huge potential in Indonesia to collect savings from people and redistribute the funds,” he says. The bank recently acquired small-sized Bank UIB, and plans to convert it into an Islamic shariah banking operation, expected to start operating in September 2009. “There is still huge potential for shariah banking in Indonesia as its market share is still less than 3%,” says Jahja.

While other major banks began shariah operations a few years ago, some analysts said that it is typical for BCA to come late to the game, adding that it could eventually take a major share of the market. They note that the bank got off to a slow start in the provision of ATMs, but now has the largest number in the industry. Nevertheless there are some limits to BCA's ambitions: an earlier plan to acquire another financial institution in 2009 has been put on the shelf while the current economic downturn continues.

Steely resolve

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-17 Juli 2008. She graduated from university but was not afraid to work as a sales girl, pushing cooking oil at local markets. At 56, Wulani and her husband now control the nation's biggest sheet metal roofing company with sales of $65 million.Wearing a simple blouse with light make-up, Wulani W Rismono's warm smile belies a steely resolve that has made her a major force in Indonesia's male-dominated construction industry.

At 56, Wulani and her husband Yarryanto Rismono have grown a family outfit into a titan in roofing metal and steel fabrication.Their PT Tatalogam Lestari, established in 1994, turned over more than Rp600 billion ($65 million) last year and is growing at 20-25%. They employ a steadily growing work force of 700.On the back of an advertising budget of more than Rp5 billion a year, Lestari's brand names Suryaroof, Multiroof and Sakura Truss have become popular choices with safety-conscious developers. Their three factories now supply more than 80% of Indonesia's total market in sheet metal roofing.

The husband and wife team kicked off business from scratch. With a relatively new building concept and little capital, they began by producing 50 pieces of roofing iron per day with modest sales of Rp7 million per month. “We worked hand-in-hand nurturing and encouraging each other to improve the business,” says Wulani of her early business efforts with her husband. With a stong professional background and deep knowledge in strategic management in the palm oil industry, Wulani decided to turn full-time entrepreneur in 1996.

Graduating from the University of Diponegoro in oil engineering, Wulani started work as a researcher with the Ministry of Industry while her husband worked for sheet metal company PT Tumbakmas, a part of Tan Siong Kie's Roda Mas Group. After two years Wulani tired of government bureaucracy and moved to the private sector with PT Kedaung Rayang, a producer of cooking oil. She worked for three years, then resigned with the arrival of her first child. After a year as a full-time mother, Wulani joined Hasil Group under entrepreneur Hendro Tjokrosetio, running palm oil concessions with big brand names such as Vetco.

Starting at the bottom

Starting as a sales girl, pushing cooking oil at local markets, Wulani went on become CEO. She has served as a director with seven companies over the past 16 years. “One of my accomplishments was successfully starting a palm plantation in Kinalu, West Sumatra where I spent some time on site,” she recalls with pride. Husband Yarriyanto resigned from Tumbakmas in 1990 and with a friend opened a small trading company, PT Nita. “The venture folded because of different interests,” says Yarriyanto. The experience brought Yarry to the next phase of his working life: becoming an entrepreneur.

With extensive experience in the sheet metal industry, Yarri and his wife established a family company with minimum capital and a design concept based on producing fashionable roofing metal with good quality material - a product lacking on the Indonesian market at the time. From the proceeds from a fire sale from the demise of PT Nita, Yarri bought land in Cikarang but prospects remained slim. Wulani recalls having to cheer up her husband when life was looking gloomy. “We've come here from Semarang in Central Java with just our clothes and the bags we carry,” she recalls telling him. “We survived, why should we be afraid of the future.”

Wulani had the confidence to see they had more than enough to start a business: experience in the metal industry, land, a network of friends and business partners and enough money to survive. “I knew my husband understood metal, so why not just produce metal roofing as a business,” she thought. In the beginning they sub-contracted production, turning out just 50 pieces of roofing iron a day. It was often not enough to cover costs and Wulani used the family's savings to pay staff wages.They made little headway in the first year and in 1995 were still turning over just Rp8 million per month.

Turning Point

Then came a major turning point that would shape the family's future and that of Indonesia's construction industry. The couple invested Rp15 million to participate in an industry exhibition, their first brave step in advertising and promotion, now a crucial factor in their business development. The bet paid off, with a visitor who worked for rising conglomerate Chairul Tanjung showing interest in Wulani's product.Yarry says they were shocked when he ordered three containers of roofing iron (45,000 pieces) at a value of Rp562.5 million (at the exchange rate of the time worth $375,000). Working around the clock, they upped production and finished the order on schedule in three months.

Over the next year production doubled and in 1996 Yarri asked his wife to quit her job. It was a decision that weighed heavily on Wulani, who had started with nothing but determination and worked her way to the top of Hasil Group. She had just been offered a $10,000 salary package - enough for the small family to live on comfortably - but the burning desire to run her own business was strong. She joined her husband, managing stock, settling debts, organizing sales, distribution and much more. “One of our big problems was a messy administration, the stock system was disorganized,” she says, shaking her head.

In 1997, the business grew significantly on the back of a good reputation and strong networking which helped Wulani seek support from banks and metal producers such as Australian giant BHP as a supplier of raw material. In 2000, Wulani and Yarri pumped Rp300 million into advertising on two national television stations. Most of their market was outside Java and not affected by the financial crisis, and the television advertising made a major impact on sales - a trend that has continued as the company's media budget increases.The company has continued to grow and now has three factories in Cikarang and Cibitung producing more than 2.5 million pieces of roofing iron each year.

With ISO 9001 certification, the company has improved its production process to meet increasing demand in the local market. “The three factories are not sufficient anymore and we are planning to open new sites. We already have 2.5 hectares of land and are waiting for the right time,” Wulani says. Wulani and her husband have been showered with private sector and government awards and, through their major main supplier, Australia's Bluescope, have become the biggest buyers of roofing iron in Indonesia. They now have four major branch offices, 31 provincial distribution centers and 3,000 outlets across the country, controlling more than 80% of the Indonesian market.PT Tatalogam Lestari is still run as a family business, and Wulani still comes to the office to help her son, Stephanus Bagus Pambudi, with administration and information technology.

An independent observer sums up Wulani's strength of character: “She's nothing short of brilliant. She knows just how to market her product and advertise building materials with major impact. And she understands where there are limitations. Let's not forget - Wulani and her husband have built a construction giant from next to nothing.”

Top of Her Class

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-22 Juli 2008. Evie Ngangi is obsessed with providing a brighter future for young Indonesians – and steering women into high level management. The celebrated author of Don’t Just be a Housewife says it all starts with education. Former model Evie Ngangi has been busy travelling to Batam, Riau, Balikpapan and East Kalimantan expanding her education portfolio under the holding company Tunas Jakasampurna.

The 46-year-old mother of six has already franchised her educational system and now plans a unique new venture with local governments that could see Tunas schools multiplying across the nation.“I am lobbying regional governments for cooperation. These local governments will provide land while I will provide the infrastructure including the curriculum on a fair profit-sharing basis. I’m convinced it will work,” Evie told GlobeAsia.

A graduate of the Indonesian Christian University (UKI), Evie says she wants to establish training centers using under-utilized and vacant buildings in Batam to provide short-term vocational education in a bid to prepare skilled manpower in areas such as welding, cellular phone technology, nursing and shipping.Evie, nominated as one of Indonesia’s most powerful women in 2006, admits she is obsessed with building the skills of local workers. She believes that with the implementation of ASEAN free trade in 2010, Indonesia must be prepared to compete with skilled manpower. If not, she says, foreign workers will dominate and Indonesia will be left behind neighbouring Singapore, Malaysia, Thailand and the Philippines. “We must prepare Indonesians to become masters in their own land.

It is also the only way they can develop as entrepreneurs,” she says.Evie started Tunas Jakasampurna Kindergarten in Bekasi, West Java in 1982. It now provides primary, junior and secondary education. Three years ago, under her former flagship PT Global Mitratama Perkasa, Evie set up A to Z Kindergarten and the primary school Kiwi Kids, both following international curricula. The same year, she set up a holding company, PT Global Interkompetensi, which teaches English, extra tutorials, a dance school and a wide range of other programs.“We started in schools but then we developed and expanded into other fields of education. We’re also open to options in expanding as regulated in our company’s basic stature. “This potential is being explored and this is also why we were able to work together with other parties under a scheme called KSO (operational cooperation).

Prominent entrepreneur Dewi Motik Pramono says Evie’s success is based on doing what she likes best - educating people.“She was my best student. I told her that teaching is a service to the nation. Now she provides working mothers with the opportunity to enter business by teaching their children at the earliest stage of pre-school,” says Dewi, who heads the Demono Entrepreneur Institution. According to Dewi, Evie is a larger-than-life entrepreneurial figure in a business based on her hobby.

“The best thing about it is that this is her hobby and it plays such an important role in promoting human resources in Indonesia,” Dewi says. “Nowadays we (women) must have the courage to compete as Indonesia offers many opportunities.”

Franchising

Evie franchised her operations three years ago, offering other schools and education institutions the chance to take advantage of her advanced curriculum and courses. Basing her system on three languages - English, Mandarin and Indonesian – Evie is convinced her schools are ahead of their time in Indonesia.Children are also taught through the popular montessori method, which has an “edutainment” factor – mixing education and entertainment - in conversation, reading, writing and mathematics. In kindergarten, children are given psychological counselling and parents are helped follow their child’s emotional development.

Parenting centers are provided so that adults are involved in the learning process.Evie says her partners and franchise holders are real entrepreneurs. ”It’s part of a public service to teach children,” she says, adding that she is careful in the selection process of investors. Before franchises are awarded surveys are carried out on location, together with market analysis. The character of the investor is also taken into account as Evie says she does not want the business to be purely commercial. Investors “must really love children,” she insists. ”I’m sure if franchising follows our procedures, break-even point will be achieved as planned,” she says. “My obsession is to see education in Indonesia on par with education in Singapore.”

Evie initially entered the world of property development at the tender age of 19. She has bought several apartment units in Australia and New Zealand. Her husband, Teddy Ngangi, own apartments in Germany and China. “I bought apartments which are close to campuses in Sydney and Melbourne. The market is for students,” she says, adding she also owns a flower business with an Indonesian friend who is now an Australian citizen.She declined to provide details on her businesses abroad, saying her principles are simple: “I’m happy as long as they are profitable and can support education projects in Indonesia.” And on her principle of business, she states that “if you are happy with what you are doing, you will succeed.”

Entrepreneurship

According to evie, the concept of entrepreneurship must be introduced at an early stage in education. Student potential must be nurtured and challenged so skills can be developed. “Education must lead to entrepreneurship. Indonesian human resources must be able to compete globally,” says Evie, author of Don’t Just Be a Housewife.As a founder of the Women Workers Education Institute, Evie says her biggest concern is “rights for women workers”. “My big goal is not just getting rich but helping people to gain skills. I believe that Indonesian women must be developed,” says Evie, who also lives up to her own philosophy by working as a university lecturer on entrepreneurship.

Eric Thohir moves on

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-25 Juli 2008. Erick Thohir's first business venture was in lime mining but his interests were grabbed by the media industry, in which he's carved a name for itself that attracted Irish major Independent News and Media. After seven years at the helm of PT Abdi Bangsa Tbk. Erick Thohir is moving on from his post as president director of the publisher of Republika daily. At a gathering with a handful of journalists last month, Erick explained that he had decided it was time to hand over his position to a professional after June 30. “If the shareholders' meeting agrees, I want to give a chance to the professionals to lead PT Abdi Bangsa,” he said.

Nominated to replace Erick is Rudi Lesmana, while Abdulgani, a former head of Bank Duta and a former commissioner of PT Garuda Indonesia, will be president commissioner of PT Duta Bangsa Tbk. Erick will remain the principal shareholder in Abdi Bangsa.Erick is not going far, at least in the short term, but some new partners present the opportunity for some major moves. ”I will stay at Republika daily newspaper as president director for the next two years,” he explained, but that too will eventually be handed over to professional management. PT Abdi Bangsa Tbk. controls media including the daily newspaper, Radio One, the production house Mahaka Visual, Republika Publishing (with the novel Verses of Love in its collection) and billboard operation Avabanindo Perkasa.PT Abdi Bangsa Tbk. has proved itself to be a long-term presence in the market.

Revenue has grown steadily from the level when the company listed on April 3, 2002. In 2007, the company gained revenue of $12,2 million, an increase of 18.5% on the year earlier.This steady growth was presumably a magnet that attracted one of the bigest media holdings in the world, Ireland-based Independent News & Media Plc. (INM). It sealed a deal for some 20% of a stake in Abdi Bangsa last May.”We are extremely pleased to be investing with Erick Thohir in Abdi Bangsa and to be part of the exciting and rapidly developing Indonesian media market,”Gavin O'Reilly the COO of INM, said at the time.According to Thomson Financial, INM's all-cash consideration for the 20% stake is being made through a rights issue of 170 million shares at Rp250 per share and partly through purchase of shares from an existing

shareholder. Erick, as the principal shareholder, will retain a 52% interest in the group.

The deal allows Abdi Bangsa to get $7.33 million from the rights issue, allowing it to move to acquire more assets. Among its shopping list is a share in PT Radioner Cipta Karya, which controls the top-ranking Prambors FM, Female Radio and Delta FM radio chains as well as Radio Nett media buying. And, says Erick, the management also plans to acquire PT Praisindo Teknologi, an IT solution company which controls and manages Rileks.com. The acquisition is designed to contribute to the development of Republika Online.

A part of the cash will go to working capital and a boost in participating capital in the Republika and Mahaka billboard business units.

Mahaka Media

Erick cannot be separated from the Mahaka Media Group, the force behind PT Abdi Bangsa. Mahaka was established in 1993 by Erick together with his old friends M. Lutfi (now chairman of the Investment Coordinating Board, BKPM), Wisnu Wardhana and R. Harry Zulnardy.Mahaka is Javanese for a good first step, an appropriate name for the company they founded soon after they graduated from college. Initially, the company got involved in lime mining. It then shifted to manufacturing, plantations and trading. Erick, meanwhile, got more involved in what became the company's media division.

Today, as an established presence in the media industry, Erick has a lot of plans in his head. An early move will be for Jak TV to set up a partnership with the largest local TV station in Indonesia, Jawa Pos Televisi (JTV). ”Pak Mashuri (Himawan Mashuri, the president director of JTV) is here, helping us operates Jak TV,” says Erick.JTV, Erick added, will continue to control a stake in Jak TV but he refuses to mention the amount, though admitting it will not be more than 50%. The tie-up was irresistible for Jak TV. ”Up until now Jak TV has been lost.

It has been hard for it to be great on its own so it is better for Jak TV to create a partnership with JTV, which already has 11 TV stations,” Erick says.Indeed, since the government introduced the Broadcasting Law in 2002, many local TV stations emerged. According to Jimmy Silalahi, executive director of Indonesia's Local TV Stations Association, there are currently 200 local TV stations in Indonesia. The bad news is that most of them are bankrupt, with only a lucky few still surviving. Among them are JTV and Bali TV, which belongs to the BaliPos Group.TV One is slated to go public soon. ”We may float in September but it will certainly be before the end of this year,” says Erick, a proud father of four.

Yet, before TV One goes public, Erick plans to make it bigger by adding more media to the mix within the VMA holding company. Erick's partner in VMA told GlobeAsia that VMA will offer 25%-30% of its shares to the public. The funds will be used to develop TV One, he says.”We have discussed putting ANTV and Kanal One underneath VMA,” Erick adds. Kanal One is a news website which will be launched in the near future. Erick predicts that if ANTV and Kanal One become part of the VMA portfolio, the company's assets will rise to $315,2 million. Jak TV and Gen FM radio will also join the VMA stable, making the IPO a major media offering.

TV One

Historically, TV One is no new TV station. Formerly it was Lativi, a national private TV station which belonged to Abdul Latief, a former minister for labor and transmigration. PT Lativi Mediakarya was established in 2001 but failed to attract advertisers because its audience for its mix of crime and horror shows was in the wrong economic group. Latief sold Lativi to the three young entrepreneurs - know as the three musketeers - to focus on his family's core business.The three moved to buy the station after Capital Managers Asia Pte Ltd (CMA) paid $45.4 million to Bank Mandiri in 2007 to cover Lativi's debts. CMA is a financial institution based in Singapore and connected closely to the Bakrie Group. In 2004, CMA invested $27.2 million in Bakrie Telecom (Esia) and is a minority shareholder in ANTV.

Erick admits that it is not easy to manage TV One. The change of name was an essential step, but a change in image was equally important. “We have to change the positioning from CDE (middle-down) to be ABC (middle-up),” he says.
Gone are the horror films, eroticism, crime and magic shows. TV One now presents 70% news with the rest of its programming dominated by sports and entertainment shows. In the first week of June, the TV station won a rating of 5.1, enough to put a smile on the face of the three musketeers.Transforming the station didn't come cheap: Erick, Anin and Rosan had to put in $141.3 million to give the station a chance in the tightly competitive Indonesian television market.

Think globally, act locally

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-29 Juli 2008. Think globally, act locally After finishing his studies in San Francisco, Julius O Ruslan faced a life-shaping decision: would he work in Hong Kong, where his parents lived? In Singapore or Indonesia - the country of his birth? Julius chose Indonesia and in a little over a decade has built a multi-media empire with diverse interests under his Milestone Pacific Group. “I had not spent much time in my motherland, but I chose to live and work here where I was born. Indonesia is the land of opportunity where I learned to be an entrepreneur,” Julius told GlobeAsia.

Now 34, Julius first dabbled with billboards in Singapore but after graduating from Notre Dame College in California, he made the decision to establish PT Level Delapan Utama, better known as Level Eight Media. After eight years in the billboard business, he has proven that doing business in Indonesia was the right choice.

Diversified interests

Julius lives life in the business fast lane. As owner of the Milestone Pacific Group he also publishes Inspire Kids magazine and runs a public relations company and an entertainment management firm. He owns the House of Ipoh and Ipoh Express restaurants and the Black Cat, a renowned jazz club in Jakarta. His lifestyle holdings include Home Max, selling high-end Hastens mattresses popular among the rich of Europe and the Middle East.

In Indonesia each mattress sells for between Rp150 million and Rp700 million.This year, Julius plans to publish Inspire Living magazine and is negotiating to acquire two other world class magazines. He also plans to distribute his Inspire Kids magazine in Malaysia this year. “I won't do business unless I have a partner who's good in the business so that I can learn too. But in each business I own, I am always the chief vision officer (CVO),” he says.

Key factors

Julius sees future success based on teamwork, horizontal integration, modern management and an attack on bureaucracy. At Level Eight, divisions are led by experts in their field with a strong emphasis on youth. “I trust young professionals, they are more dynamic, I hope they are above corruption. Anyone can be the number one in a company but it's the brand that counts, not me as the owner. Level Eight Media is the only billboard company with an ISO 9000 certification,” he says proudly.Julius started his business "from zero" and now sees his most important task as preparing for the future. “It's my job to draw up the strategy and chart the direction of the company,” he said.

The second key factor of success is to "think globally, but act locally". "The company is open to new technologies and strategies which originate from abroad but that does not mean turning 100% foreign," he says. In fact, Julius prefers to use local values. “We need to adjust the strategies to accommodate Indonesian culture. As the old saying goes, When you are in Rome, do as the Romans do."On a personal level, his main goals in life are making his family happy, making the company successful, staying healthy and remaining high-spirited.

Danny Wirianto, CEO of Semut Api Colony, says Level Eight Media is known to be innovative and aggressive. It was the first in Indonesia to use Larger Electronic Display (LED) screens for billboards. “They are innovative and successfully brought new technology to the billboard industry,” Danny says, adding that Level Eight has modern management with quality operating procedures.Julius owns and operates LED billboards on Jl. Asia Afrika, Senayan, the Stock Exchange and at Mal LaPiazza Kelapa Gading: all strategically located in the capital.

On innovation, Julius says that when he decided to enter the billboard business, he tried to offer something different and new to Indonesia. Many advertising companies were taking the conventional approach by looking for clients first, but Level Eight hunted for strategic locations first, then looked for suitable clients. “You can say that we changed the business pattern of billboard promotions,” he says.Julius admits it is difficult to find good locations for billboards because of limited space in the big cities. “Unfortunately, we can't create space.

Locations with a good view are also difficult to find unless the government builds new road projects. But the fact is, demand for billboard promotions is increasing.”

Steering for Expansion

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-15 Agustus 2008. As one of Indonesia's best-established and most influential media groups, Kelompok Kompas Media (KKG) is expanding into industry and property. Established in 1965, the group owns and publishes 13 newspapers, 16 magazines and tabloids and runs five publishing houses. The growth and success of the group's subsidiaries is largely due to the investment savvy of its founder, Jakob Utama, who has been seizing outside opportunities while staying focused on the group's core interests in mass media.“We are in heading in new directions but maintain our strong media focus.

Although growth in the non-media portfolio is significant, the bulk of revenue still comes from the media although assets in property and hotels might be worth more,” Jakob told Globe Asia. KKG owns Kompas daily newspaper - one of Indonesia's most respected dailies as well as a 50% stake in Trans7 television station, currently run by Chairul Tanjung's Para business group. The newest business unit is kompas.com which aims at becoming the largest portal in Indonesia. According to Globe Asia sources, the group has allocated Rp20 billion ($2.19 million) to develop the portal, which integrates the group's businesses and provides comprehensive multimedia services.

Convergence

“Like it or not, media convergence is a must if we want to be competitive, says Kompas CEO Agung Adiprasetyo.The web site will become a center of information services providing sophisticated features ranging from online media, photography, audio and video, and include cellular services.Since its launch, kompas.com has received millions of page views. The distribution of information also shows significant increase through the mobile services offered. Agung Adiprasetyo says providing space for advertisers in the group's print media has proved to be inadequate and kompas.com aims to provide extra advertising space on the internet.

The web-based operation, run under Kompas Cyber Media (KCM), also aims to develop an interactive digital market. For this, Kompas Cyber Media has signed a memorandum of cooperation with Group M Indonesia (GMI) to provide market analysis, case studies and other information. The group's corporate culture reflects Jakob Utama's cautious approach as founder and owner, especially when it comes to speaking to the press on the group's development. The companies under KKG are not listed and information on finance and revenue are never disclosed. Globe Asia estimates the group's total revenue reached $446 million last year.“Although Pak Jakob is now a top businessman, he is always cautious and he's still a journalist.

He knows how a reporter feels if he's asked questions but unwilling to provide the information,” a senior journalist who spoke on condition of anonymity told GlobeAsia with a smile.

Dreaming of Warren Buffet

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-19. Agustus Benny Subianto proved his value at PT Astra International Tbk., where he was instrumental in founding both Astra Agro Lestari and United Tractors. Now out on his own with his investment fund, he says the best lesson in life is “never stop learning.”With close links to automotive giant astra International and a founder of two of the giant's highly successful business units, Benny Subianto is now focused on his own investment vehicle.

As president director of PT Persada Capital Investama (PCI) the 66-year-old entrepreneur has set his sites on natural resources and commodities in coal, palm oil, rubber and plywood. PCI was founded in 2003 as a holding company for PT Tri Nur Cakarwala and PT Pandu Alam Persada. Benny and his family own a 50% stake in each. He is also a founder of PT Astra Agro Lestari and PT United Tractor, both listed on the Indonesia Stock Exchange.PCI has expanded its oils and gas interests recently through Interra Indo Resources, which operates oil blocks in Indonesia and Myanmar. In tourism and property, PCI is engaged in Bali and owns a construction company, trading houses, healthcare and financial services.“The growth in our company is more prominent in the coal and plantation sector,” Benny told GlobeAsia.

Last year, total sales for companies under the PCI umbrella reached close to Rp20 trillion, with the largest contributor PT Adaro, the second biggest mining enterprise in Indonesia, with sales of $1.1 billion.PT Kirana Megatara, a rubber processing company with production capacity of 400,000 tons a year, reported $740 million in sales.“The most impressive investment that we made was when we bought 12.3% of shares In PT Adaro because the return rate is high,” says Benny, adding he was encouraged to invest by Edwin Soeryadjaya, the son of William Soeryadjaya, founder of PT Astra International.A father of three, Benny says he is pleased with PCI's investments and growth, most notably in PT Adaro, Kirana Megantara and Truputra Agro Persada.

However, he concedes that several companies have not reached their growth targets, including PT Sapta Indra Sejati (SIS), a coal sector contractor.“It's troublesome handling these small companies,” he says. “PT SIS is suffering because of delays in the supply of new heavy equipment.”Teddy P. Rachmat, owner of Triputra Group, is Benny's business partner and a former president director of PT Astra International. He was also Benny's junior at the Faculty of Engineering at the Institute of Technology in Bandung (ITB).

Benny and Teddy - a cousin of William Soeryadjaya have enjoyed a 35-year business relationshipand strong friendship. “Benny and Teddy are like brothers who grew and developed together at Astra,” says a company insider.

Cost pressure

While close friends, their investment policies have followed separate paths, with Benny choosing to focus on mining and plantations. He believes natural resources have a competitive advantage in Indonesia. “The most important issue is surviving among all the new players in the booming natural resources sectors. It's based on how to become the lowest cost producer,” he confides.And, he adds, “looking for a business partner is like finding a life partner. We have to have something in common.” Benny says many companies offer him investment funds, but as head of a professional investment company he channels responsibility to his team. “In the end I'm the one who makes decisions but we all have a job to do.”According to Benny, there are three factors in developing a successful investment company.

First, investing in a growing business sector with long-term and strong industry trends; second, solid team management; and finally capital expenditure. “We are now trying to be that kind of company. Our most successful investment is Adaro because of the high returns, along with the other coal-mining companies. But we also have had investment in ventures like Hotel Cipta, which has been sold to Siswono Yudohusodo.”Never stop learning is his tip to becoming a successful entrepreneur. Benny says he will never forget a speech by Vietnam's former president Ho Chi Minh delivered at ITB.“He said that at the moment you graduate with a bachelor's degree, that doesn't mean that you've finished your school, you've just begun your last school, which is the school of life.” Benny has big dreams for PCI.

He wants to be like Warren Buffet, one of the richest men in the world, worth $62 billion through his investment company Berkshire Hathaway. “Warren buys stock in world companies such as Coca-Cola, Wells Fargo, and Kraft Food through Berkshire Hathaway. I want to have many investments just like him. I want to develop Persada Capital Investama just like Berkshire Hathaway.” he says.

Inspiring traditional innovation

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-09 Oktober 2008Indonesia's traditional art and crafts are getting a modern makeover from new retail outlets that are at last beginning to appreciate the hidden talents of the country's craftsmen amid growing demand among young and trendy buyers. Alun Alun Indonesia is ahead of the curve. In small towns and large cities across Indonesia, commercial life is centered around city squares, the alun alun.

This is where traders come to sell their wares and buyers look for bargains, where the hub of economic activity is at its most intense.It was at the alun alun that Indonesia's craftsmen also offered their work for public scrutiny and appreciation. According to Joop Ave, Indonesia's former minister of tourism who recently launched the book Indonesian Arts and Crafts, it is often the poorest people working far from the media spotlight who produce some of the country's finest designs and items in traditional arts and crafts. Unfortunately their work is underappreciated and often tucked away in dusty corners.

“I remember visiting a poor desa (village) in Lombok where the local women produced the most beautiful cloth I have ever seen,” he notes. “It was of such quality that it would immediately be on show at some of the best museums in the world.”According to Joop, some 20 million Indonesians earn a living from the arts and crafts industry but the sector receives little support, especially from modern retailers who prefer to display contemporary fashion.That may be about to change with the revitalization of the Pasaraya shopping complex and the opening of Alun Alun Indonesia, a modern retailer specializing in Indonesian arts and crafts. The 5,000 square meter store in Jakarta's central Grand Indonesia retail complex houses more than 1,000 items from across the vast archipelago, ranging from batik and traditional cloth to jewelry and antiques.

The store has a special corner for upcoming young Indonesian designers who want to experiment with marrying traditional patterns with more modern designs, especially in clothes.“The idea came to us about two years ago when a group of friends got together to explore how we could promote arts and crafts at the same time President Susilo Bambang Yudhoyono was talking about promoting the creative industries,” says Catharina Widjaja, managing director of Alun Alun Indonesia. Minister of Trade Mari Pangestu has worked hard to encourage the handicraft industry and also inspired Catharina and her friends, who include Pincky and Dea Sudarman, the owners of Gedung 28 in Kemang, and Cherie Nursalim. “We wanted to have a space that is like a stage and we focused on the aesthetics based on our passion and love for Indonesian arts and crafts,” says Catharina.

A place to call home

Since opening a year ago, Alun Alun has proved a hit with both the artisan community and shoppers, especially those from the expatriate community. By supporting nearly 1,000 vendors from across the country, 55% of them operating small- and medium-sized enterprises, the store is seen as a welcome face for an industry long accustomed to being shunned.By paying great attention to packaging and display, Alun Alun can elevate the image of Indonesian arts and crafts and add greater value, says Catharina. The store works with the community to create items that are popular with buyers in order to provide benefit for everyone.

Unlike other retailers, Alun Alun pays attention to details such as describing items and their origins; displaying them with proper lighting; ensuring the store layout is easy to navigate, with special corners for products from different parts of the country.Catharina admits that creating Alun Alun has been an eye-opener in terms of discovering the richness of Indonesia's culture. Even with its range of products, it has yet to fully penetrate the eastern part of the country which has its own unique cultural identity.“Many local artists now use Alun Alun as a benchmark for creating designs and items,” she notes. “We try to work with them to improve the designs by telling artists what is saleable and what customers want.”

She adds that with older Indonesians still resistant to paying a higher price for such items, she is focusing on serving the expatriate community and younger Indonesians. “That is why we try to be less ethnic and more contemporary,” she says. “If we can get 10% of the market, we will be quite happy.” With the creative sector expected to play a larger role in the country's gross domestic product going forward, it currently contributes about 5% to GDP, so marketing and proper promotion will be critical.

According to Catharina, Alun Alun is already studying the possibility of expanding to other Indonesian cities as well as overseas. A store has just opened in Bali and the company is looking to open in Kalimantan soon. It is also working on a website to sell its items through e-commerce.“Certainly we have to have more presence and visibility both at home and abroad,” Catharina notes. “We also need to expand our product range and make better use of our store space to display the items.”Alun Alun already has a full schedule for the rest of the year with events and shows highlighting the richness of Indonesia's arts and crafts.

This month a group of upcoming SMEs that have yet to show their goods at the store are being given the opportunity to show off their designs. In November, a large pearl exhibition is planned to showcase Indonesia's significant pearl industry.“It's very encouraging but it's still a learning process for everyone involved,” notes Catharina, who adds that Thailand has had a head start on Indonesia in promoting the native arts and crafts industry and in the process developing modern marketing concepts. Indonesia can also take a leaf from the Thai book and elevate an industry that has in the past played second fiddle to other economic sectors, she believes.

Agent of Change

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-15 November 2008. F.X. Bambang Ismawan, 70, has been a pioneer of the people's empowerment movement in Indonesia through the foundation he started in 1967. Since then he has helped to make social entrepreneurship a fashionable trend in national development. It operates as a foundation, is committed to building a better Indonesia, but expects to turn over Rp300 billion ($30 million) this year. It holds majority shares in more than 17 companies, benefits million of people from its activities in training, agribusiness, tourism, banking, microfinance and consulting.

The Bina Swadaya Foundation (YBS) founded by F.X. Bambang Ismawan, now 70, has become one of the largest agents of development in Indonesia, working with a range of major organizations in promoting social entrepreneurship.YBS represents the life's work of the man who walked out of Yogyakarta's University of Gajah Mada as a graduate in economics in the early sixties. Instead of going to work in government or the private sector, young Bambang chose to immerse himself in the Pancasila Movement (Gerakan Pancasila), backed by the then bishop of Semarang, the late Mgr. Albertus Soegijapranata. “I had been inspired by an old Dutch priest, Father J Dijkstra, SJ, who was working in rural areas of Java. He went into the villages, talking and motivating rural people, discussing many things about development activities,” recalls Bambang.

In 1967, together with the Pancasila Farmers Association (Ikatan Petani Pancasila), he set up YBS. With Suharto in power, Bambang followed the rules of the country's new president and aligned his new foundation with the farmer's association Suharto fostered, Himpunan Kerukunan Tani Indonesia (HKTI), which still exists today. To Bambang, what was important was to do something positive. “As a member of society, we can not just look at poverty, we cannot only ask and encourage the state to deal with it. If we can do something, we should not shout in the darkness when we could be lighting a candle,” he says. Over the years, YBS became an incubator for business and an institute of social and economic development, building social laboratories in rural areas. “This formula became a serum for development activities in Indonesia and we became involved with many government offices, helping them to design programs for community development,” says Bambang.

The foundation has worked together with the United Nations Family Program (UNFP) on the National Family Planning Coordinating Board (BKKBN) to promote small families in Indonesia by involving woman. “For almost 41 years YBS has been an agent of change for development,” Bambang says proudly. YBS's work, he believes, has contributed to the acceleration of efforts to alleviate poverty, the creation of productive employment and social integration.

Professional first

In Bambang's view, all social development activities should be run in a professional manner. For him, social entrepreneurship means social development activities which are carried out with an entrepreneurial spirit with the deployment of management and professionalism in managing the organization and its activities. “We have to be able to compete with large credit institutions, even with the large corporate groups,” he says.As a social agent, social entrepreneurship is different in many ways to individual endeavors, he believes. First, says Bambang, comes the perspective of product choice, whereby social entrepreneurship mobilizes a product not only as a means to make a profit but also as tools that can be used to empower people. An early endeavor of YBS was the publication of Trubus magazine in the early 1970s.

It didn't make a profit for 15 years but it did make many people aware of issues in the agribusiness sector. Trubus was so important as a means of spreading the message that Bambang set up a printing business to subsidize the magazine, with units including Penebar Swadaya and Puspa Swadaya. Also different is the use of profit. Unlike normal entrepreneurial endeavors where some profit legitimately goes to the entrepreneur, in this case all profit is plowed back into new business that also aims to improve development.

Vehicle for empowerment

YBS acts as an umbrella for a range of activities, controlling a majority of shares in all the companies in its stable. As an agent with a vision to empower society, YBS manages all of its business through three channels. First is product development. “We identify activities which have the potential to create popular products and work with research institutions such as the Indonesian Institute of Sciences (LIPI),” says Bambang. He notes that the researcher who cooperated with YBS in work on the buah merah (red fruit), Drs I Made Budi, became popular as a result of the program of cooperation. Buah merah itself is now recognized as a powerful herbal medicine and is producing good returns for small-scale farmers.

Trubus articles have made Adenium and Aglonema popular plants among gardeners, also creating job opportunities. All this, Bambang says, has occurred as part of the domino effect of YBS's social development programs. The foundation's second channel is institution building, through the formation of an institute of social empowerment. Bambang believed that poor people can always learn something from their friends, so through YBS he established learning centers to mobilize such grassroots resources and marketed the learning model to many parties, including government. “We train people from any organization or corporation, government as well as non-government organization.

Now all our team members or trainers are mobile, providing training in many fields in many parts of Indonesia, organized under PT Bina Sarana Swadata.”The third channel is through micro-finance support for some of an estimated 41 million micro-enterprises that exist in the country. To support this function, YBS has established four people's credit banks (Bank Perkreditan Rakyat - BPR), in Lampung, East and West Java and Banten, and established cooperatives at regency level as well as 12 dedicated micro-finance institutions. In many ways, YBS subsidiary PT Dana Mitra Swadaya, formed to control management and shares in the micro-finance business, is a home-grown Indonesian Grameen Bank, a la Bangladesh. Bambang says that 30% of profit from the micro-scale businesses goes back to YBS, 20% is set aside for employees, while the remainder is used to strengthen capital.

All the business units are controlled 100% by YBS.Bambang embraces change as a philosophy in running the organization, while maintaining the strong intention to empower people. “We are dynamic, and respond to many opportunities, but our mission to empower people is the top objective of all our activities,” he insists. And, he adds: “We also have a rule that everyone should retire when they reach 70, which means we have to prepare a succession. We also build an organization culture through embedding the values of YBS over a long period.“We set up management development programs to prepare leaders in each unit of our business.

This way we do not need to be afraid of becoming the biggest organization but losing our mission.” Since its inception in 1967 YBS has helped motivate more than 100,000 people. Soon that number could reach 1 million, all people who have received training, empowerment, micro-finance, leadership and many more services. Indirectly, as many as 10 million people have benefited from the program.

More work to do

Even though Bambang has reached the official YBS retirement age, he is not prepared to stop working just yet. Even though the foundation he started has become the largest social agency in Indonesia, he still dreams of expanding its work. “We are building networks with other organizations including at the micro-credit summit in Washington,” he notes.The foundation is active in the official micro-finance movement in Indonesia, Gema Pengembangan Keuangan Mikro (PKM). “We have had two national meetings in micro-finance and an international micro-credit summit in Bali, which successfully drew more attention from many parties,” Bambang notes.Since 1998, Bambang and his colleagues have worked to redefine the future of the organization, directing it more into an agency concerned with the development of the spirit of social entrepreneurship. “The change has not been by design but as a response to the changing environment.

So the soul of commitment to community development and the way to do it changes over time,” Bambang explains.As a pioneer, he is not worried if his model is duplicated by other organizations. “It has been our mission to help people become active in social empowerment. This is what we are, an empowering institution, an agent of change.” There is no shortage of praise for Bambang's work. Nani Zulminarni, national coordinator of PEKKA, a group that works with families headed by women, says YBS has been playing an important role in empowering people, especially the poor. “In the eighties, YBS had become a school for social organization and I was one of its students,” Nani recalls. She credits Bambang with helping to educate people to establish organizations to empower people.

As a social entrepreneur he has built wide networks across the country and run the organization professionally, creating many more social entrepreneurs. Nani believes Bambang's work should be taken further. Social entrepreneurship should become a national movement fully supported by society, she says, as long as social entrepreneurs must show that they are professional and skilled in organizational empowerment.And, she stresses, they cannot do all of this on their own. They need more supporting systems, capacity building and financial resources. “After all, they are doing the government's job for it,” she says.

Coming of Age

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-22 Desember 2008. Given the current economic environment, any increase in economic activity - let alone advertising - would be a surprise. Beating the trend, interactive advertising on Indonesian Internet sites shows the new web-savvy generation has come of age.As the lifestyles of Indonesians change and people seek to satisfy their needs with the least amount of waste of time and energy, the Internet with its inexhaustible information database has become the source of consumer service for products ranging from toiletries and cosmetics to cars and homes.

A number of big websites such as www.jual-beli.com and www.pasarbaris.com have developed expertise in serving consumers effectively as well as snatching a sizeable portion of advertising revenues every year. Several other new websites are serving web surfers, happy to get up-to-date information on what is happening in and around Jakarta.

What's on in Jakarta

The www.whatsnewjakarta.com is a well-designed, comprehensive website which aggressively keeps abreast of what's new in Jakarta, as its name promises. Deisy Wong, the creator of the website, says she got the brainwave to create the website while on holiday in Cambodia. Judging by the 24,000 email addresses in her archives over the past three years since opening the site, she seems to have succeeded in giving Indonesians a hip and detailed website where they can log on to for day-to-day needs.“We get 40,000 hits a day and in January 2008 we measured 9.2 million hits,” says Deisy, who plans to change the site's design this year.

The web site offers the latest events, cinema, nightlife and restaurant information besides a large data base of other useful information for the `Jakartan.' The large number of advertisers is impressive too including service companies and numerous well-known restaurants and clubs.

A new component is the garage-sale section where just anyone can get information on where the next garage sale will be held. “One man's rubbish is another's treasure,” goes the saying and people love to flock to garage sales to get good quality items at great bargains.

Advertising on-line

Indonesia's on-line media have seen a surge in advertising dollars and the next few years also look positive. Nukman Luthfie, CEO of Virtual Consulting, speaking at the `New media: The end of conventional media?' seminar in Sanur, Bali, recently, says the share of on-line advertising will inevitably grow. ”Currently, the share enjoyed by the on-line media is quite small but the situation is set to change in the next few years as the on-line media will acquire a bigger share of advertising budgets.”Advertisers are expected to keep spending on on-line ads especially in an economic downturn because they feel they are paying for ads that are performance-based.

It's easy to track when a consumer clicks on an ad to visit an e-commerce site, and advertisers can feel the presence of the consumer by just watching the number of hits on the web site.

The new awareness of the value of an on-line presence is driven by the growing level of Internet use in the country. Out of a total 30 million users in Indonesia about 44% surf the web everyday, spending an average of two hours a day on-line.Data released by Zenith Optimedia states that the share of on-line advertising will see annual growth of 23% during 2008-2010. At the same time the advertising shares of newspapers, magazines and television media will gradually decrease.Hartaty Budiman, product manager of the JobsDB website, says that the most popular product for on-line advertising is banners placed directly on the front page of a site.

Eddy S. Tadja, managing director of JobsDB, says one advertisement placed by stationery company Standard Ballpoint won 4,113 hits in its first two weeks in the public domain.“Several multi-national companies are very satisfied with the responses they have received to the ads they have placed on the web site,” he says.JobsDB Indonesia itself is a part of JobsDb.com, the Hong Kong-based provider of online recruitment services in the Asia-Pacific region.

Security

While web shopping has its upside, there are also downsides. Given the lack of ability to inspect the merchandise before purchase, consumers are at a higher risk of fraud on the part of the merchant than in a physical store. On the merchants's side, there is the risk of fraudulent purchases using stolen credit cards or repudiation of an online purchase payment. As the web is accessible at any time to anyone, workplace on-line shopping has given rise to the problem of reduction in work efficiency.

ISACA, a non-profit association that serves more than 86,000 IT security, assurance and governance professionals globally, has carried out three simultaneous surveys (two in the US and one in the UK) to look at the latest trends in on-line shopping and workplace Internet safety. A mere 21% of respondents said their organization's employees fully understood the risks associated with shopping on-line from their workplace computers. More than 82% said their organization either does not have or they are not aware of a policy that prohibits employees from shopping on-line. There was also an expectation that there would be more on-line shopping from the workplace than last year, with over 51% predicting an increase. Only 32% of organizations that allow on-line shopping educate employees about the risks.

Slightly over 31% of organizations prohibit using a work e-mail for on-line shopping or other on-line non-work related activities, even though allowing the use of work e-mails can expose the organization to greater volumes of spam.Back in Indonesia, industry players say there is a discernible requirement for better consumer satisfaction with on-line services, which need to concentrate on more than just profitability. On-line monetary transactions via Paypal also need to become more user-friendly to Indonesians as they learn to trust secure web sites with their credit card details. Very few websites have this level of security and for the moment rely on bank transfers.

There is a long way to go for all the problems in the industry to be sorted out, and in the meantime building and operating web sites remains a costly affair that has to provide tangible returns to the investor.From the consumer's point of view, although it is heartening to know we will soon be able to punch a keyboard and order anything on-line, it is also important to feel secure in the knowledge that our confidential information will not be leaked to the many fraudsters lurking out in cyberspace.

Creating Casa Bella

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-30 Januari 2009. Indonesia’s wealthy elite expect to be pampered by retailers of high-quality home furnishings and Winten Wilaras has created a booming business by doing just that. For Winten Wilaras, 44, creating a beautiful house is not a big deal. Her ease in tackling the task is not because of her training, although she holds an interior design degree from an American university.More important, she says, is her love of designing house interiors.

Winten is the owner and founder of Casa Bella which, in both Italian and Spanish, means beautiful house.Visit her retail furniture outlet at Darmawangsa Square Citywalk, South Jakarta and you will be amazed by her range of classic European, American, modern and modern classic furnishings. Or visit her decorations at Bellagio or Hampton’s Park apartment show units.In terms of price, each item is matched to its beauty. A dining room set, for example, costs as much as a simple house. “That’s because we provide imported furniture which is limited in amount,” Winten, a mother of two, tells GlobeAsia.Among the branded furniture she imports from Spain, Italy and the US for her A+ target customers are Hurtado, Tecni Nova and Nicoleto.

She also provides auxiliaries or loose furniture pieces such as trays, armchairs, lighting and key accessories such as carpets, paintings, photo frames, wallpaper and curtains.Extraordinary growthWinten started her business in 1997, just when the Asian monetary crisis started to hit Indonesia. She’d just returned from the US with her husband and daughter, where she had spent 10 years involved in the hotel industry. Moving from one city to another there had made her more confident and flexible.“I told my husband I didn’t want to stay at home all the time, taking care of our children and waiting for him to come back from the office. No way,” she recalls.On February 22, 1997, Winten commenced her furniture and interior business with the opening of a 150-square meter Casa Balla store with four workers at Taman Anggrek Mal.

In 2000 she opened a second retail outlet at Ratu Plaza furniture center. The 500-square meter outlet employed 25. “In three years, I saw significant development in my business,” she says proudly.Another four years on, Winten made a much bigger expansion by moving to Darmawangsa Square Citywalk, her present retail outlet. The 1,500-square meter space needs at least 100 employees. “It is a blessing and an achievement,” she says. “I set this business up when the monetary crisis hit,” she says of the rocketing growth of her business. Casa Bella has also expanded to include interior design work and selection of furniture. Together with the Pikko Group, the developer of the Hampton’s Park apartment project, Casa Bella opened a representative office to provide furnishing needs of apartment dwellers. “At Hampton’s Park the units are small and occupied by the younger market segment so our customers there prefer the modern minimalist concept,” Winten explains.

At the Bellagio apartment, customers prefer classic design interiors.For this service, Casa Bella charges at least Rp1.5 million to Rp2.5 million per square meter. For a two-bedroom apartment of about 100 square meters, the charge is at least Rp100 million.The rich are specialWinten predicts the real estate business in Indonesia will grow better and bigger compared to the 20,000-25,000 apartment units that were built between 1988 and 1999. “From 2008 to 2010, 50,000 apartment units will be developed. That’s why I believe in this business,” she says firmly.The current global financial crisis is of no concern to her, she says.

It will make ‘high-end’ people more selective in spending their money. In any case, she adds, very rich people prefer to wait and see until a better season arrives.Winten states that a service company must focus first on customer satisfaction followed by price, quality and time to finish a project. “I can say that our success is based on customer loyalty. They already trust us,” she says.Without mentioning names, Winten says most of her customers are business people, the wealthy elite and dignitaries who require special treatment. “Usually, they never come during office hours. Each time they come here, I have to send my crew to present our interior design concept at their house. I do it all the time and 50% of my business is done this way,” she admits proudly. According to the Ministry of Trade’s 2007 data, imported furniture is growing annually by 5%-10%.