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Toward Indonesia As Entrepreneurial Nation


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Toward Indonesia As Entrepreneurial Nation

  1. 1. LAILI AIDISSES Entrepreneurship in Developing CountriesToward Indonesia as Entrepreneurial NationEntrepreneurship is the backbone of economy of a nation. This is supported by thefact that the most triggers to the development and innovation comes fromentrepreneur community [5]. Muhammad Jusuf Kalla, one of Indonesian leadingentrepreneur and former Vice President of Indonesia during 2004 - 2009, in one of hisspeech made statement that, the efficient booster of Indonesia’s development isincreasing number of its entrepreneur [1]. The important role of Indonesia’sentrepreneurs can be seen during economic crisis in Indonesia and most of south EastAsia countries in 1997 – 1998, as 95 % or around 43 millions of Sektor Usaha Mikro,Kecil dan Menengah (UMKM) or Micro, Small and medium Enterprises in Indonesiashowed big potential to survive [5]. This number just did not stop until that fact, aslater 99% from the total of entrepreneur in Indonesia that survived during economiccrisis were these UMKMs [5]. This sector gave huge contribution to the Indonesia’seconomic development, and we can see this from the number of new start up businessand job creation it made, as UMKMs gave 54% - 57% income to the country and itscapability to absorb new employee were 79,04 millions or around 99,44 % from totallabour market of this country at that time [5].And today, Indonesia only has around 400 thousand entrepreneurs from total 237,8million of its citizen, or around 0,18 % [2]. This number is still far away from ideal,as to be developed economically, a country needs at least 2 % to be able to drive itseconomic growth, as what can be seen in developed country [2]. According to theBadan Pusat Statistic (BPS) or Central Bureau of Statistics of Indonesia, theunemployment rate in the country has reach 8,32 million or 7, 68 percent from itstotal citizen, as there are 116,5 million labour market but only 108,2 million availablejob opportunities [3]. As a comparison, the government of Indonesia currently onlyable to employ around 7-8 million from labour market to be government employeewhich is spread as public officer, teacher, military officer, police officer and state-owned enterprises, which is not significant to be the main source of job opportunity[3].    This country at least needs 4 million young entrepreneurs to achieve its 2 %entrepreneur rate, not more new graduates and young people who will only want tofind job and become employee. We can still see that number of Indonesia’s domesticworkers has been increase year by year, which now almost reach 6 million, and mostof them do not have adequate levels of education and work in informal sector such ashousemaid [8]. There are also various social problems ranging from violence, sexualabuse, and rape to murder that afflict those workers [9]. All these facts clearly showus that there is lack of job opportunity in Indonesia’s domestic. Soon, if the number ofthese Indonesia’s domestic workers with adequate levels of education keepincreasing, then this nation will be only known as world supplier of unskilledlaborers, where its government cannot protect them but only protest when its citizensare tortured and suffers violations of human rights [9, 10], which would be a bad factconsidering Indonesia is a big nation, and its natural wealth and another hugepotentials. From these simple facts above, we can clearly see how importance the roleof entrepreneur in Indonesia’s economic, as entrepreneur activity implies to theeconomic progress. Entrepreneur is the party who opens job opportunity and also paysthe tax, as currently nearly around 75 % of Indonesia’s government’s incomes comefrom corporate tax [4].     1  
  2. 2. LAILI AIDISSES Entrepreneurship in Developing Countries  Moreover, Indonesia provide big opportunity to its young entrepreneur to grow up asthis country has almost everything that what can be expected from mother nature,supported by good weather all year around. The climate, large area of land and sea,and also natural resources, combine with large amount of population are importancefactors that should can drive Indonesia’s national economy. The demand for good andservice is also high in the world, as the population of this country is 237 million,which means there is high purchasing needs. Furthermore, another importance factalso can be taken into consideration are Gross Domestic Product of this country whichis nearly reaches 700 million USD [3]. Thus, we can conclude that there are a lot bigresources in Indonesia that have great potential to keep growing, for example inagriculture, Mining, Industry and Services fields.    There are so many natural resources in Indonesia that still ‘untouchable’ byinnovative local entrepreneurs. For example, Indonesia’s is one of the largest exporterfor the timber, rubber, cocoa, tea, coffee, etc but the best exporter for paper product,chocolate, wheel, etc in the world is not from this country, and we can also comparewith the number of import activities for those products which that the main sourcesare from timber, rubber that come from this nation. Jusuf Kalla ever said that theslowly progress of Indonesia’s economic is because Indonesian tent to sell materialrather than put value added to the natural resource, but indeed they tent to export it tothe other countries [6], as this gives faster turn over, then only make this country asconsumer to more expensive and valuable products. There are also several importantaspects that make entrepreneurship activity in Indonesia become challenging, such asa poor regulatory environment, which has lack of transparency and consistency in theimplementation level, Inefficient and corrupt legal system, unclear manpower law,etc.  The process to produce local entrepreneur ideally has to be started as earliest stage aspossible, for example during academic period, as early stage as possible. However,this is not generally happen in Indonesia, as the pattern of education system in thiscountry leads its students to become employee, not as entrepreneur. The climate forentrepreneurship in general is also not really supported by the current environmentaspect, as most parent and community respect people with safe career and prejudicewith how much property that they has, such as car, house, mobile phone, etc. Thenumber of wealth that can easy to be seen become important part to assess a person inthe community. For example, then there is marriage, then the community will identifythe bridge (mostly, the man), by who is his/her parent, what does they do/work, orwhere does the bridge works, etc. Thus, it is not surprising when most of younggraduates in this country prefer compete to find best job in respected company orgovernment office and start to boosting their career as soon as possible rather thanstarting to build their own small company and take high possibility to fail and longturn over. This can be seen as 82% from total number of graduate university who getwork are as employee [4].    Director General (DG) Small and Medium Enterprises, Department of Industry ofIndonesia ever made statement that the world economic power in the future will beshifted quickly from the west to the east, mainly to China and India, as at that momentthe possibility of China and India will contribute more than 100 of the worlds 500largest corporate [7]. Indonesia, logically, should has the same opportunity to achieve   2  
  3. 3. LAILI AIDISSES Entrepreneurship in Developing Countriesthat such achievement, as this country is not just supported by huge natural resourcesbut also huge human resources. Thus, Indonesia’s education system should changeand adapt with current economic needs, by providing student with programs that willintroduce them to the business environment and entrepreneurship mentality beforethey are graduate, such as how to starting business. This can be implemented byproviding more entrepreneurship courses, exhibitions and cooperativeentrepreneurships with the corporate through the curriculum of all study programs inbachelor or diploma, not just in the economic or management programs. This isbecome important as same as how to introduce new young student with universityenvironment. The process to educate student that dare to challenge the ‘status quo’ isthe main aspect to makes them become innovative and always find inspiration fromopportunities and challenges in the market. Jusuf Kalla suggest that, it is better tointroduce the students with small and medium entrepreneur rather that the bigconglomerate, which tents to talk about macro economic rather than practical tips tostart business, as this will make student confuse and scare to start their own business[1].    Moreover, there is also another most obstacle for young people to start their ownbusiness in Indonesia, which is how to find starting capitol, as there is lackcommunication with investor that interest to support young people with unknowntrack record in business and entrepreneurship in Indonesia. Even tough this climatebegin to be changed day by day, as the government try to stimulate and counter thisproblem by increasing their investment to small and start up company through thegovernment banks, such as young entrepreneurs program that is run by Mandiri Bank,one of top 10 Indonesia bank [2]. But still, it cannot reach all potential start upcompanies in order to achieve 2 % entrepreneur target. Thus, It is importance forgovernment to cooperate with corporate parties to keep continuing on investment onnew entrepreneurs, but with smaller interest and simple administration, in order tosupport larger amount of small and start up companies, such as through Indonesia’sgovernment current program, which is Kredit Usaha Rakyat (KUR) or Investment forPeople.    No nation can be respected without its economic development, and this developmentonly can be achieved if there is passion of entrepreneurship among its citizen.Without this passion, all Indonesia’s energy resources, commodities, minerals, etcwould not be used to the wealth of Indonesian people. There is a need to take realaction from entrepreneurship activity, so the property and unemployment rate can bereduced. Jusuf Kalla stated that this is important as the main principles to startbusiness are the idea, dare to try and take risk, as the key to win the competition in thebusiness is always same, which are faster, better and cheaper [1].    Moreover, In this global market, the business competition has changed to thecompetition between organization and business model, thus the development ofentrepreneurial organization is much important as developing of entrepreneur itself.The role of macro environment is important in order to support passion and quality ofentrepreneurship activity, such as conducive investment climate, clear and healthyregulation, consistent law as well as strong social capital. Indonesia has to reduce andmake better regulation for raw material export, and focus on how to attract moreinvestors to develop and cultivate its own natural wealth, which will impact onopening new more job opportunities and accelerate the development of Indonesian   3  
  4. 4. LAILI AIDISSES Entrepreneurship in Developing CountriesEconomic. Indeed, the cooperation between government, corporate and academicparty or triple helix is important to provide young entrepreneur with goodenvironment to start up their business and contribute to the acceleration of economicdevelopment.    Reference(s):  [1] Jusuf Kalla. 2009, July 27. Membangun Jiwa Usahawan. [Online]. Available:[2] Heri Susanto, Nur Farida Ahniar. 2008, December 3. Enam Pengusaha JuaraIndonesia Butuh 4 Juta Wirausahawan Muda. [Online]. Available:[3] AA Ariwibowo. 2011, Febuary 2. Presiden: Peluang Bagi Wirausaha diIndonesia Besar. [Online]. Available:[4] Laqih Ed. Kelana. 2010, January 18. Dorong Wirausaha Bangun Bangsa.[Online]. Available:  [5] -. 2011, January 3. Peran Penting Wirausaha. [Online]. Available:  [6] M Firdaus. 2009, January. Jusuf Kalla dan Kewirausahaan. [Online]. Available:  [7] -. 2009, October 9. Entrepreneur Indonesia Baru 0,18 Persen. [Online].Available:  [8] Antonius Tanan. 2010, September 3 .Mendorong Entrepreneurship di Indonesia[Online]. Available:  [9] Ali Kotarumalos. 2010, November 19. Body of Indonesian maid found in Abhadumptser. [Online]. Available:  [10] -. 2010, November 23. TKI Cermin Kegagalan Pemerintah. [Online]. Available:         4