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The President Post T H E



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Anatomy of a Coalition


Megawati is predicted to maintain PDIP’s stance as the opposition as becoming a member of the coalition would only benefit the party’s elite in the form of seats in the cabinet By Lukman Hakim

JAKARTA (TPP) – One week after the House probe on Century Bank dealt a severe blow to President Susilo Bambang Yudhoyono’s cabinet by accusing Vice President Boediono and Finance Minister Sri Mulyani Indrawati of illegally bailing out Bank Century, speculations are rife over the future of the president’s grand coaltion and the possibility of a cabinet reshuffle. But a cabinet reshuffle is not likely in the immediate future, political analysts said last week, as President Yudhoyono will not risk appearing to be seeking revenge so soon after three members of his Democratic Party (PD)-led coalition voted to seek a criminal investigation into the handling of the 2008 Bank Century bailout. “Reshuffling the cabinet would create the image of Yudhoyono being a vindictive person, ” said Burhanuddin Muhtadi, a political analyst at the Indonesian Survey Institute (LSI). He said the president’s Thursday night speech, in which he cited the remarkable achievements of Boediono and Mulyani, signaled an effort to conduct “political introspection.” Yudhoyono said Boediono and Mulyani were not guilty of illegally bailing out Bank Century and were instead saviors of the nation. Burhanuddin also said it would be “too extreme” for Yudhoyono to remove non-Democrat ministers in the near future. “It would only benefit the opposition, particularly in gathering support for launching a strike at the government, even via impeachment procedures, not only against Boediono, but Yudhoyono,” he said. Burhanuddin further said the chances of the opposition Indonesian Democratic Party of Struggle (PDIP) joining the government had increased given Yudhoyono’s disappointment with the stances of the Golkar Party and the Prosperous Justice Party (PKS) over the bailout investigation. The PKS was most in danger of being removed from the government as Golkar was guided by more seasoned and crafty politicians, he said. Burhanuddin further said the PDIP could make up the PKS’s numbers and was looking for alternative funding sources after being in opposition since 2004, in reference to the financial windfalls associated with being in power. However, he added, the relationship between former President Megawati Sukarnoputri and Yudhoyono was the only obstacle to the PDIP joining the coalition. Yudhoyono included four PKS members in his cabinet, three from Golkar and two from the

Muslim-backed United Development Party (PPP). But the three parties, together with PDIP, the Great Indonesia Movement Party (Gerindra) and the People’s Conscience Party (Hanura), voted to seek criminal investigations over the bailout. PD is yet to take a stance on the coalition partners, but one of its chairmen, Andi Mallarangeng, who is now the minister for sports, said: “We will carry out an evaluation on our coalition and look at ourselves internally, about what we have done and what we will do next.” Some PD officials have meanwhile warned that the Golkar Party, the PKS and the PPP would be expelled from the coalition after last Wednesday’s vote. The Democratic Party has previously spoken of the possibility of bringing the PDIP into the coalition, should the time come to replace one of the coalition members.

In the past Yudhoyono has demonstrated that he is a master in resolving complex national issues; analysts expect him to do the same in the future. But Hasto Kristianto, the PDIP’s deputy secretary general, said on Sunday: “I think it’s a bit difficult to do. We have different ideologies. The Democrats stand by a liberal economic system while we uphold a pro-people economy.” “The way I see it, things will start to become clearer after the PDIP holds their congress in April,” said Burhanuddin. Stung by three of its coalition partners siding with the opposition in finding the Bank Century bailout was illegal, PD appears to have started courting the PDIP and finding a willing but hamstrung partner in the party’s advisory council chairman, Taufiq Kiemas. Syarif Hasan, deputy secretary general of PD, dropped in on Taufiq this week and was later asked by reporters whether the Democrats would ask PDI-P to join the coalition. Syarif said the party was open to any possibility, as “we think positively all the time.” Despite no official talks between the two parties, Taufiq reiterated his desire to team up with Democrats. The PDIP needed “renewal,” he said, pointing to its landslide defeat to the Democrats in last

year’s legislative elections. “Why don’t we change?” Taufiq said. “If we are not in opposition, we will receive benefits,” he said, without elaborating. Taufiq, who is also the chairman of the People’s Consultative Assembly (MPR), has made no secret of his desire to join the governing coalition, though his wife, Megawati Sukarnoputri, who maintains a firm grip over the PDIP, still harbors deep resentment toward Yudhoyono for daring to contest the presidential elections in 2004. “I think the chance is small,” the noted political researcher Syamsudin Haris told detikcom last week. On Taufiq’s desire to bring PDIP into the coalition, Syamsudin said that it has little bezring as it is Megawati who os calling the shots in the party. “Taufiq may have a wish, but Mega says no then it is finished,” he said. Megawati is predicted to maintain PDIP’s stance as the opposition as becoming a member of the coalition would only benefit the party’s elite in the form of seats in the cabinet, he added. “The downside of it is that PDIP will be seen as an inconsistent political party,” said Syamsudin. PD senior official Marzuki Alie, who is also the Speaker of the House of Reprsentatives, said: “We are ready to cooperate with PDIP.” Marzuki made it is clear that the present coalition is going nowhere and is not cohesive in ways that warrant “a re-arrangement” as the coalition agreement calls for. PD chairman Anas Urbaningrum said: “We are thinking of forming a lean but healthy coalition, which is better than a fat but unhealthy one.” Golkar Party Priyo Budi Santoso vice-chairman said: ”Our position is that we are a partner of the Dermocratic Party, not a subordinate or whatever. We are equals,” he said. ”Golkar has no plan to leave the coalition, but it all depends on the president,” said Priyo. Anas, however, gave a positive sign on maintaining the coalition, saying that despite the fact that the three parties gave dissenting votes, PD has yet to decide on revamping the coalition. “We do not wish to see a divorce within the coalition,” said Anas last week during a political discussion. In a related development, National Mandate Party (PAN) chairman Hatta Rajasa expressed his disappointment over the results of the House plenary sessions. “I am disillusioned, but it`s politics. For me, honesty, loyalty, sin-

President Yudhoyono Receives Australian Government Award President Susilo Bambang Yudhoyono on Tuesday afternoon was awarded an Honorary Companion of the Order of Australia by Australian Commonwealth Governor General Quentin Bryce AC. The conferment was conducted at the Governor General`s official residence at the Government House in Canberra. during a series of courtesy

cerity and truth are the fundamentals of life,” he said. In the meantime, the market remained buoyant amidst the political cacophony that has inundated the nation for the past three months. This week the Indonesian shares composite index hit the so-called psychological mark by reaching beyond 2600. Observers say this is a clear indication that national and foeign investors remain confident in Boediono and Mulyani, both of whom are held in high esteem in business circles for their impeccable professionalism and integrity. As usual, the solution to this prolonged crisis is a political compromise that should acommodate the interests of related parties, not the least Golkar Party, whose chairman, Aburizal Bakrie has been beleagured by corporate fiscal problems . In the past Yudhoyono has demonstrated that he is a master in resolving complex national issues; analysts expect him to do the same in the future.

calls of the President during a three-day state visit to Australia starting Tuesday. The award was given to President Yudhoyono for his services in fostering the relations between Australia and Indonesia, and in promoting democracy and development in Indonesia.

Value of Exports Rise by 59% JAKARTA (PP) – The chief of the state-run statistics body BPS, Rusman Heriawan, this week issued a statement saying that the value Of Indonesian exports in January rose by 58,99% to US$11.57 billion. He added that Japan remained the main destination of Indonesia’s non-oil/gas exports, which rose by US$59 million last month over the month before to US$1.31 billion.

“The rise comes as Japan’s economy has improved,” said Heriawan. China is at second place, replacing the position normally held by the US. “This shows that our non-textile items remain competitive against that produced by China,” he added. “We still have the upper hand when it comes to CPO and minerals.” Meanwhile, Coordinating

Minister of the Economy Hatta Rajasa said he is convinced that Indonesia’s exports this are set to fare better this year over 2009. “We are optimistic that we will perform better this year despite the supposedly adverse impact of the ASEAN-China Free Trade Agreement (ACFTA),” he said. BPS figures show that the country’s trade balance in January is positive at US$2.03 billion, as its imports stood at US$9.54 billion.

Wilmar plans US$400m CPO complex in E. Java Photo:





Obama and His Cairo Promises

Trade Minister Mari Pangestu: “We must form a synergy with China, India”

Trade as a Key Component of The Indonesian Economy

Trade Minister Mari Elka Pangestu said Indonesia last year suffered a trade deficit with China but enjoyed a trade surplus with India.

For Indonesia trade it has always been a highly important sector – the blood of the economy that goes back to colonial times when it was monopolized by a powerful conglomerate, the Dutch-run VOC.

Minister Nuh Urges Politicians Not to Spoil Education with Political Ambitions



Obama is expected to give more concrete substance to his Cairo diplomacy. One good way to do this could be to have frank dialogues with religious and community leaders whom George W. Bush ignored. PAGE 2

Minister of Education Prof Dr Muhammad Nuh has called on politicians to stop riding on education as a vehicle to realize their personal ambitions. PAGE 8

Singapore-based Wilmar International Ltd, one of the world’s largest producers of crude palm oil (CPO), is set to start the operation of a US$400 million project in Gresik, East Java in the middle of this year. Construction of the integrated industrial complex including cooking oil refinery, packaging, oleochemical, biodiesel and NPK fertilizer factories, began late 2009. Wilmar is also building supporting infrastructure including a special quay and power plant, Investor Daily reported last week.


The President Post

March 12, 2010


Obama and His Cairo Promises Obama is expected to give more concrete substance to his Cairo diplomacy. One good way to do this could be to have frank dialogues with religious and community leaders whom George W. Bush ignored. By Alci Tamesa


hen Barack Obama arrives in Jakarta later this month, it is not just the president of the United States that comes; it is much more than that. In him there is something none of his predecessors possessed—a perfect blend of cultural values and convictions from both poles of civilization that enables him to address the Muslim world and the West alike with great confidence and a high level of acceptability. None of his predecessors was ever born to an immigrant family with generations of Muslim background that he had. And none of them had ever lived in Indonesia to get their ears accustomed to the call of azaan at the break of dawn and fall of dusk as little Barry Soetoro did more than three decades ago. None of Obama’s predecessors had worked and mingled so harmoniously with Muslim communities in Chicago and elsewhere in America; none of them had ever recognized openly the global civilization’s debt to Islam. The 44th president of America is the first Western leader to have openly said that it was Islam that “carried the light of learning” through many centuries, paving the way for Europe’s Renaissance and Enlightenment. It is Barack Obama that has openly announced to the world that Islam has always been a part of America’s history due to which there are now around 1,200 mosques scattered all over the United States for the international Muslim communities, including seven million Muslims of American citizenship. Obama has made it clear to the world that it was innovation in Muslim communities that developed the order of algebra, magnetic compass and tools of navigation. He says that it was Muslim innovations throughout history that have initiated human mastery of calligraphy, printing, understanding of how disease spreads, and how it can be healed. Throughout history, Obama believes, Islam has demonstrated religious tolerance and racial equality and these values must be restored at a time when the world seems to have forgotten the religion’s contributions to civilization.

“All of us have a responsibility to work for the day when the mothers of Israelis and Palestinians can see their children grow up without fear; when the Holy Land of three great faiths is the place of peace that God intended it to be; when Jerusalem is a secure and lasting home for Jews and Christians and Muslims, and a place for all of the children of Abraham to mingle peacefully together as in the story of Isra, when Moses, Jesus, and Mohammed joined in prayer.”

Obama once recalled that in signing the Treaty of Tripoli in 1796 America’s second President John Adams wrote, “The United States has in itself no character of enmity against the laws, religion, or tranquility of Muslims.” This is why Obama believes that America’s Muslims are not threats but are assets that have enriched and strengthened his nation to date. Political observers in Jakarta believe that the most striking U-turn in Washington’s attitude toward Islam was revealed by Obama when he said in Cairo last year that “partnership between America and Islam must be based on what Islam is, not what it isn’t. And I consider it part of my responsibility as President of the United States to fight against negative stereotypes of Islam wherever they appear.” Unlike in some parts of Europe where Islamic symbols are not al-

lowed in public places, Obama’s America is demonstrating to the world that such a discriminative attitude is not right. And America is lucky to have been led at this juncture of history by a man like Obama. The US president has promised to the Muslim world that his government will continue to protect the right of Muslim women and girls to wear hijab and anybody trying to erect restrictions will be punished by his administration. This month, as he prepares to come to Indonesia, all the nice words he has said about Islam rewind themselves in the memory of enthusiastic political observers—simply because this is not just the world’s third largest democracy, but also home to the world’s largest Muslim population.

But because of that, Obama will be challenged to clarify his position on two very crucial and altogether sensitive issues—the Palestinian conflict and extremism with religious overtones. His host, President Susilo Bambang Yudhoyono, whom he has met several times, favors a two-state solution for Palestine. On this, Washington and Jakarta share the same stance. Therefore, observers are eager to know whether the two leaders can formulate some concrete action plan to substantiate Obama’s Cairo speech regarding this issue. Obama said in Cairo on June 4, 2009 that “All of us have a responsibility to work for the day when the mothers of Israelis and Palestinians can see their children grow up without fear; when the Holy Land of three great faiths

Indonesia is in a position to seek assurance from the US leader that he will keep his promise to embrace the Muslim world and usher in a new sense of realism in American society that because Islam is an integral part of America, it should no longer be seen as going against the nation or the Western world, even as the US-led campaign against terrorism intensifies. The dichotomy of the West versus Islam must come to an end.

is the place of peace that God intended it to be; when Jerusalem is a secure and lasting home for Jews and Christians and Muslims, and a place for all of the children of Abraham to mingle peacefully together as in the story of Isra, when Moses, Jesus, and Mohammed joined in prayer.” As an influential member of the Organization of Islamic Conference (OIC), Indonesia has a golden opportunity to capitalize on these new intentions of the US president. Indonesia is in a position to seek assurance from the US leader that he will keep his promise to embrace the Muslim world and usher in a new sense of realism in American society that because Islam is an integral part of America, it should no longer be seen as going against the nation or the Western world, even as the

US-led campaign against terrorism intensifies. The dichotomy of the West versus Islam must come to an end. The second most crucial issue—extremism with religious overtones—must be handled extra-carefully and I am sure Obama knows very well what to do. Indonesia’s own painful experience shows that many innocent people, including Muslims, have fallen victim to terrorist bomb attacks. Terror and such kind of bombing are against Islamic doctrines. In fact such actions only show their lack of understanding of the religion. Indonesia has sentenced to death and gunned down many terrorists who exploded bombs in Bali, JW Marriott Hotel and elsewhere, proving that the nation is very serious about com-

bating terrorism, regardless of the terrorists’ faith. Because of that, America— and the West in general—must stop pointing finger at the Muslim world as if the religion condones terror. Since Muslims here are against terrorism, Indonesia is good political laboratory to study. Any opposition in Palestine, Indonesia, and the rest of the Muslim world must be seen as expression of dissatisfaction against injustice and the way in which Washington handles many conflicts around the globe. How to neutralize such opposition is a homework President Obama must do to prove that he can match his words with deeds. Visiting Jakarta is therefore a very strategic move the US president will make in his bid to realize his spectacular promise to the Muslim world. So, beyond the usual protocol of signing bilateral agreements with the host government, Obama is expected to give more concrete substance to his Cairo diplomacy. One good way to do this could be to have frank dialogues with religious and community leaders whom George W. Bush ignored. If Obama wishes to embrace the Muslim world, it is not just about warmly approaching the governments of Muslim countries, but entering the hearts of religious and community leaders. The greatest test to Obama’s diplomatic success is whether he can bring peace to the Middle East and thereby pave the way for normalization of Israel’s relations with the Muslim world. Obama has all the necessary power and political ingredients to achieve this, given his unique background and high level of acceptability. President SBY, meanwhile, has the right friend in the White House with whom he can talk openly about this issue. And time is ripe for a fresh US-Indonesia maneuver to create a breakthrough on Palestine. Until this crucial issue is settled, the world will continue to suffer the brunt of aggression, injustice, hatred, enmity, and distrust among nations. May that not be the case at a time the right man is in the right place at the White House to help bridge differences in war-torn parts of the world!

The President Post

March 12, 2010



“We must form a synergy with China, India” China and India are the two countries that showed robust growth amid the global financial crisis last year. Both countries continued to dominate the world market with their products such as electronics, automotive, and electricity appliances. In terms of percentage, their global trade share also continued to increase, including on products sold in Indonesia. Trade Minister Mari Elka Pangestu said Indonesia last year suffered a trade deficit with China but enjoyed a trade surplus with India. The President Post has compiled, from several media, the minister’s public statements on a number of topics, especially with regards to China and India, as follows:

On the global economic condition Despite volatility, the global economy in 2005-2008 posted positive growth. However, the International Monetary Fund projected that last year the global economy suffered the deepest plunge of minus 1.3% since the Second World War. Global industrial production also plummeted in line with plunging industrial production in industrialized countries. On China’s and India’s trade strength China is a market with the most rapid growth. In terms of share of global gross domestic product, China moved from sixth place with 4.7% growth in 2004 to number 3 with 7.1%

in 2008, just behind the United States and Japan, leaving Indonesia far behind. This means China is a production source with a market much bigger than any other country in the world. As for India, it is a country with a vast domestic market, like Indonesia. On factors that differentiate Indonesia’s trade strength with China and India In Indonesia, the index on tariff limits is 4.63; China 6.33; and India 14.46. India still applies many high tariffs, while Indonesia’s tariffs are already low due to reformation and many other factors. China is really remarkable as it is starting to lower its tariffs. China is also more prepared in imple-

menting free trade with ASEAN. China has seen a fantastic trade growth trend. Many in this country are talking about how to compete with China, a hot topic discussed worldwide because in reality China has demonstrated exceptional progress. Compared to India, China has much bigger capital and financial resources. China enjoys sound economic growth driven by vast financial resources. The country’s massive financial industry supports new investment growth. China offers easy access to huge working capital and other financial sources. Those are the factors behind its status as a global economic tiger.

On Indonesia’s exports to China and India Indonesia’s export to China doubled last year and tripled to India. Indonesia’s export market share to China grew from 6% to 9% and rose from 4% to 8% to India. So, we are actually increasing our trade with the two countries, as well with other Asian countries. Indonesia’s exports to China are natural resources, food and beverages, coal, handicrafts and others. From China we import electronics, machinery, electrical appliances, and others. From India we import almost the same things such as automotive products, machinery and spare parts. The two countries are doing exactly what Japan, Korea and Taiwan did. They invest to produce electronics or automotive items in Indonesia to be exported, including to their own countries. Take for example TVS motorcycles, some of the raw materials of which are imported from India while others are local contents. Once ready, the motorcycles are exported to ASEAN countries and return to India. In conclusion, Asia is a future market with sustainable growth and we are lucky to be in a region with robust growth. On Indonesia’s competitiveness with China and India On how we can compete with

China and India, the answer lies on how we can cut high costs in our economy, improve our infrastructure and others. I get the same question all the time. To compete with China and India on products with a huge volume is difficult indeed. This is because if we produce one item, they can produce a hundred. We just cannot compete there. So, in my opinion, we should not compete head-on. We should compete with them through products that they don’t produce such as natural resources, nonmass produced products and other similar products. We can compete on quality and product design, and this is where our challenges lie. On the other hand, we must form a synergy with them through investment. We have to admit that many Chinese products sold in Indonesia are also natural resources-based products. We don’t see much of non-natural resources related products yet, and we need to work on this. This year trade cooperation between Indonesia and China has started. We will open more contacts with China. On capitalizing from China’s and India’s market potentials It can be done

through trade cooperation and by trying to become a significant market. Indonesia must also form a synergy with them on trade and investment and not be afraid to compete. It is true that both are huge nations with rapid growth, but we have to look at them as opportunities due to their huge markets. Also, they still need many products and services. We have to be able to tap into their huge market potentials. Mari predicted that this year only countries in Asia

will experience high growth. The United States and European countries would still see low growth. Indonesia must work very hard to bolster trade with China and India due to their highly potential markets. Indonesia’s trade with China was negative last year but it is expected to turn around and ink positive growth this year. Indonesia’s trade is expected to grow 5% this year, which means that trade to both China and India must exceed 5%.


The President Post

March 12, 2010

The Economy ECONOMIC UPDATES BKPM promotes “Remarkable Indonesia” Head of Investment Coordinating Board (BKPM) Gita Wirjawan said he will start promoting investment with the slogan of the Indonesian Chamber of Commerce and Industry (Kadin) “Remarkable Indonesia”. “While other countries have slogans like Uniquely Singapore, Incredible India, we have Remarkable Indonesia, which sounds very representative of the country,” he said when receiving the slogan from Kadin Indonesia here recently. Besides launching the new theme “Invest in Remarkable Indonesia” and improving its official website, BKPM also cooperates with national flag carrier Garuda Indonesia in the distribution of investment pamphlets.

RI, Australia in $30m Carbon Trade Coop

Zulkifli Hasan

The Indonesian and Australian governments have agreed on carbon trade cooperation of AUS$ 30 million. AccordingtoForestryMinisterZulkifliHasan, representing the Indonesian government, they have reached an agreement deal with the Australian Minister of Climate Change and Water Penny Wong. The bilateral partnership will be realized to reduce emissions caused by deforestation and forest degradation in Jambi province. According to Zulkifli, Jambi was chosen because a third of its area, or about 1.7 million hectare, was deforested.

Government asked to bridge banking-real sector gap The Young Indonesian Entrepreneurs Association (HIPMI) has asked the government to act as a bridge between the real business sector and the banking industry. In his address opening HIMPI`s 14th national working conference at the Ritz Carlton Hotel here on Tuesday, HIPMI chairman Erwin Aksa expressed hope that the government and banking world would be more responsive to the aspirations of the real sector. He asked the government to create synergy Anwar Adnan Saleh between the financial and real sectors, especially in the extension of bank credit at lower interest rates. Erwin said the amount of bank credits being extended to the real sector so far was very small.

Allocation for subsidies raised by Rp 44 trillion

The government has raised the amount of its various subsidies by up to Rp44 trillion in the revised 2010 state budget to be submitted to the House of Representatives (DPR) on March 1. Fuel subsidy was raised by Rp20 trillion, electricity subsidy Rp16.7 trillion, fertilizer subsidy Rp4.4 trillion, and food subsidy Rp2.8 trillion, Finance Minister Sri Mulyani Indrawati said after a plenary cabinet session on the revised 2010 state budget here on Thursday. She said subsidy for the procurement of rice for the poor was raised by Rp2.3 trillion in line with the government`s decision to increase the amount of subsidized rice for each poor family to 15 kg from 13 kg previously.

Trade as a Key Component of The Indonesian Economy For Indonesia trade it has always been a highly important sector – the blood of the economy that goes back to colonial times when it was monopolized by a powerful conglomerate, the Dutch-run VOC, which took advantage of the country’s natural wealth of spices, commodities and raw materials. By Atmono Suryo


ow that the world economy is heading towards full recovery, trade and finance are increasingly set to become key components in the global economy. Global trade will face enormous challenges such as the risk of increased protectionism. On the other hand, trade may also open up new opportunities as the world economy is expected to grow. Internally, trade (domestic and external) is a key sector of the country’s economy. For Indonesia trade it has always been a highly important sector – the blood of the economy that goes back to colonial times when it was monopolized by a powerful conglomerate, the Dutch-run VOC, which took advantage of the country’s natural wealth of spices, commodities and raw materials. Today, however, Indonesian exports constitute only about 11% of its GDP. Throughout many centuries, especially during the last few decades, the conduct and composition of global trade has changed immensely. Across border exchanges and bilateral trade continued to expand, covering ever larger continents and regions. In this era of globalization, multilateral trade has become the main feature of global trade. It is important to know that the goal of the WTO (World Trade Organization with more than 140 member countries) is to achieve world free trade. Free trade however does not mean it is totally free from all impediments or restrictions. On the contrary, the present free trade regime is crowded with a myriad of regulations, standards and other restrictions which have become very complex and difficult to comprehend. It seems, however, that there is still the need for the Indonesian business community to be become more aware of the changes taking place, with emphasis on the many complicated codes and regulations and developments in world trade.


The implementation of the ASEANChina Free Trade Area, which was signed some 8 years ago, was a real shock for the business world which seems to be totally in the dark with the many bilateral or regional agreements involving Indonesia. TRADE IN GOODS & SERVICES

According to the WTO, in addition to trade of merchandise there is now the trade of commercial services which has grown significantly. Commercial services include transport, travel and other commercial services such as financial services. GLOBAL TRADE

Trade activities during the colonial times when the Dutch-run VOC monopolized Indonesian economy

According to the WTO for the last 30 years trade has been an increasing part of world economic activity. Trade growth is even outpacing gains in output. The year 2008 was the golden year for world trade. World merchandise exports increased by 15% and reached the high level of $15.8 trillion in 2008. The share of developing economies set new records with exports rising to 38% in 2008. The financial crisis since September 2008 has brought the largest contraction of world demand since WW II. The decline of world demand in 2009 appears to be more widespread than expected before, and even Asia was affected. The decision to undertake fiscal stimulus programs was a right move to keep up global and regional demand. After the golden year of 2008, exports declined significantly in 2009, strongly influenced among others by the following factors: • The immense decline of world consumption and world demand which started in the advanced countries • The decline of trade finance as a result of the financial crisis; it was the worst crisis since WW II with the most devastating impact around the world • The risk of growing protectionism which restrain the growth of world trade • Changes in commodity prices

with its unpredictable ups and downs in demands and prices In addition to the developments of world finance, trade will be a key component to achieve full recovery and growth of the global economy. It is expected that world trade will recover and increase in 2010-2011. TRADE REGIME

In this era of globalization and the financial crisis, there is the increasing pressure to restructure the global financial system. No consensus, however, has been reached so far on this issue. Meanwhile, a number of shortterm measures are being introduced and implemented. For outsiders the question is whether there will also be increasing demands to improve the present trade regime. The WTO meeting in Seattle some years ago, which drew strong protests, was a clear message of discontent on the asymmetric developments of world trade. There is now the cry for fair trade instead of free trade. The Doha round in Qatar in November 2001 has so far not made progress. Since then meetings were held at Cancun and Hong Kong but again with little or no results. One of the key issues concerns the problem of subsidies, in particular agriculture subsidies,

which is doing harm to developing countries. Another issue refers to the “development round” which was set out in Doha but seems to go nowhere. For outsiders it is difficult to keep track with the developments within the WTO. TRENDS TO WATCH

• Trade activities continue to develop in the Asia-Pacific region to achieve free trade through the reduction or elimination of tariffs and other trade measures • ASEAN seems to become the center of a whole set of trade agreements, which include those with China (ACTFA), South Korea and Japan • ASEAN is also active in the area of regional economic integration covering important economic sectors, including the real sector • Asia is expected to take the lead in the international efforts to achieve full recovery and growth of the global economy It is important to watch developments in Asia, in particular what the countries in Asia have in mind. ASEAN is expected to come up with trade policies which would strengthen the position of Asia and at the same time support international efforts to beef up global economic recovery and growth.

“The Veranda Golf Town House is one of the best residential areas in the region” “I was the first resident of The Veranda Golf Town House when I moved from my house in Jakarta to Kota Jababeka 3 years ago. I feel safe living in The Veranda Golf Town House because Jababeka is very concerned about creating a safe environment


s a young entrepreneur, Taufik Hidayat (30), Director of Sarana Grafika Indonesia, decided to expand his business through the acquisition of Standard Factory Buildings (SFB) and live in The Veranda Golf Town House in Kota Jababeka. “I was the first resident of The Veranda Golf Town House when I moved from my house in Jakarta to Kota Jababeka 3 years ago. I feel safe living in The Veranda Golf Town House because Jababeka is very concerned about creating a safe environment; so far everything is secure”, Said Taufik. “I bought a house in The Veranda Golf Town House because I already owned a factory and ran a business in Kota Jababeka. Initially I thought about buying a house in another residential area in Cikarang, which is developed by another residential developer, because they are more advanced with regards to residential facilities. However, travel time to and

from work exceeds 20 minutes as a result of traffic. In comparison, now I need only 5 minutes to go to my factory”. He loves the view of the green grass of the golf course behind his house, “A good location to live, a beautiful view, and at lunchtime I can go home to have my lunch. Veranda is one of the best residential areas in the region” He added. In the end of 2003 Taufik bought an SFB and started his printing and packaging operations in 2004. Considering that his employees need housing, Taufik bought them a house in the Gardenia Residences complex. On the other hand, the acquisition of property serves as a good investment, since the price of properties in Jababeka has increased significantly over the past years. In 2007, Taufik bought a housing unit in The Veranda Golf Town House and he bought 1,200

square meters of raw land next to his factory in 2008, which is intended for expansion. Taufik does not only run Sarana Grafika Indonesia, he also runs a food and snack business with his friends. The snacks are made from mushrooms and sweet potatoes. For now it is still a small business but once it increases in size he will not hesitate to open more factories in Jababeka, because Jababeka is the biggest industrial estate in South East Asia. His life guideline in running his business is very simple, “Do your best and think positive”. By doing your best, the result will be the best and if we are not doing our best, we won’t get the best result. Sometimes Taufik and his employees have a different point of view when they think less positive. However, Taufik tries to bridge their point of view and remind them to always think positive.


It is clear that Indonesia would be hard-pressed to strengthen its domestic economy and its competitive position in Asia and the Pacific and as such the following measures should be taken: • Building up its infrastructure which is an important element to smoothen the flow of merchandise and trade in services • Eliminating all impediments as Indonesia is being handicapped by a high-cost economy • Providing the private sector with finance and credit facilities and lower interest rates in order to be able to compete • Modernizing its trade sector to upgrade and restructure the composition of its exports in order to become also an exporter of high quality manufactured goods in line with the developments in Asia The period of 2010-2015 will be crucial to the country. Indonesia is presently regarded as one of the top ten emerging countries because of its economic size, economic growth and its potentials. The coming years will determine Indonesia’s trading position in the highly competitive global economy. The writer is a former ambassador to te EU

The President Post

March 12, 2010


The Economy

RI Economy Doing Remarkably Well Indonesia is seen by the international community as an emerging country that is doing remarkably well. In the last 5 years, Indonesia has been a member of the prestigious G20 By Atmono Suryo



he Indonesian political elite, some of whose members continue to play politics in ways that undermine the government, should be aware that the international community views the Indonesian economy as quite encouraging. The assessments of the World Bank, IMF, ADB and many international banks are positive. But while Indonesia is doing remarkably well, certain risks remain, however. Indonesia is seen by the international community as an emerging country that is doing remarkably well. In the last 5 years, Indonesia has been a member of the prestigious G20. However, at the same time the country is facing a number of risks which should be resolved. In its report “The Indonesian Outlook 2010”, Deutsche Bank rightly states that 2009 was a landmark year for Indonesia in several fronts, among others: • After China and India, it is the third fastest growing economy in East Asia • After facing a bout of investor outflow in late 2008 and early 2009, Indonesia’s financial market recovered quickly • It sustained one of the strongest performances in the region • It has gone through a peaceful set of parliamentary and presidential elections • It has scored key achievements in the areas of regional cooper-

ation and national security • It has seen rising trends in consumption, investment and trade At the same time Deutsche Bank notes that Indonesia faces three main risks: • domestic politics that may lead to revelations of corruption scandals and infighting • capital flows surge that puts the rupiah under pressure • a slowdown in the global economy in the second half of 2010 As economic observers would rightly say, the domestic political environment, loaded with unnecessary political upheavels, is hurting and impeding sound economic development. It is sapping the country’s energy to achieve larger national objectives. It is time for Indonesia to politically grow up and become more mature, especially now that it is rated as the third largest democratic country in the world. In the area of economics the business and investment climate continues to be another risky factor. POSITIVE ECONOMIC TRENDS

On the positive side, Deutsche Bank data on the developments for the years 2008-2011 show some positive trends, particularly with regard to national income, growth and external accounts (Figure 1). 2010 GDP GROWTH

Bank Indonesia’s assessment is that the Indonesian economy is

positioned to grow beyond original forecasts as follows:

Figure 1: Deutsche Bank forecasts Deutsche Bank forecasts

GDP growth 5.0%-5.5% Main factors behind the forecast are: • Export • Private consumption • Inflation




National GDP (USD bn)





Population 9mn)





GDP per capita (USD)





Real GDP (YoY%)





Private consumption





Government consumption





Gross fixed investment















Merchandise exports





Merchandise imports





















National Income


From an economics perspective, rising momentum is developing for Indonesia in the years ahead. As the economy has been moving on the right track and the global economy is recovering. Indonesia’s goal to achieve 7% growth is within reach. Efforts to reduce poverty and unemployment, however, will remain a continuous problem as with most developing countries. Much has been achieved in the area of macro-economics and finance, but much work has still to be done to upgrade and restructure the so-called real sector of the economy which still lags behind. This risky sector covers such areas as agriculture, industry and services, the backbones of the economy. A very encouraging statement was made by World Bank Country Director Joachim von Amsberg in a seminar organized by the Modernisators Group. He rightly pointed out that: • Indonesia will have an unique opportunity to rise as a dynamic inclusive middle-income economy • Indonesia should become a hub of labor-intensive industry in Asia like China


“Indonesia shoud become a hub of labor-intensive middle-income economy” Joachim von Amsberg World Bank Country Director

External Accounts (USD bn)

Trade balance % of GDP Current account balance % of GDP FDI (net)

• Indonesia should develop a leading sophisticated commodity economy like Australia Indonesia has the potentials to achieve such goals but it would be necessary to remove the many obstacles and the risks factors. The writer is a former ambassador to the EU

FX reserves (USD bn) FX rate (eop) IDR/USD





















General Industrial production (YoY%) Unemployment

Source: CEIC, DB Global Markets Research, National Sources


The President Post

March 12, 2010


Why France is the Best Place to Live in the World France, voted the best place in the world to live for the fifth year in a row by International Living magazine, which has been analyzing data and publishing its annual Quality of Life Index for 30 years.


indi Dupouy, an Australian living in Paris, and her French husband, just had their first child, a son born in the country. Dupouy, a 28-year-old lawyer, got almost five months paid maternity leave from her company for the birth. She can take another seven months off beyond that -- a year total -- unpaid, if she wants, with her job guaranteed under French law. When her son Louis was born, healthy and by way of a normal delivery, she got to stay in her local French hospital, around the corner from where she lives, for five full days, to rest. Welcome to France, voted the best place in the world to live for the fifth year in a row by International Living magazine, which has been analyzing data and publishing its annual Quality of Life Index for 30 years. One of the reasons France keeps winning the ranking is its world-class health care system, which Dupouy just experienced first-hand. “They treat expecting mums like treasures here,” Dupouy told CNN from her Paris apartment. “They take really good care of you. The health care system is just amazing.” She said she wouldn’t have gotten the same maternity leave -- or care -- back home in Australia. At her job, Dupouy also gets seven weeks paid vacation a year, although it’s her first job as an attorney since graduating with a law degree in Australia. She doesn’t think twice about taking the Metro across town -- for just $1.37 a ride -- to visit a friend. Or she picks up a rental bike at one of the many computerized bike hire racks in town to get around. France scores high marks across the board in the survey, which is done every January, from health care (100 points) to infrastructure (92 points) to safety and risk (100 points). “No surprise,” said the magazine in its report. “Its (France’s) tiresome bureaucracy and high taxes are outweighed by an unsurpass-

able quality of life, including the world’s best health care.” “The bread, the cheese, the wine,” Dan Prescher, special projects editor at the magazine, told CNN, when asked why France just keeps on winning year after year. “That weighs pretty heavily in quality of life.” They treat expectant mums like treasures here. The healthcare system is just amazing. Prescher admitted the magazine had an “American bias” since the vast majority of its subscribers are Americans spending in U.S. dollars. “France is one of those golden places in the American consciousness,” he said. The annual index ranks 194 countries and comprises nine categories: Cost of Living, Culture and Leisure, Economy, Environment, Freedom, Health, Infrastructure, Safety and Risk and Climate. The Index analyzes data from several official sources, including government web sites, the World Health Organization, and several media sources. Following France in the top ten are Australia, Switzerland, Germany, New Zealand, Luxembourg, the U.S., Belgium, Canada and Italy, in that order. “France always nets high scores in most categories,” the magazine said. “But you don’t need numbercrunchers to tell you its ‘bon vivant’ lifestyle is special. It’s impossible to enumerate the joy of lingering for hours over dinner and a bottle of red wine in a Parisian brasserie. Or strolling beside the Seine on a spring morning, poking through the book vendors’ wares.” Other European countries slipped a little in the magazine’s rankings this year, with the exception of France and Germany. Britain dropped to 25th place from last year’s ranking of 20. Variety is also seen as a major factor in France’s appeal, with the survey noting that “romantic Paris offers the best of everything, but services don’t fall away

in Alsace’s wine villages, in wild and lovely Corsica, in lavender-scented Provence.” The United States dropped from third to seventh place in this year’s rankings, largely because of the grinding economic crisis last year. “Sustaining the American dream has escalated out of the reach of many,” the magazine said. “The depression hit the United States and Great Britain hard,” Prescher told CNN. “That weighs down the ratings.” Of course, France too has its problems. The country suffers from high youth unemployment, particularly among the disaffected young people who live in its equivalent of the projects, known as les banlieues. Late last year, the French government opened a national discussion about national identity, which has evolved into debates over whether immigrants, and particularly Muslim immigrants, are French enough. The country has the highest Muslim population of any European country, with an estimated six million living in the country. But for the most part, French people enjoy a good lifestyle. International Living says that during their large chunk of leisure time, the French enjoy visiting the country’s many beaches and Alpine ski resorts. Dupouy -- like more famous expats Ernest Hemingway and Julia Child before her -- agrees. She and her husband vacation every year at the seaside near Bordeaux, in the southwest corner of France, where her husband’s family has a home. They also go skiing in the Alps during the winter. She says that even if she and her husband decide to leave France for awhile during their lives, they’ll always come back -- every year, probably. “The culture, the food, the family, it’s all just really nice here,” said Dupouy. (CNN) Photo:


The President Post

March 12, 2010



Is Your Heart in Trouble? While it may sound odd to miss the signs of something as monumental as a heart attack, cardiologists say they see it quite often.


hen Eugenie Smith’s hands started tingling, she figured her biking gloves needed more padding. When she felt out of breath after a short walk on a treadmill, she assumed it was pneumonia. When her chest hurt, Smith chalked it up to indigestion. She was wrong, wrong, wrong. Smith was actually having a heart attack, and needed three stents. She was 46 at the time, and in otherwise perfect health. While it may sound odd to miss the signs of something as monumental as a heart attack, cardiologists say they see it quite often. It happens “ALL THE TIME!!!” Dr. Kenneth Rosenfield, an interventional cardiologist, said. “Every week. Seriously.” Rosenfield says a “Hollywood heart attack” -- the kind where you collapse to the ground clutching your chest -- is the exception, not the rule. “We need to do a better job of letting people know what the types of symptoms that can indicate a heart attack,” he says. Smith couldn’t agree more. Looking back at her heart attack

eight years ago, she now sees she had symptoms for six months and missed them. “My message to everyone is simple: If your symptoms are frequent do not hesitate. Have them checked before it is too late,” she says. Former President Bill Clinton was hospitalized recently and received two stents after he experienced brief periods of discomfort over several days. Clinton, who’d undergone bypass surgery in 2004, said he began feeling tired around Christmas. “I didn’t really notice it until about four days ago when I felt a little bit of pain in my chest, and I thought I had to check it out,” he said. The signs that you’re having a heart attack -- or that your arteries are so clogged up you’re about to have one -- vary from person to person. You can listen to heart attack patients describe what it felt like to them, and the American Heart Association, the National Heart Lung and Blood Institute, and the Mayo Clinic have lists of heart attack symptoms and warning signs. Here’s a list of some of the more common signs:

Chest discomfort

While not everyone feels it, chest pain or discomfort is still the most common sign of a heart attack, according to the American Heart Association. The pain isn’t necessarily overwhelming. “It was a relatively mild pain that I kept expecting to go away, but it never did,” says Duane Marcus, 56, of Stone Mountain, Georgia, who had a heart attack two weeks ago. Rolanda Perkins, who had a heart attack just over four years ago at age 39, says at first she ignored her chest pain because she thought it was indigestion. “I figured I could go to the doctor in the morning, but morning came for me at about 3:30 [a.m.] when the pain got worse and I had a shortness of breath,” she remembers. “I knew that something was wrong.” In recent years Perkins, who lives in Tennessee, has completed two half-marathons. Now she tells people to listen to their bodies. “My body was speaking to me, and I was not listening,” she says. Discomfort in other parts

of the upper body

Rob, an Atlanta businessman who asked that his last name not be used, said pressure behind his ears while working out on the stair-stepper was the first sign that something wasn’t right. He was 50 and on vacation at the time, and he didn’t think much of it. But when he got back home he also started to experience a bit of tightness in his chest while exercising. It seemed so strange that he walked into a cardiologist’s office without an appointment and insisted on seeing the doctor. He had bypass surgery the next day. Rosenfield, head of vascular medicine and intervention at the Massachusetts General Hospital, says pain in a variety of places can indicate a heart attack. “I often tell my patients that they should be mindful of any symptom from the waist up which seems different or unusual,” he says, including “heaviness, pressure, squeezing, aching, or discomfort in the chest, back, neck, shoulders, or arms, wrists, elbows, between the shoulder blades, aching in the jaw, throat, or even gums or earlobes.” Of course, discomfort in any of those areas could mean myriad other problems and not a heart attack at all. So how do you know the difference?


Shortness of breath can be a sign of a heart attack even if you don’t have any chest pain or discomfort.

Rosenfield says pay particularly close attention if you have a personal or family history of heart disease or risk factors such as high blood pressure or high cholesterol. Other reasons to be on guard is if the symptoms are particularly intense, happen for no apparent reason, if they get worse with exercise, if they don’t go away, or if they go away and come back.

he had a history of high blood pressure and vascular disease. Wood, a cardiologist and assistant professor of medicine at Harvard Medical School, made sure her father received quick attention, and it turned out his right coronary artery was 92 percent blocked, requiring stents and bypass surgery.

Gastrointestinal problems

Dr. Robert Superko says he’s seen it many times: A patient’s routine EKG will show signs of an old heart attack, but when he asks whether the patient has had a heart attack the person says no, adding, “But, oh yeah, doc, last

When Dr. Malissa Wood’s father complained about stomach pain and nausea, she paid close attention because he said it felt different from ulcer problems he’d had in the past, and because

‘Eat your chips,’ just not every day

Flulike symptoms

year I had a really bad flu.” Superko, a cardiologist and author of the book “Before the Heart Attacks,” says significant fatigue, feeling exhausted for several days, gastrointestinal problems and a general feeling of not being well can be signs of a heart attack or heart problems -- and they’re easy to miss. “You can see how people could just write it off as the flu,” he says. Shortness of breath

Shortness of breath can be a sign of a heart attack even if you don’t have any chest pain or discomfort. (CNN)

Happy Living In Your Golden Age

The global food system can be revolutionized through the simple steps of individuals


hen celebrity chef Jamie Oliver sat down for an interview with CNN -just after giving a speech in which he railed against America’s unhealthy food system -- he remarked that he was tired and wished he had a beer. That’s the charm of Oliver -the dynamic cook who grew up working in his dad’s pub in Essex, England, and went on to become “The Naked Chef.” He doesn’t seem particularly interested in food rules. He just wants people to be healthier. And to be healthier, he says, we need to learn where our food comes from and to know how to cook it. “You know, we don’t have to pretend that burgers aren’t indulgent. We love burgers! The chip is the most incredible, brilliant invention in the world. Eat your chips!” he told CNN. “But not every day.” Oliver on Wednesday was named the recipient of the TED Prize, an annual award given to a speaker at the TED Conference, which is being held this year in Long Beach, California. Former winners include former President Bill Clinton, biologist E.O. Wilson and the rock star Bono. All are given $100,000 and are asked to express one “wish” they hope will change the world. The non-profit organization then helps recipients to rally support for their cause. Oliver wished for an overhaul of the American food system, saying the country’s poor decisions about what to eat are shortening life spans and increasing health care costs. “My wish is for you to have a strong, sustainable movement to educate every child about food, to inspire families to cook again and to empower people everywhere to fight obesity,” he said in a speech at the TED Conference here in Long Beach, California. Oliver will star in an upcoming ABC series where he promotes lo-

cal, healthy food as a way to fight obesity in Huntington, West Virginia, which he called the unhealthiest community in the United States. “This is a global problem. It is a catastrophe. It is sweeping the world. England is right behind you [America], as usual,” he said. “We need a revolution.” Members of the audience stood up to pledge Oliver their support after his short talk. Oliver outlined a number of specific steps to help America get back to local and fresh foods and to combat obesity. Among them, he said: • Every child in the U.S. should learn to cook 10 meals before leaving high school. • Supermarkets should appoint “food ambassadors” to explain to customers how they can prepare local, fresh and seasonal foods. • Food companies should make education a central part of their business. • Food labeling should be improved to accurately warn people about unhealthy food. He called America’s current foodlabeling system a “farce.” Oliver’s new reality show is called “Jamie Oliver’s Food Revolution.” He is the author of a number of cookbooks. In a CNN interview, he said he supports First Lady Michelle Obama’s initiative to combat childhood obesity. He said he hopes the first lady will grant him a meeting in coming weeks so they can talk about reforms to the U.S. food system. In the U.K., the chef previously launched a campaign called “Feed Me Better,” which aimed to improve school lunches. He presented a petition with more than 270,000 signatures

to the prime minister’s residence at 10 Downing Street in 2005, and officials promised to spend an added 280 million pounds ($437 million) to improve school food quality. “Now is the time for the awful statistics, the lack of funding, you know, the true pain that is being caused by diet related death -- it’s kind of got to a tipping point where something has to happen,” he said. “I’m a food lover,” he added. “The problem that we have is a burger is not a burger, a pizza’s not a pizza. Milk’s not milk anymore, do you know what I mean? “The big clean-up needs to happen.” TED offers video lectures on its Web site for free -- the idea being to disseminate “ideas worth spreading,” as its slogan says. The group’s conference continues through Saturday and includes talks from celebrities like Bill Gates, Sheryl Crow, Sarah Silverman, James Cameron, David Byrne and Eve Ensler, as well as prominent thinkers, biologists, technologists, artists and musicians. He said the global food system can be revolutionized through the simple steps of individuals. He called on America to be a leader in these efforts. “If America does it I believe other people will follow,” he said. “It’s incredibly important.” (CNN)

When we enter the golden age of retirement, what will happen to us? What are our activities? What are our priorities? How about selfactualization at that time? Talking about life accomplishment, the golden age of retirement may be the highest point in your life when the goals you had when you were young can be achieved. Housing options are becoming an important aspect when we want enjoy life at an old age, both physically and spiritually. It is undeniable that our body’s natural process will experience decline with age. The fast-paced and busy life of the city makes it difficult for our children to give us all the help we need or accompany us on a regular basis. The “Senior Community” is an emerging trend in big cities today. The seniors spend time and their activities together and share their experiences. Senior Housing Jababeka Medical City will present a new concept and paradigm; seniors are living near their children’s hearts, but are not always accompanied or assisted by their children and are free to do activities on their own and be creative. Senior Housing will be part of a

regional integrated one stop world class health service. The location is just a few meters from International Hospital facilities, so that all medical emergencies can be handled without facing traffic problems of a large city.

The “Senior Community” is an emerging trend in big cities today Access and residential facilities are user friendly and especially catered to the capabilities and needs of its seniors. Toilets and its accessibility are designed to prevent injuries and facilitate mobility, especially for those who use a walker. The Senior Community will be built and become the heart of the activity center, where seniors can spend quality time together and maintain a healthy body and soul. Exercise programs, such as garden-

ing and flower planting, keep the seniors fit and games for the mind keep the brain and memory active. Senior sport facilities designed for seniors are also available. Library, skills room and karaoke are other facilities and activities for seniors in Jababeka Medical City. We don’t have to feel that we are far from our family, because every time our children and grandchildren visit, we can do activities together. “Family Day” events will be held to enliven the atmosphere and get to know each others family. Remove the old paradigm and find out that living independently in the golden age means time to enjoy in Senior HousingJabebeka Medical City. For those of you who still work part time at your golden age or for those of you who have fully retired, to all your needs can be catered.

(021) 893 4580 ext. 414 & Rossy 0811 851 769


The President Post

March 12, 2010



Minister Nuh Urges Politicians Not to Spoil Education with Political Ambitions Minister of Education Prof Dr Muhammad Nuh has called on politicians to stop riding on education as a vehicle to realize their personal ambitions. By Alci Tamesa


n an unprecedented move to cleanse the sector of education from political greed, Minister of Education Prof Dr Muhammad Nuh has called on politicians to stop riding on education as a vehicle to realize their personal ambitions. “Whoever it is, whether he or she is a presidential candidate, a gubernatorial candidate, a candidate for regent or mayor, the person in question must not use education as a commodity to attract voters,” the minister said during a visit to the daily Fajar in Makassar, South Sulawesi. “Even members of the central government should not do that,” said the minister, who is a former rector of Sepuluh November Surabaya University of Technology (ITS). Education observers say that it is common in Indonesia for politicians to attract parents and student voters by giving them sweet promises of free education, provision of new jobs, better living standards and others, but after being elected to their intended positions, they forget their words. Photo:

“Whoever it is, whether he or she is a presidential candidate, a gubernatorial candidate, a candidate for regent or mayor, the person in question must not use education as a commodity to attract voters.” Prof. Dr. Muhammad Nuh Minister of Education

In 2009, there were 524 elections from national to provincial and regency levels. In the run-up to each of these elections, politicians promised to exempt students from school fees in order to win votes from parents and young voters. For many years now the Indonesian society has been led to believe that good education means free education; that a good gov-

ernment is one which provides free education and a bad one is one which cannot do so. In the run-up to the formation of President Susilo Bambang Yudhoyono’s second cabinet in October last year, national television stations were full of free education ads. Such situation creates the impression that the government’s success in the sector of education is measured by the extent of its free education services. Minister Nuh flatly rejects such a notion as nonsense, because one cannot have high quality education when everything is free of charge.

of joint research units, and even mutual recognition of their curricula, all of which facilitate transfer of credits from one university to another. So an emphasis on free education—though this was originally meant to support children from poor families—is a wrong approach to building a nation’s human resource potential. In fact, the government provides a huge number of scholarships every year, either by itself or through cooperation with foreign governments and international organizations. It is true that the government needs some kind of education

emphatically during his visit to the office of the South Sulawesibased newspaper. Turning to the free-education policy of his predecessors, Prof Nuh said free education could be good to some extent, which is to help the poor. But, if at the end of the day it is used as a political commodity to attract voters from poor segments of society, that is a blunder which will eventually backfire, he added. During his term as Minister of Education, he will never promote free education but will implement policies that enable the rich to subsidize the poor. So students from rich families

During his term as Minister of Education, he will never promote free education but will implement policies that enable the rich to subsidize the poor. To have high quality education one needs high quality teachers, adequate technology, and good teaching-learning process. All these require investment, including bringing in professors from abroad, building expensive facilities, or establishing cooperation with world-class universities. In recent years many Indonesian high schools and universities have established cooperation with foreign institutions through dual degree program, exchange of teachers and students, setting up

politics, the minister said, but that means the formulation of the right policies on education. “But it must not be turned into a commodity for sale,” he said. “Please do not treat education like goods on sale in the market. Whoever you are, whether a presidential candidate or someone running for office on provincial, mayoralty, or regency level, you must avoid touching this sector. “Let education proceed according to its own logic and academic tradition. Do not touch it,” the normally soft-spoken Nuh said

should rightly pay school fees in order for those from poor families to attend schooling free of charge. “But if everything is free of charge, there will be negative implications,” he said. For instance, in the context of free education, teachers would feel that they are not obliged to teach seriously because students don’t pay them anything. “Such schools will be closed down somehow because people will think that anything that is free often means cheap or poor in quality so it must be shunned,”

he said. The Government of President Susilo Bambang Yudhoyono has allocated Rp9.2 trillion in special funds called DAK to help schools renovate facilities and build libraries, science laboratories and others. The fund is transferred directly from Jakarta to local governments and it is the local governments that will determine which schools should get how much and for what purposes. His office will “only provide guidance” on the usage of the fund, but realization of the plan is done by the local governments and the recipient schools, the minister said. With the China-ASEAN Free Trade arrangement now in place, Indonesian schools will witness even tougher competition at home where their graduates are challenged by those from universities abroad. This is because of the fact that under the regional agreement, governments can no longer erect barriers against the free flow of expertise and jobseekers. This in turn means that free education is a fallacy that must be avoided. The right way to enable students from poor families to have good education is not to give them free education but to increase their parents’ earnings. Therefore, analysts say, the Government’s education policy must go hand in hand with efforts to improve the welfare of lower segments of society.

Indonesia to Revitalize Moral Education In a long-awaited move to rectify the orientation of education, the Indonesian Government says it will now revitalize moral education besides expanding the curriculum content at all levels. By Alci Tamesa


ver since 1928 when the national anthem Indonesia Raya (Great Indonesia) was first introduced, its composer Wage Rudolf Soepratman wrote the lyrics on the need to first “build the soul” before building the body of the nation. But since then Indonesian education has been directed toward physical development only, omitting in the process the need for moral and spiritual development. This is the reason why Indonesian prisons are full of scholars— people, who are smart cognitively but have no integrity or lack moral dignity. This is also the reason why we have an abundant of scholars across the country, but at the same time those involved in white-collar crimes are also university graduates known to be academically smart. What went wrong? Minister of Education Prof Dr Muhammad Nuh has the right answer— a tragic lack of moral and spiritual education at almost all levels in society. The higher the level of education, the more such topics as religion and ethics are deemed as unnecessary and irrelevant. At several universities, some students get a semester on religious and moral education, but in most schools the subjects are scrapped from the curriculum. “Education can no longer be carried out through such a system,” says the minister. “Education must arouse within students noble human values of dignity, and this must be done through schools. It must become a tradition at schools.”

“Let us start a new movement,” Prof Nuh declares. “It is a movement to arouse a collective awareness in society toward the need of having good moral education, comprising character building, ethics, cultural values, noble ideals and dignity. We want President Susilo Bambang Yudhoyono to launch this movement,” he said

of its toilets and bathrooms, how to deal with garbage, all of that is part of a school’s daily practices, he says. Character cannot just be taught as a lesson, the minister notes, he said, “it must be shaped by the teacher as the role model for his or her classes.” “Parents must also become role models for their children at home. So role-modeling is the key word.”

“It is a movement to arouse a collective awareness in society toward the need of having good moral education, comprising character building, ethics, cultural values, noble ideals and dignity. We want President Susilo Bambang Yudhoyono to launch this movement.”

Throwing his weight behind the minister, Director General for Primary and Secondary Education Suyanto says that though such values are abstract and cannot be taught as a hard lesson, their impacts can be felt directly by the way students communicate among themselves as well as with their teachers. For instance, a teacher who tends to his or her students affectionately while teaching and educating them will prevent students to display bad behaviors. The opposite is also true, as teachers who do not care or who pay little attention to students will see students getting naughtier and wilder due to a lack of direction and patronage. But character building is not an overnight task. Teachers alone cannot impart good personality on students because students get along with them only during school hours whereas the rest of the day the students mingle with their families.

This is why holistic educators say that education is not just a matter of sharpening learners’ minds but is a comprehensive area of responsibility involving parents, teachers, and even community leaders.

So, family education is another important area that must be straightened out. Parents who abandon their natural role as educators will see their children’s failures getting worse.

Education analysts say that a tragic lack of good role models in society is to blame for Indonesia’s difficulty in producing wellrounded graduates with integrity and balanced personality.

Prof. Dr. Muhammad Nuh Minister of Education

The minister says that a school culture begins with its usual practices, which will shape a tradition that in turn forms culture and civilization. How teachers communicate with students, how they arrange classrooms, how schools take care

Photo: President University

Character building is not an overnight task. Teachers alone cannot impart good personality on students because students get along with them only during school hours whereas the rest of the day the students mingle with their families.

Business BUSINESS BRIEFS BTN plans to issue bonds State-owned Bank Tabungan Negara Tbk (BTN) plans to issue its 14th bonds worth Rp2 trillion in the first half of this year said BTN Treasury Director Saut Pardede here last week. “Since 1989 the bank has 13 times issued senior bonds. In 2004 it issued subordinated bonds,” he said. In total, the bank has issued Rp6.350 trillion worth of bonds, including outstanding bonds worth Rp3.250 trillion.

Net profit of Holcim Indonesia up 217% The net profit of the country’s third-largest cement maker PT Holcim Indonesia shot up by 217 per cent to Rp896 billion (US$97.4 million) from the previous year on larger sales and foreign exchange gain. The Indonesian unit of the Swiss-based cement giant Holcim Ltd posted Rp5.9 trillion in sales in 2009, up from Rp5.3 trillion in the previous year. Demand for cement rose with brisker construction and property industry to follow the economic recovery, the company said in its financial report.

BJB Bank to launch IPO PT Bank Jabar Banten (BJB), which is owned by the West Java and Banten provincial administrations, will launch an initial public offering selling share to the public worth Rp800 billion (US$87 million). The bank will sell 20% of its shares to the public in the IPO to be held around June, BJB President Agus Ruswendi said. Bahana Sekuritas and CIMB GK Sekuritas are the underwriters. He said the bank shareholders have also pledged to inject Rp200 billion into the bank to be used to finance business expansion.

Indian airline shows interest to fly to Indonesia An Indian airline, Jet Airways, is interested in flying to Indonesia. “There have been talks, but as yet there has been no official request from the Indian government,” Director of Air Transport Tri S. Sunoko told Tempo. There is room for an Indian airline in the country since Air India closed shop here, he added. Tri explained that a bilateral agreement between the two countries allows Indonesia to fly to Mumbai and Kolkata. Jet Airways is an airline based in Mumbai, and serves 63 domestic and international routes, including New York, Toronto, Brussels, London, Hong Kong, Singapore, Kuala Lumpur and Bangkok.

Five investors eager to develop tourist hub in Lombok island Chairman of the Investment Coordinating Board (BKPM) Gita Wirjawan said at least five investors had reiterated their intention to develop an integrated tourist hub in Lombok island, West Nusa Tenggara province. “Several investors have filed applications to us. One of them is Emaar Properties (of Dubai), the others are from other areas (than the Middle East). To be sure, they are companies of good caliber,” he said here last week. Gita Wirjawan The BKPM chief said five companies had expressed interest in developing the project.

Expres Airline flies to Poso Another commercial airline company will fly from Makassar to Poso and over the Poso-Manado-Makassar route. Head of the Poso transportation agency Poso Husni M Kasim said the airline has a capacity for 40 passengers, and “if everything goes well, the airline company will start flying over the Makassar-Poso route this month.” He added that the opening of the new route is earlier that originally planned. Kasim said another airline company, SMAC (Sabang Merauke Air Center), with the 20-pax Casa 212-200 had already been flying over the Makassar-Poso route since early this month.


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Display until April, 2010 /// N0. 10 Published by President University

Pertamina to Drill 33 Geothermal Wells in 2010 The plants will start to operate between 2011 and 2014


T Pertamina Geothermal Energy plans to drill 33 geothermal wells this year, as part of the second stage of the 10,000 megawatt power plant project. “The plants will start to operate between 2011 and 2014,” Pertamina Geothermal Energy Operation Director M. Irhas told Tempo last week. According to him, the drilling cost is between US$4.5 million and US$6.7 million for one well. In 2009, Pertamina had already finished drilling in 23 geothermal wells. The areas worked on by Pertamina are in South Sumatra, in Lumut Balai with a capacity of 4 x 55 megawatts, Ulubelu (Lampung) 4 x 55 megawatts, Hululais (Bengkulu) 2 x 55 megawatts and Penuh River (Jambi) 2 x 55 megawatts. Power plant development is also being carried out in Lahendong with a capacity of 3 x 20 megawatts and Kotamobagu of 4 x 20 megawatts, both situated in Manado, North Sulawesi. In West Java there will be the development of Kamojang Unit 5, which will pro-

duce 30 MW of electricity and the Karaha Bodas development of 30 MW. The electricity produced will be channeled to state-owned power firm PLN to fulfill national energy needs. “The project contract is for 30 years,” he said. Pertamina signs gas deals worth US$265 million

Meanwhile, Pertamina has signed four contracts worth US$265 million as part of the Upstream Oil and Gas Regulatory Agency BP Migas`s efforts to meet domestic gas demand. “Pertamina EP is committed to supply more than 71.2 billion cubic feet of gas to consumers,” Syamsu Alam, Pertamina EP`s exploration and development director, said here last week after signing the contracts. The four contracts covered Gas Sale Purchase Agreement (PJBG) between Pertamina EP and PT Medco E&P Indonesia, Amended PJBG between Pertamina EP and PT Pelangi Cakrawala Losarang, Amended PJBG between Pertamina EP and PT Tossa Shakti, and PJBG`s Head of Agreement (HOA) between Pertamina EP and PT Pertamina Gas. PJBG with PT Medco E&P


Indonesia is to supply 1.3 billion cubic feet gas for re-pumping stations at Pengabuan (Serdang, North Sumatra Province) and Ibul (South Sumatra). The agreement is effective from April 27 April 2009 until November 2013 or until the supplies are completed. The agreement with PT Pelangi Cakrawala Losarang concerns 6.2 billion cubic feet gas supply for industries at Losarang (Indramayu, West Java Province). The amended agreement is valid from 18 December 2008 until 31 December 2018 or when the supplies are completed. Based on the amended agreement with PT Tossa Shakti, Pertamina EP will provide 1.4 billion cubic feet gas to meet the demands of glass companies in Central Java. The agreement is valid from 1 January 2010 until 31 December 2011. PT Pertamina EP, based on the agreement with PT Pertamina Gas, will supply 62.3 billion cubic feet gas for Natural Gas Liquification (NGL) Plant in South Sumatera. The agreement is valid for 15 years since 1 January 2013. Pertamina EP is the second largest oil and gas producer in Indonesia. In 2009, Pertamina EP produced 127.1 thousand barrels per day, exceeding the target of 125.5 thousand barrels per day.

PLN to Build Two Gas Power Plants in South Sumatra State power utility PT PLN plans to build two gas power plants with a total capacity of 600 megawatts (MW) in South Sumatra this year. PLN president director Dahlan Iskan said in Jakarta last week the two power plants will be using gas from South Sumatra. “The power plants will also make use of the pipelines already in place there,” he said. He added that the power plant in Prabumulih will have a capacity of 200 MW, and the one in Musi Rawas 400 MW. The power plant in Prabumulih will use 45 MMSDFD of gas from the Singa Field operated by Medco EP Indonesia, and the one in Musi Rawas will be using 80 MMSCFD of gas from the Jambi Merang Field run by Hess Indonesia. “We have already signed a contract for the gas which will be supplied starting in March 2010,” he said. Dahlan added that PLN de-

If the choice is PLTG, the investment in the two power plants would reach US$420480 million, but if the choice is PLTGU, the investment may reach US$660 million. “We also have not decided whether the procurement mechanism would be a lease, operational cooperation, or otherwise,” he said.

Dahlan Iskan

cided to build the projects by itself as the gas supply has been secured and at a relatively low price. But the procurement mechanism was still being considered, he said. Several options had been considered such as gas power plant (PLTG) or more practical a power plant using both gas and coal (PLTGU).

Dahlan also said that according to an earlier plan, the gas supply from Singa and Jambi Merang will be brought to Java. But as the gas power plants currently operating in Java already have their gas supply already secured with the LNG receiving terminal in Jakarta Bay, the plan was canceled. And besides, the capacity of the existing power plants in the Java power grid is already adequate at 30 pct above peak load. In addition, investment in transporting gas to Java by pipeline is already too big.

In 2009, Pertamina had already finished drilling in 23 geothermal wells.

Bank Profits Increase Significantly The Indonesian Banking Industry recorded a significant net profit in 2009, as indicated by the increase in some banks’ net profits. BNI Bank recorded a 103% increase in net profit, from Rp1.22 trillion to Rp2.48 trillion The increase of net profit was due to net credit revenue, which increased 12% to Rp11.13 trillion over 2008. Besides that, fee based income increased 21%, from Rp3.55 trillion in 2008 to Rp4.3 trillion last year. “Our financial fundamentals are getting stronger,” BNI’s Managing Director CEO Gatot M. Suwondo told Tempo in Jakarta last week. Up until the end 2009, the total assets of this state-owned bank were Rp227.50 trillion or an increase of 13% compared to the last position at the end of 2008. Outstanding credit at the end of 2009 amounted to Rp120.84 trillion, composed of small and medium-scale enterprises credit, followed by corporatie and international credit. Meanwhile, consumer credit was only 15% and Islamic Syari-

ah financing 3%. Besides BNI, other banks recording significant profits were OCBC NISP and CIMB Niaga. The President Director of OCBC NISP Parwati Surjaudaja said that the net profit obtained by the bank up until the end of last year amounted to Rp435.9 billion, an increase of 38% compared to the previous year. According to Parwati, they will increase this year’s credit growth up to Rp7 trillion. It is predicted that the credit composition will not be too different from last year, which was corporate credit (34.4%), consumer credit (29.6%), commercial credit (1.8%), and micro credit (1.8%). OCBC NISP plans to increase credit rates if Indonesia’s inflation and economic growth increase. “We will increase the credit rate in the second or third quarter of this year,” she said. Even if the credit rate increases, the credit growth target could hopefully be reached. The net profit of Bank CIMB Niaga also rose, to 131% to Rp1.6 trillion (US$173 million).

Profitable Danamon Looking Ahead with Greater Optimism As of December 31, 2009, Danamon’s total loans reached Rp63.28 trillion, against its market penetration worth Rp34.08 trillion, or 54% of the total loans. Jeannifer Filly Sumayku


T Bank Danamon Indonesia Tbk. (Danamon) has announced that it made a net profit after tax (NPAT) consolidation of Rp1.53 trillion for the year 2009. Its capital adequacy ratio (CAR) stands at 20.7%, well above the minimum requirement of 8%, making it one of the highest performers in Indonesia. As of December 31, 2009, Danamon’s total loans reached Rp63.28 trillion, against its market penetration worth

Rp34.08 trillion, or 54% of the total loans. Danamon’s total worth of credit, including micro-credits obtained through Danamon Savings and Loans (DSL) and motor vehicle financing schemes through Adira Finance, grew 12% and 13% a year respectively. “We saw positive developments in all our business segments throughout 2009. This is apparent from the bank’s net profit after tax worth above Rp1.5 trillion,” says Sebastian Paredes, the bank’s president director.

“Despite going through tough domestic condition and global challenges over the past two years, we have made positive gains in business, and we are well positioned to do better in 2010,” he says. “We realize that Indonesia’s economy will improve in the future, so we have targeted a credit growth of 20% across all out business lines. Danamon’s crossselling activities have also become more intensive and in this way we have synergy among all our businesses,” Sebastian says. Meanwhile, Vera Eve Lim, the director and Chief Financial Officer, adds that the value of the bank’s equity had soared 49% in 2009, pushing its CAR to 21%, thereby making it one of the best banks in Indonesia. The bank’s net operating profit grew 19% last year to Rp5.65 trillion, while its net interest mar-

gin (NIM) was recorded at 12% Versa notes. Danamon Savings and Loans scheme, which serves small and micro segments through more than 1,200 units across Indonesia, saw a rapid credit growth to Rp1.32 trillion in 2009. Total credits under the scheme reached Rp 12.3 trillion, representing 19% of the bank’s total loans. At the end of 2009, financing through Adira Finance reached Rp19.13 trillion, or up 13% from the figure of the same period the year before. Loans for small and mediumscale enterprises (SMEs) as well as commercial loans reached Rp16.5 trillion, representing 26% of total loans. Retail credit which forms 8% of the bank’s total loans reached Rp4.9 trillion, mainly supported by business credit cards and mortgages.

“The quality of our funding increased substantially compared to that in previous years. This is indicated by increased ratio of giral money and savings (CASA) of third party funds, from 26% in 2008 to 33% in the year 2009. Savings account grew to Rp 15.0 trillion in 2009, from Rp 12.85 trillion in 2008,” says Vera. PT Bank Danamon Indonesia Tbk was established in 1956. As of December 31, 2009 it had over 1,900 branch offices and points of sales, including units for Danamon Savings and Loans (DSP) and Syariah schemes. By then it had been cooperating with branch offices of Adira Finance. Danamon manages more than 14,000 ATMs, including joint ATM access systems called ATM Bersama and ALTO in 33 provinces. Some 40,000 employees are in place to ensure customer satisfaction.

The President Post

10 March 12, 2010

Business Government Mulls Semen Kupang-Semen Gresik Merger The state enterprises ministry is still studying merging PT Semen Kupang with PT Semen Gresik to save the company, State Enterprises Minister Mustafa Abubakar said last week. “The merger plan still has to be studied again as there are still problems to be solved,” he added. He said it was still too early to merge the two state-owned companies, as PT Perusahaan Pengelola Aset (PPA) is still restructuring PT Semen Kupang.

The PPA earlier suggested four options for PT Semen Kupang, namely liquidation, restructuring, operational cooperation with investors and corporate action. “We cannot as yet decide the result of the study on saving the assets of PT Semen Kupang, whether it will be a capital injection, a merger or an acquisition,” he said. “Although the annual results of evaluation on PT Semen Gresik`s performance showed quite a significant development, this would not make a merger automatical-

ly a solution for saving PT Semen Kupang.” Abubakar said what was urgent now was increasing the production capacity of PT Semen Gresik to meet domestic demands, which are predicted to continue to increase until 2014.

tion a year and an annual cement consumption growth of around 6-7%, he said. PT Semen Gresik`s president director, Dwi Soetjipto, said the company would not only have assets but also liquidity and debts restructured.

PT Semen Gresik can still meet the national demand until 2014 with its production capacity of 47 million tons and growth in demand of 38 to 39% a year, in addition to around 10 million tons of additional produc-

He said unless PT Semen Kupang restructures its debts, PT Semen Gresik would not get any benefit from the planned merger. “It would even be better for us to build a new plant (rather than merging with it),” he said.

“The merger plan still has to be studied again as there are still problems to be solved.” Mustafa Abubakar State Enterprises Minister

Tourism in Eastern Indonesia to be Developed

Raja Ampat, Papua

Photo: David Doubilet/National Geographic

The government is developing tourism in Eastern Indonesia, according to Winarno, the secretary of the Tourism Destination Development Directorate General, “as this area will later become another main tourist destination besides Bali.” “Bali is the connector for tourism packages in Eastern Indonesia,” he said last week. Winarno also said that the potential for tourism in Eastern Indonesia was very big. Many tours and travel agencies, especially in Bali, have offered travel packages to these areas which are still lacking in access and infrastructure, he noted. “The number of tourists has gone up by 100% in the past two years, although the number is still lower than other established tourist destinations,” he said. According to Winarno, tour-

ists in Eastern Indonesia normally choose special packages such as diving, komodo watching or cultural and adventure tourism. Preferred destinations include Lombok, Flores (Komodo Island and Lake Kelimutu), Toraja, Makassar, and Raja Ampat in Papua. Liner passengers received by C. Java governor

Meanwhile, Central Java Governor Bibit Waluyo received in audience 107 foreign tourists visiting the province by the cruise ship M.V. World last week. The luxury vessel carrying tourists from the US, Asia and several European countries called at Semarang`s Tanjung Emas port Wednesday morning. The captain of M.V. World Dagsverik said he was proud to visit Central Java.

He said that the tourists of the ship were warmly welcomed at various tourist sites and destinations in the province. Governor Bibit Waluyo hoped the tourists would enjoy the many tourist objects and destinations offered to them, and expressed his wish that some day they would return to Indonesia. He also hoped that upon their return in their respective countries they could promote the tourist objects and destinations they visited. The marketing chief of the Central Java Cultural and Tourism Agency Budiyanto said the ship called on Semarang for two days, and that the tourists had visited places like Borobudur and Prambanan temples. He said there will be other ships to call at Tanjung Emas.

Car Exports Expected to Reach 80,000 units in 2010 Industry Minister M.S. Hidayat predicted car exports in 2010 would reach 80,000, close to 2008’s figures. “Car exports this year are predicted to be close to the figures of two years ago,” he said at a meeting with members of the Association of Indonesian Automotive Industries (Gaikindo) here last week. He is optimistic because the global market has started to recover. Car exports in 2009 dropped steeply due to world recession. In 2008 the country`s car exports reached 100,000 units but later dropped sharply to around 55,000 following a global financial crisis. He said the automotive industry and transport means in particular is one of the 10 big industries the government is relying on out of 30 industrial clusters already identified.

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The government has relied on the automotive industry to help boost the growth of industrial sector until the next five years. Hidayat said to accelerate automotive industrial growth in the country, supporting industries need to be developed, including automotive component industries. “Not only after sales service component industry but also industry of components for car assembling,” he said.



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The President Post

March 12, 2010 11

Human Capital Indonesia HR Organizations Must be Better at “Managing Culture” Naresh Makhijani

Getting the “culture right” requires a strong partnership between the senior management team (that owns the culture) and the HR organization (that facilitates the process to implement the appropriate organizational culture).


he Human Resources (HR) function cannot own the organizational culture. Indeed, repeated research over the last couple of decades proves that organizations fail to create a high-performing culture that deliver superior returns to shareholders when responsibility for culture is seen as a “HR thing.” Rather culture, as with strategy, has to be owned by the senior management team and therefore viewed as a core organizational capability, as shown in figure 1. Figure 1: Culture as a core organizational capability.

St r

St r u

t en


ure ct

eg at

iro n m



ace tpl ke ar ms te








Source: The Conductive Organization. SaingOnge/Armstrong.

But with ownership properly assigned, then HR has a critical role in ensuring that the required culture is put in place. But research to support our book Managing Human Capital in Indonesia: Best Practices in Aligning People with Strategic Goals finds that most business leaders do not believe that their HR organizations are playing a role in inculcating the right culture (figure 2). Figure 2. percentage of business managers within indonesian companies that believe that their hr organization helps to inculcate the required culture for delivering superior performance. Strongly Agree NA 5% 1.67%

Strongly Disagree 16.67% Disagree 16.67%

Agree 41.67% Neutral 30%

A recent poll by the world leading market research organization Gallup showed conclusively the importance of getting the culture right. Gallup found that fully 73% of employees are disengaged from the organizations for which they work. This means that they just turn up at work and go through the motions or, worse, do all they can to do as little as they can. Even more worrying is that a significant percentage of these disengaged worked are described as “actively” disengaged, which means that they are likely to purposefully derail organizational activities and sabotage performance improvement plans. They become “the enemy within.” Whether simply engaged or

“actively” disengaged, note that the vast majority of these employees joined their organizations full of hope, expectation and with a firm commitment to give their best. So what happened to transform these employees from being “actively” engaged to various degrees of disengagement? Simple, they became embittered and resentful as a result of the culture of the organizations that they joined: a culture that might be autocratic and where managers rule through fear, where people are not encouraged to participate in decision-making or empowered to take action or where suspicion and distrust inform all relationships – manager/ direct report, employee/co-worker, company/supplier and company/customer. We would argue that getting the culture right (that is one where most employees are “actively engaged”) is the requisite underpinning of all the valueadding work that HR can deliver. If the culture is not right then no matter what HR does or how hard it works, little will actually change in the workforce – and few of their interventions will make a real and lasting difference to performance. Yet, getting the culture right is understood in most organizations, at least at a superficial level. Within previous issues of The President Post we have spoken at lengths about the Balanced Scorecard, which is a strategic performance management framework that comprises a financial and three non-financial perspectives of customer, internal process and learning and growth and that identifies appropriate objectives, measures and targets. Within the learning and growth perspective (which is essentially about “people”) of just about every Balanced Scorecard that exists there will be a strategic objective that relates to culture. Typically this is articulated as “create a high-performing culture,” or something similar. Culture’s placement within the learning & growth perspective signals that HR is perceived as the custodians of an organization’s culture, as day-to-day responsibility for this perspective is typically devolved to the HR organization. The role of HR is to educate the senior team as to the importance of ensuring that the required behaviours, values and mindsets are in place to support strategic execution. HR must be able to demonstrate that strategies will not be successfully implemented without the appropriate cultural infrastructure. Hand-in-hand with culture is an understanding of values. Indeed, when culture is measured on a Balanced Scorecard it is typically through a metric of how employees are living the values or perceive their importance in the hurly-burly of daily operations. For HR professionals looking to create a high-performing culture the starting point should be an understanding of how to identify and shape corporate values. This process must involve the senior team and be facilitated by HR and perhaps with external consulting support. Values creation cannot be devolved to lower level teams as it is the senior leadership team that sets the cultural tone. The first task of the leadership team is to shape a robust view of the type of culture than the organization wishes to possess (entrepreneurial, sales-focuses, team-based etc) so to deliver to its strategies. The senior team can then agree on the specific values that support this culture and should also describe the appropriate behaviors. Describing the behaviors make the values “come alive” and be more than “nice sounding words.”

Krishnan Rajendran

As a case example, in our book we described how the senior team of one large USbased financial services company decided on the four values of: integrity, openness, respect for people and accountability. To ensure that they were more than “nice sounding words” each was subjected to a rigorous definition of meaning and was captured in a document that was circulated to all employees. For example, the definition for accountability was “valuing accountability is valuing the mindset that says: If it’s going to be, it’s up to me. It’s the belief that we are powerful people, capable of getting the results that we want.” The statement continued that valuing accountability “is the rock-solid belief in the importance of the marriage of individual growth and the financial success of the company.” Five guiding employee behaviors for accountability were then defined: • Accepts personal responsibility for his/her actions • Takes ownership of team goals and is accountable for his/her part in the process • Avoids making excuses or placing blame • Follows through on commitments and promises • Displays a “can-do” attitude and commitments to get the job done. To drive performance, how these values are lived out in the organization must be measured. Formal surveys, or opinion polls, are typical mechanisms for capturing how employees view how the values are being lived and for assessing the culture generally. Such surveys can be deployed in either paper or online electronic formats. In our book we published a useful cultural survey instrument, a portion of which we publish here. The employee who fills in the profile questionnaire has to state on a scale of 1-7 which of positive and negative statement most accurately describes the culture of the organization. A strength of this profiling technique (and there are many similar) is that it unambiguously points to the cultural strengths and weaknesses of the organization as perceived by the employees themselves. This can serve as a powerful “gap analysis” between the desired organizational behaviors and, as articulated through values and the “as is” state. For example, if the value calls for teamwork but there is a high agreement with the profile statement “narrow focus, turf issues, we versus them” then considerable work will need to be done to inculcate the teamwork value. It will also provide HR will crucial data with which to prioritize people-related interventions. Getting the “culture right” requires a strong partnership between the senior management team (that owns the culture) and the HR organization (that facilitates the process to implement the appropriate organizational culture). We would strongly argue that the success of the work that HR does with regard culture largely determines 1) the longterm success of all their other performing-enhancing interventions and 2) whether or not they are accepted as sought-after business partners. This article is extracted from the book: Managing Human Capital in Indonesia: Best Practices in Aligning People with Strategic Goals (Azkia, Indonesia, 2009)

James Creelman




Sometimes both













People clearly understand mission, vision and goals

People are unclear about mission, vision and goals


Hierarchical/boss driven

High service consciousness/focus on the customer

Low service consciousness/low focus on the customer

Teamwork/mutual support and cooperation

Narrow focus/turf issues/we versus they

People are highly accountable for results and actions

People find excuses/feel victimized/blame others

Open to change

Resistant to change

Encouraged to innovate/creativity welcomed

Do what is told/risk averse/poor support for new ideas

High performance is recognized and rewarded

High performance is expected but not rewarded

Core values and ethics are very important

Values and ethics nit stressed or tend to be ignored


Insecure/fearful or negative environment

The President Post

12 March 12, 2010

Management Indonesian Leadership in Changing Times: It’s Leading with Style

Dewi Tobing Transforming Learning Hay Group Jakarta

A high performance climate is one that makes optimal use of everyone’s abilities. This climate suggests that employees are fully engaged and exerting the greatest amount of discretionary effort and organizational commitment. An energizing climate is one that facilitates a high degree of discretionary effort and organizational commitment. Employees experiencing neutral climates are unlikely to be exerting their full degree of discretionary effort or commitment. De-motivating climates are likely to result in high turnover and frequent absences, leading to employees to perform significantly below their optimal levels. This research was based on a gap analysis of employees’ ideal working climate and the climate they were actually experiencing on a day-to-day basis created by their leaders. The gap was defined here as the difference in what the subordinates expect from their leader and what they actually get in each dimension of organizational climate. The number of gaps out of six dimensions of climate that are created by leaders, relates to the positive or negative climate the subordinates feel. The larger the amount of gap, means the more de-moti-

Turning on the Style

So, what’s going wrong? What makes the difference between a leader who creates a de-motivating climate and a leader who creates a high performance one? Our research shows that it mainly boils down to the style. Backed by over 30 years of research, Hay Group has identified the six leadership styles that have the biggest impact on team climate – Directive, Visionary, Affiliative, Participative, Pacesetting and Coaching. We also

The Hay Group research shows that the majority of Leaders operating in the Indonesian market create a de-motivating climate by using only two or less styles of leadership (see figure 3). By contrast, the majority of leaders creating high performance and energizing climates were using four or more leadership styles. Looking closer at which styles were used by the leaders creating the high performance and energizing climates, there were telling differences. The leaders making the most positive impact on the performance of their team drew on

Looking at the composite results on the inventory of leadership styles of Indonesian Leaders (see figure 4 and 5), both leaders and their subordinates agree that the Directive style is the dominant style leaders use in facing business and managerial situations. Leaders assessment on own style is saying that they also use a Coaching style; however according to their subordinates, this Coaching style is only a back-up style, not used on a frequent basis. These two graphics also show that the composite of leadership style has a similar shape, between leaders and subordinates assessment. It means that the leaders have quite a good self awareness on their style.

habits. Perhaps the biggest risk is adopting an exclusively Directive approach, which at its worst involves micromanaging employees. Used in isolation this can adversely affect the overall work climate within an organization. When leaders use a mixture of styles they create the clarity, flexibility and the responsibility that employees need in order to be effective. They’re also able to maintain a focus on high standards and create much needed team commitment that is often in short supply during rough times. These styles demonstrate a longer term approach taken by these leaders. They arouse their people’s discretionary performance by explaining the why behind the what, showing an interest in their team as people and understanding what motivates them. In addition, they involve their team in the decision making that supports the execution of the team’s objectives and builds capability to enable effective delegation and trust. They give employees goals to focus on and room to innovate, while also encouraging them to work collaboratively. All of this is important because employees that are engaged by the right kind of leadership will go the extra mile.

During a real business challenge it’s easy to fall into bad

The aggressive growth experienced by Indonesian compa-

nies has resulted in companies to put people in leadership positions without giving adequate time or exposure to the leadership challenge they face. Leadership roles are too often filled by individual contributors who are individually the best at what they do, but are unprepared for the demands of leading others. The key is to invest in a leadership program that can guide managers on how to deliver engaging high performance climates and consistently measure the results. Use feedback data to help leaders understand the impact of their behaviours. In addition, organizations need to provide support and challenge their leaders to broaden their leadership repertoire, invite them to “Lead with Style”. About Hay Group Hay Group is a global consulting firm that works with leaders to turn strategies into reality. We develop talent, organise people to be more effective, and motivate them to perform at their best. With 86 offices in 47 countries, we work with over 7,000 clients across the world. Our clients are from the public and private sector, across every major industry, and represent diverse business challenges. Our focus is on making change happen and helping organisations realise their potential. Visit

Figure 3: Leadership Profile of Indonesian Leaders that are creating motivating and de-motivating climates

90 80 70 60 50 40 30 20 10 0 ive


re Di




si Vi



fil Af




ci rti



a Co



Motivating Climate




s ce

De-Motivating Climate

Figure 4: Composite of Leadership Style from Leaders’ Assessment












Figure 1: Organizational climate created by 476 leaders in Indonesia across industry sectors.

90 80

High Performance 10%


Energizing 8% Neutral 10%

De-motivating 72%

Backup Dominant

Businesses that win in a tough business environment provide clear direction in the face of uncertainty, reassuring when necessary, all the while continuing to push for results. Successful leaders concentrate on creating energized and engaged work climates. They get people looking at what they can do, so that they feel empowered and energized to help the company through the changes and challenges it faces. They know it’s important not to leave employees in the dark about the company’s strategy. These leaders make decisions quickly and then communicate them effectively to staff so people have an area to focus on moving forward. Worryingly, Hay Group study reveals that today’s leadership talent appears to be merely average at creating conditions for success. In our review of 476 leaders from high profile organizations operating in the Indonesian market (see figure 1), we found that 72% of leaders weren’t engaging the people that they lead and in fact were effectively de-motivating them. Only 18% of leaders were creating a high performance and energizing climate.

Directive: demands immediate compliance. To be used sparingly but is effective in a crisis or to kick start an urgent turnaround. Visionary: inspires and is able to explain how and why people’s efforts contribute to the vision. Moves people towards shared outcomes through empathy and clarity. Affiliative: creates harmony that boosts morale and solves conflict. A useful style for healing rifts in a team or for motivating during stressful times. However sustained usage, without other styles to balance, could lead to toleration of mediocrity and underplaying the importance of performance in the reward system of the organization. Participative: values inputs and gets commitment through participation. A listener, team worker, collaborator and influencer. Pacesetting: drives to achieve through own efforts, has high standards and initiative. Can be impatient and prone to micromanaging and leading only through example. Coaching: encourages, delegates and improves performance by building their people’s long term capabilities. Listens and helps identify their people strengths and weaknesses.

a much broader range of styles principally Visionary, Coaching, Participative, Affiliative and also Directive. They use most of them in a given week, seamlessly and in different measure, depending on the business situation. Leaders who had a negative impact on organizational climate rely too heavily on one or two styles. Their styles of leadership tend largely to be Directive. This style shows a focus on the task in the short term at the expense of the bigger picture.

60 50 40 30 20 10 0 Directive


Figure 5: Composite of Leadership Style from Subordinates’ Assessment Figure 2: The 6 Dimensions of Organizational Climate 80%












90 80



Organizational Climate Team Commitment


70 Backup Dominant

Therefore, organizations need leaders (at all levels) that are ready to strengthen their organization, aligning their people with the strategy and positioning them for success.

Keep Employees Energized and Engaged

Clarity: all employees know what is expected of them and understand how those expectations relate to the larger goals and objectives of the organization. Standards: the degree to which people feel that challenging but attainable goals are set for both the organization and its employees. Also the emphasis that employees feel management puts on improving performance, doing one’s best and that mediocrity is not tolerated. Responsibility: employees have authority delegated to them to which they can run their jobs without having to check everything with their boss. Also the degree to which they feel fully accountable for the outcome and are encouraged to take calculated risks. Flexibility: the degree to which employees feel there are no unnecessary rules, procedures, policies, and practices that interfere with task accomplishment and good new ideas are easily accepted. Reward: employees feel that they are being recognized and rewarded for good work. Recognition is directly and differentially related to levels of performance. People know where they stand in terms of their performance Team Commitment: The feeling that people are proud to belong to the organization, will provide extra effort when needed, and trust that everyone is working toward a common objective.

know that the more of these leadership styles a leader has under his/her belt, the better climate they tend to create within their organization, team and among subordinates. This is also clearly demonstrated in our analysis with Indonesian Leaders. The Indonesian leaders that are able to use the full range of leadership styles create energizing, engaging work climates.

Percentile Shown

Leaders need to act decisively to anticipate for market changes, defend and capture their share of the market and stay ahead of the competition. Employees need a working environment that inspires their individual effort and team commitment to drive performance.


ecades of Hay Group research shows that the right climate can increase bottom line performance of teams by up to 30%. Significant improvement in organizational performance can be expected to result from improved organizational climate. So, slightly improving an organization’s climate can have a huge impact. Studies done by Hay Group have shown that leaders who can create a positive work climate for their people make an impact on bottom line performance. Below are two examples: • We studied 33 new Directors of a global technology firm and found out that those who created a high performing, energizing climates outperformed their peers by $711 million in profit annually • In a similar study of leaders, within a call center, we found that teams led by managers creating positive climates delivered 26% more sales than their target – compared to additional 4% delivered by their peers. They also had substantially lower absence rates and lower staff attrition.

vating climate the subordinates get and the larger the opportunity lost in terms of discretionary effort. Climate is therefore the profit and loss statement of how effectively an organization is deploying its human resources. It is this set of elements that together create an engaging, empowering work climate (see figure 2).

Ed Krancher Managing Consultant Hay Group Jakarta

Percentile Shown

When you ask Indonesian leaders whether or not the country is going through a recession they will provide you with different answers depending on the industry they work in. What they all agree upon though is that they are facing a tough economic climate with accelerated business changes.

High Performance Climate Generates Bottom Line Performance

Lusi Lubis Managing Consultant Hay Group Jakarta

60 50 40 30 20 10


0 Directive


The President Post

March 12, 2010 13

Investment Photo:

Telkomsel Eyes Rp400 billion from Mobile Advertising


obile advertising takes up about 10% of Indonesia’s advertising market worth about Rp4 trillion annually and Telkomsel hopes to tap 10% of the Rp4 trillion mobile advertising market. “The advertising industry has entered a new phase in delivering messages to the public through digital technology. Given this condition, we came up with a new creation and innovation for our services by providing cellular and digital advertising service convergence,” Telkomsel President Director Sarwoto Atmosutarno said during the launch of mobile advertising service in Ja-

karta, late last month. The mobile advertising service includes commercial service delivery to its customers via SMS, NSP, MMS, NSP, outbound call, and cell broadcast, and Telkomsel is facilitating all industries with the new massive and on-target advertising solution. “The mobile advertising service contains various information and offers according to Telkomsel’s customer profiles which have now reached 80 million customers,” said Sarwoto. To use the mobile advertising service, advertisers can collaborate with 33 media sellers. “We will invite media sellers to become our partners to com-

pile the advertising contents and we hope to get 100. Meanwhile, we already have more than 100 advertisers and we hope to see the number grow to more than 1.000,” he said. In 2009 Telkomsel delivered 500 advertisements that involved more than 100 top brands from various product categories such as banking, food and beverages, consumer goods and automotive. Green BTS

To support the green movement, Telkomsel has already used 132 environmentally-friendly base transceiver stations, making it the telecommunication company with the most green BTS

in Asian country. BTS recently operated its 132th green BTS in Senayang Island, Riau Islands. Telkomsel GM Radio Operation and Power System Iwan Chairul said the green BTS is spread across the Indonesian regions, Sumatra 33 BTS, Java 22 BTS, Bali and Nusa Tenggara 23 BTS, Kalimantan 18 BTS, Sulawesi, Maluku and Papua 36 BTS. “They have existed since 2005. This year we will invest in 39 solar cell BTS,” he said. Investment for one solar-powered BTS is about Rp1.2 billion that can be used for about 20 years. Alternative use of energy sourc-

es has become an option for telecommunication operators to secure power supplies to operate their BTS. Aside from solar cell, Telkomsel also adopts fuel cell technology with hydrogen and uses environmentally-friendly technologies that do not generate pollution, noise or smells. “In the future, Telkomsel will develop BTS using alternative energy sources. The most suitable for Indonesia’s geographic condition is microhydro-powered BTS that can take advantage of the rivers around the BTS as well as develop BTS that uses bio fuel,” said Iwan.

Reliance Books 560% Net Profit Surge Reliance Securities’ (RELI) net profit soared 560% to Rp66 billion last year from only Rp10 billion in the previous year with Rp36 billion of the company’s profit contributed by BUMI shares. RELI President Director Orias Petrus Moedak attributed 90% of the profit from stock portfolio to BUMI shares. Of the Rp66 billion net profit, Rp40 billion came from the company’s stock portfolio and the remaining Rp26 billion from profit as a stock broker. Moedak said the company no longer has BUMI stocks in its

portfolio because it has already sold them all. This year the company is aiming for 20% net profit growth to Rp79.2 billion. To achieve the target, the company plans to open 5 branches this year in Java and Sumatra. So far, it only has branches in Java and Bali. “We hope to open one in Medan by the end of the year. We opened one in Java at the beginning of the year, in Solo and it was quite interesting,” Moedak said.

100 CEOs Optimistic Profit to Exceed 10% Based on a survey conducted on 100 chief executive officers (CEO), the majority is convinced that they would see their profit and assets growing by more than 10% this year. Indonesia’s rating agency Pe“Of course we expect 2010 meringkat Efek Indonesia (Pe- to be better. We were able findo) is upbeat with Indonesia’s to maintain the economeconomic growth this year. ic growth and the momenBased on a survey conducted tum but we will not revise the on 100 chief executive officers growth target just yet. The (CEO), the majority is convinced downside risk is still lingering that they would see their profit and pulling down our ecoand assets growing by more than nomic growth,” Mulyani said recently. 10% this year. Muly“74% proani predictjected reveed that the nue growth “Of course we expect negative risk of more than 10%, while 2010 to be better. We from the global econ65% expect ascan sets to grow were able to maintain omy the economic growth emerge in by more than second 10%,” said Peand the momentum the half as infindo President but we will not revise dustrialized Director Kahlil Rowter dur- the growth target just c o u n t r i e s wit hdraw ing a Media Foyet. The downside rum in Jakarta their stimulast month. risk is still lingering lus. The earliThe sur- and pulling down our er than exvey showed economic growth,” pected debt that 85% becrisis in lieve that busisome Euroness will be pean counmuch better Sri Mulyani tries showed in this year of Finance Minister that ecothe Golden Tinomic resilger compared ience in that to last year. Although 2009 was engulfed by region is not as strong as many the global financial crisis, 93% believed. She also considered the US said the year was still better than economy still vulnerable de2008. “The optimism from the busi- spite its fiscal consolidation ness sectors captured in this sur- policy. Mulyani said the govvey is quite positive regardless of ernment will retain household the problems displayed on tele- consumption growth above vision (for example, the special 5% in the medium term to House committee on the Bank get the economy to grow at more than 6% on average per Century case). “Key players remain upbeat year. Household consumpwith Indonesia’s economy,” he tion makes up about 65% of the country’s gross domestic said. The government has set an product. Household consumption economic growth target of 5.5% this year. Finance Minister Sri grew 4.9% last year, down Mulyani said despite the condu- from 5.3% in the previous cive condition, Indonesia still has year. The government is tarto watch out for external factors geting household consumption growth at 5.2% this year that could affect the economy.

Bank acquisition

Reliance Securities is planning to acquire a domestic bank and has readied Rp130 billion for the acquisition. The company is currently holding talks with two banks. “We intend to invest in a bank. We have readied the funds and done a lot of negotiations, but so far we haven’t struck a deal,” Moedak explained, adding that the management has obtained shareholder approval for the plan. “We have met about 10 times but still haven’t reached any agreement,” he said, while declining to disclose the names of the banks. Furthermore, he explained that the company intends to become the majority shareholder in the bank. “Our expectation is that the bank, which will be our subsidiary, can form a synergy with us,” he said. The management has also secured approval to issue Rp150 billion bonds but decided to hold it due to sufficient capital. “We still have suf-

ficient amount of capital. But if the plan goes ahead, we will use the proceeds for marginal expenses,” he said. This year, Reliance is aiming for 20% customer growth which will be boosted through the newly launched online trading program dubbed Relitrade. “The online trading program has actually been around since last year but we’ve only launched it recently,” Moedak said. The securities company invested Rp2 billion in the online trading program. Daily customer transaction at Reliance reaches Rp150 billion and the company hopes to boost it to Rp200 billion with online trading.

This year, Reliance is aiming for 20% customer growth which will be boosted through the newly launched online trading program dubbed Relitrade.

Kebon Jeruk-Penjaringan toll road (JORR W1)

Bosowa Takes Control of JORR W1 Toll working on another toll project just yet because most of the investments on toll projects that have been tendered are hindered by land issue,” he said. The Makassar-base company is so far operating the Makassar toll road and two toll lanes in Jakarta (W1 and Bintaro). The current shareowner composition in BLJ is Bangun Tjipta Sarana with a majority control of 52%, Jasamarga 23% and Bosowa Group 25%.

Bosowo Group is set to raise its share ownership in Jakarta Lingkar Baratsatu (JLB), the operator of the Kebon JerukPenjaringan toll road (Jakarta Outer Ring Road West 1/ JORR W1). Bosowa will increase its stake from 25% to 52% in July this year by injecting Rp250 billion which will mostly be funded from internal sources. The company had so far invested Rp218 billion in the project for a 25% share ownership. Bosowa Group Chairman Erwin Aksa said the move is part of the company’s agreement with other shareholders which allowed the company to gradually raise its stake until July 2010. Erwin added that with a 35-years concession, the company hopes to reach a break event point in 7-8 years time. Bosowa does not plan to increase its investment in the toll sector any time soon. “We haven’t thought about

In the toll project development, which costs Rp1.22 trillion, Bank Mandiri acts as the leader in the loan syndication with members consisting of Bank Bukopin, Bank DKI, and Bank Panin with each pledging Rp100 billion loans. The remaining Rp685 billion is funded by Jakarta Lingkar Baratsatu (JLB). The Kebon Jeruk-Penjaringan toll road stretches through four sub-districts, namely Kembangan, Cengkareng, Kalideres, and Penjaringan.

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The President Post

14 March 12, 2010

Leadership SDWTs: What are They and Where did They Come From? Self Directed Teams comprise of members who are jointly responsible for whole work processes, with each individual performing multiple tasks

SDWTs is just not another management fad and there are actual real world examples to show that they outperform Traditional Operations; and the best research exists on two decades of experience within Procter & Gamble, showing up for, as one example, a 30 to 50 percent reduction in manufacturing costs.

By Dr. Karan Singh MBA, DBA


he origins of Self Directed Work Teams are associated with an Englishman named Eric Trist, who, in the 1950s coauthored a paper which used the term socio-technical system. The concept challenged many of the elements of Frederick Taylor’s Scientific Management. Scientific management was developed in the beginning of the century and used extensively by Henry Ford in his automobile plants in the 1930s – a system that proposed specialization through breaking down job responsibilities into small parts, enabling faster efficiency and bringing about predictability and a sense of order. Thus setting the stage for mass production and standardization in factory work. Scientific Management had facilitated a number of advantages like improvements in quality and efficiency, as well as allowing workers with little or no experience, education or training, to become fairly productive fairly quickly. At the same time Scientific management had its downsides. Workers pursued their tasks with a narrow focus and it did not allow them an opportunity to understand the whole work process. Nor let them participate in a variety of tasks, and in their planning and in their improvement. In the words of Fisher (Kimball

concept spread to service organizations as well. The present SDWT

Fisher’s definition: Self-directed Team (noun): A group of employees who have dayto-day responsibility for managing themselves and the work they do with a minimum of direct supervision. Members of Self Directed teams typically handle job assignments, plan and schedule work, make production-and/or servicerelated decisions, and take action on problems. The key element being EMPOWERMENT, and according to Jack Sherwood, a prominent STS (Social & Technical Systems) consultant, SDWTs sit on the higher end of the Empowerment continuum (Figure 1) Self Directed Teams comprise of members who are jointly responsible for whole work processes, with each individual performing multiple tasks; in many cases like small self sustaining businesses that can be jointly managed by the organizational membership. In an example from Procter & Gamble Lima, the company was divided into Product Organizations where team members decided on who would do what, rather than having individuals separated into jobs like operators, mechanics and trades people. Everyone had a common title – Technician – and everyone shared responsibility for the team’s success.


true empowerment is achieved only when ALL FOUR variables work together in harmony. SDWTs is just not another management fad and there are actual real world examples to show that they outperform Traditional Operations; and the best research exists on two decades of experience within Procter & Gamble, showing up for, as one example, a 30 to 50 percent reduction in manu-

Figure 1: SDWT sit on the higher end of the Empowerment continuum Selected Employee Input

Ongoing Employee Taskforces


Fisher, author of ‘Leading Self Directed Work Teams’), “Perhaps most detrimentally, it prevented them from understanding the customers who used their products and services.” This almost forced workers to adopt and inward view concerning job security and job rights rather than a larger view about customers and customer-related efficiencies; and these job concerns often worked against the good of the enterprise as well as the individual. Socio-Technical Systems

This was Trist’s alternative to scientific management, which he discovered through observing the work of an extraordinarily productive coal mining team in postwar England; from where he postulated that the formation of a team that had complete (joint) responsibility for (a) the entire operation, (b) the interface between its people (the social system) and (c) their tools, would lead to more rewarding job performance and enhanced productivity. The early roots were seen in the United States in the 1960s and 1970s with experiments called “semi-autonomous work teams ”or “technician” operations started in Procter & Gamble plants in Ohio and Georgia. Later the

Self-Directed Work Teams



Fisher captures the essential differences between Traditional Organizations and SDWTs (Table 1) SDWTs focus on people as being the competitive advantage and to get the best out of people they need to be empowered – as the author (fisher) states, “Competitive Advantage comes from fully utilizing the discretionary effort of the workforce, not from buying the latest gadget or using the latest management fad. Voluntary effort comes from employee commitment, and commitment comes from empowerment. It is simple human nature. Why? In the words of Doug King, human resources manager at Weyerhaeuser, ‘It’s hard to resist your own ideas’.” Self Directed Teams are the most advanced form of Empowerment. The next question is, what exactly is empowerment? Fisher describes it as a function of four variables: ARIA Authority Resources Information Accountability Fisher emphasises that if any one of these variables is zero, then the whole is also zero, such that

facturing costs. In the same breath the author also offers a caveat or two: • That SDWTs are not an end in themselves but a means to an end. They are a method of improving results, not a substitution for them, and offers an example of a mistake – “Sorry, our poor customer service is caused by the fact that everyone is in a team meeting right now”. • Some believe that SDWTs connote an absence of management personnel, which is not true. They mean a change in management role and not the elimination of supervisors and managers. • Some also believe that the name implies freedom to do whatever one wants. This is also not true. All teams have to operate within boundary conditions, and Fisher offers alternate terms that could overcome these misconceptions – Work Centred Teams or High Performance Work Systems. In summary, Fisher says that these operations are ones in which skilled, well informed people take direction from the work itself rather than from management.

Table 1: The essential differences between Traditional Organizations and SDWT Self Directed Work Teams

Traditional Organizations

Customer Driven Multi-skilled workforce Few job descriptions Information shared widely Few levels of management Whole business focus Shared Goals Seemingly chaotic Purpose achievement emphasis High worker commitment Continuous improvements Self-controlled Values/Principle-based

Management Driven Workforce of isolated specialists Many job descriptions Information limited Many levels of management Function/Department focus Segregated goals Seemingly organized Problem-solving emphasis High management commitment Incremental Improvements Management controlled Policy/Procedure-based

Dr. Karan Singh MBA, DBA, Organization Development Consultant, is presently Management Development Director at President University, and Managing Consultant of PT King & Singh Consulting. In his seventeenth year in Indonesia, Dr. Singh has wide experience, across a range of multinational companies, in areas like corporate training, market entry strategy, integrated marketing (external and internal marketing), communications, and human performance improvement.

Company In-house Programs. Public programs at President Executive Club. Two day training programs Week long development programs One day seminars Hybrid Programs to suit your Training Needs Assessments University Certification

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The President Post

March 12, 2010 15

Corporation Photo:

Unilever: Providing Enjoyable and Meaningful Life to Customers

Unilever’s success does not come automatically. It is the result of long years of commitment to the business philosophy and core values laid down by its founders. By Jeannifer Filly Sumayku


nilever is a multinational company that needs no introduction. This huge consumer goods enterprise has established its presence in various countries, including Indonesia. Its products from Europe have penetrated not only urban communities, but also rural areas across Indonesia. Unilever’s success does not come automatically. It is the result of long years of commitment to the business philosophy and core values laid down by its founders. The multinational giant came into being following the merger of two competitors which used to be hostile to one another—Margarine Unie and Lever Brothers. One of its business leaders and smart marketers worth remembering is William Hesketh Lever. He was known as a hard-working, innovative, and skilled marketer who formulated the foundation of what is now a proud symbol of success in global consumer goods business. Born in Wood Street, Bolton, England, on Sept 19, 1851, William was raised in a family of seven children and learned to do business from his parents. William’s first job was relatively trivial—producing cutters and soap bars. From morning till evening he worked hard in return for £7. He became his father’s business partner until 1872, the same year he began producing Lever’s Pure Honey soap, which led him to become a soap manufacturer. Unexpectedly, the soap sold well, as purchase orders streamed in from every direction. Knowing that prospects of the soap market were bright, William went on to massproduce the soap in a smaller package. The soap w a s manufactured

at Warrington factory in 1884 through a partnership with William Hough Watson, an alchemist. The soap was named Sunlight, which used natural raw materials of vegetable oil while other soap products used animal fats. The sales of this soap were amazing. In the span of three years, the factory managed to produce 250 tons of such soap per week and sold 40,000 tons of it every year. After that, he moved the factory to the suburb of Liverpool in Wirral area, a small village that swiftly transformed itself into an industrial centerlater known as Port Sunlight. William managed to run the industry which provided field jobs to many people. This way he nurtured the local community’s sense of belonging. They began to feel as if they owned the factory.

alone in the business, as Procter & Gamble (P&G) emerged as a strong competitor it should not ignore. After the acquisition of Thomas Hedley Ltd and penetration into the British market in 1930, Procter & Gamble emerged as a tough competitor and a key actor in business that Unilever could not underestimate. This competition encouraged William to chart further innovative ideas; he produced shampoo products, liquid soaps, and detergents. Its margarine was enriched with nutritional products in the form of vitamin A and D. Such innovation put on hold the expansion of Procter & Gamble, giving Unilever an upper hand to become a market leader in Europe and the Americas. In fact, during World War II, the armies from Europe and the United States got their logistic supplies from Unilever.

By 1887, Sunlight had penetrated Europe, America and Africa. Through this soap, the British Empire reaped many benefits. Five years later, the soap attracted the American market, and Lever Brothers were able to retain a handsome market share in America. After having penetrated many countries with this soap, William developed two more brands of soap—Lifebuoy and Lux Flakes. By this time he had already started to produce canned foods, processed fish, sauces, and ice cream. His fame and that of the products he was associated with paved the way for his canned food business to be accepted widely in the market. Sales figures soared and the products remained in many people’s hearts.

Apart from William, another key trendsetter that played an important role in instilling the values of Unilever was Countway, who promoted Lux Soapflakes as a soap that does not harm cottonbased clothing and silk. Countway’s marketing strategy led to a sharp increase in the sales of Lux bathing and toilet soaps as well as Rinso detergent. Both William and Countway advocated the importance of large-scale promotion and advertising, a strategy that is retained even to date by Unilever offices across the globe. Unilever is known as one of the big-spending advertisers in any country to date because it believes that promotion through mass media advertising is the right way to bring the product message directly into the hearts of the customers. After World War II, there was a “consumer boom” in the sense that many people began to purchase consumer goods in large scale across Europe. This new tradition aroused Unilever’s awareness that it should focus on enhancement of technology in order to strengthen customer satisfaction. Port Sunlight was made the center of research and product development. Since then Unilever has expanded to many countries, including Indonesia.

At the end of 2008, U N V R ranked third in the Indonesia Stock Exchange in terms of market capitalization. Unilever owns eight main factories in Jababeka Industrial Estate, Cikarang, West Java, and Rungkut Industrial Estate, Surabaya, East Java, with its head office in Jakarta. The company’s products comprise at least 30 key brands sold through a network of about 400 independent distributors and hundreds of thousands of outlets throughout Indonesia. Products are distributed through central distribution centers, satellite warehouses, depots and other facilities. Based on Unilever’s Annual Report of 2008, the HPC (Home and Personal Care) business grew at 21.1% (in 2007 it was 10.8%) and contribution from foods and ice cream businesses saw accelerated growth to 35.1% (it was 19% in 2007). The strong growth in net profit for the year was attained against a background of cost increases in many raw and packing materials due to higher global prices in oil, chemicals and other commodities.

PT Unilever Indonesia, which later became a publicly-listed choice of portfolio investors, was established on 5 December 1933 as Lever’s Zeepfabrieken N.V. by decree No. 23 of Mr.

The net cash flow from operating activities was Rp2,786 billion in 2008, up from Rp2,250 billion in 2007. It invested Rp1,005 billion in capital expenditure in 2008, in part for expansion of

During World War I, Lever Brothers, which was then based in London, approached Margarine Unie Company based in Rotterdam, The Netherlands, and merged with it because they produced similar consumer goods. This merger gave birth to a new company called Unilever as of January 1, 1930. Following the merger, Unilever maintained two headquarters—one in London and the other in Rotterdam. As a result of the merger, it had a larger amount of profit and dividends as well. And with this Unilever felt much stronger to expand its wings across the globe. But soon Unilever discovered that it was not

A.H. van Ophuijsen, a public notary in Batavia (now Jakarta), and approved by the then GovernorGeneral of Dutch-Indies. By decree No. 92 of public notary Mr. Mudofir Hadi SH dated June 30, 1997, the Company’s name was changed to PT Unilever Indonesia Tbk. The company offered its shares to the public in 1981 and since January 11, 1982, it is registered at the Jakarta Stock Exchange (now Indonesia Stock Exchange) under the initial of UNVR. At the company’s Annual General Meeting on June 24, 2003, the shareholders agreed on a stock split, reducing the par value per share from Rp100 per share to Rp10 per share.

factory operations to meet rising demand. But in 2008 it also completed construction of the largest skin care factory in Asia at Cikarang, and invested in a new SAP enterprise resource planning system across all their sites. Dividend payments remained high with a total of Rp1,999 billion in 2008, an increase of 21.9% from 2007. With an eye to the investment needs to support its growth, Unilever has remained committed a high dividend payout policy in the foreseeable future. Based on CLSA prediction, Unilever’s income for 2010 will increase by

16.02% to Rp21.22 trillion—up from Rp18.28 trillion in 2009. Net profit will also increase 18.12% to Rp4.19 trillion from Rp3.55 trillion in 2009. As of 9 March 2010, UNVR stock at Indonesia Stock Exchange was strong enough closing at the position Rp11,900. The stock was transacted 221 times with a total volume of 1,034,500 stocks worth Rp12.2 billion. In 2008, Unilever’s worldwide turnover was €40.5 billion. The company employs around 174,000 people in around 100 countries worldwide. Unilever’s success cannot be separated from the solid values that William had implanted many years ago. One of his strategies is to build good brand image. This is why Unilever gives high priority to brand imaging of its products rather than popularizing the name Unilever itself. A network of distributors all over the world also contributes to Unilever’s strength and market leadership. All over the world Unilever aims to create a clean environment to live in; reduce women’s workload; improve people’s health and personal charm; and promote a life that is more enjoyable and meaningful for its customers. All these values can be summarized in one word: vitality.

All over the world Unilever aims to create a clean environment to live in; reduce women’s workload; improve people’s health and personal charm; and promote a life that is more enjoyable and meaningful for its customers. All these values can be summarized in one word: vitality.

The President Post

16 March 12, 2010


A Charming Destination with Myriad Prospects Tanjung Lesung is one of the most potential tourism objects in Banten, a new province in Indonesia, and is situated at the westernmost tip of Java Island. By Jeannifer Filly Sumayku


rapidly developing tourist resort is attracting the attention of international business communities in Indonesia. This popular destination is 170 km away or only a three-hour drive from Jakarta. To get there, take the JakartaMerak toll road and go through the scenic inland route of Serang-Pandeglang-Labuan, Banten province. It is a “prime location” as reported in 1987 by the Japan International Cooperation Agency (JICA). Tanjung Lesung is one of the most potential tourism objects in

Banten, a new province in Indonesia, and is situated at the westernmost tip of Java Island. It seems unbelievable that after passing through the busy toll road, escaping Jakarta’s hustle and bustle, we can find a stretch of beautiful landscape that enriches the western beachfront of Banten province. This city has a lot of historical relics such as the ruins of Surosowan Palace, Kaibon Palace, ‘Masjid Agung Banten’ [Banten Great Mosque], Speelwijk fortress and Chinese temple Avalokiteshvara. There is also the harbor of Banten, Karanghantu [literally trans-

lated as devil rock’s harbor] that is still being used to date despite the fact it was constructed centuries ago. Banten Province consists of four regencies, two cities, 94 districts, 128 sub-districts, and 1,339 villages. Banten is geographically strategic because it links Java with Sumatra as well as the capital city of Indonesia and the West Java province. This is why it is a potential market. One of the pioneering companies developing this region is PT Banten West Java Tourism Development Corporation (BWJ), which was established in 1990. The company develops promising new sites for tourism and tourism related purposes. It is a 100% privately owned company and is among Indonesia’s leading tourism development corporations (TDC) handling such projects in Nusa Dua Bali, Lombok, Manado, and Bintan.

As its first major project in Banten, West Java, TDC has a license from the National Land Agency (BPN) and is supported by the Directorate General of Tourism to develop 1,500 hectares of land at Tanjung Lesung as a new tourist destination. It sits on a peninsula on the western coast of Banten, bordering the Sunda Strait. The area is rich in natural beauty and attractions. A four-star hotel, the Bay Villas, along with Kalicaa Villa estate, a beach club, Legon Dadap village, a sailing club, and a driving range complete the charm of this international tourist destination. There are a variety of attractions such as water sport, spa, golf driving range, eco-tourism site, Ujung Kulon resort, Krakatoa, Liwungan and Badui village tour, etc. In short, it is a location for people to relax. Modern infrastructure such as electricity, telephone lines, mo-

There are a variety of attractions such as water sport, spa, golf driving range, ecotourism site, Ujung Kulon resort, Krakatoa, Liwungan and Badui village tour, etc. In short, it is a location for people to relax.

bile phone network, satellite TV, high speed Internet access, water treatment plant, waste water treatment plant, security service, nice road and beautiful scenery add to what is already an alluring site. Tanjung Lesung is a prestigious destination with a wide range of investment opportunities. And BWJ is inviting prospective land buyers and developers to submit their bids. PT Banten West Java is an experienced resort planner and developer, and is widely recognized as a prime consultant in the development of the area. The shareholders of BWJ are respected local businessmen well experienced in such businesses as property, textile and garment, chemicals and various manufactured goods. A management team of multi-skilled professionals is in charge of the project.

Ancient Temples as Seen by Agus Canny By Jeannifer Filly Sumayku

Agus Canny, the Marketing Director of PT Taman Wisata Candi Borobudur, Prambanan & Ratu Boko, says that the ancient place of Prambanan Temple, which disappeared in the 10th century following the Merapi volcano eruption, has been reconstructed and preserved by PT TWC Borobudur, Prambanan & Ratu Boko. He claims that this 18-hectare Hindu–Buddhist heritage is no less magnificent than the renowned palaces in Greece. Recently, the Indonesia Australia Business Council (IABC) used this beautiful place as the site for its annual conference in Yogyakarta special province. Canny, who is in charge of promoting Prambanan Temple, is optimistic about the palace being able to attract more international visitors 10 years from now. He is now preparing to produce a movie that will be shown in Hollywood, and hopes to see Harrison Ford reprise his “Indiana Jones” role with Ratu Boko as its backdrop. Yogyakarta and its surrounding

areas are very rich in Hindu–Buddhist heritage that needs proper promotion to attract international tourists. In fact, Yogyakarta has sufficient facilities to satisfy the interests of international visitors, and this is a plus point for Indonesia’s tourism industry. Canny, who used to work at Matari Advertising and the Tanjung Lesung project under Jababeka Group, was recruited by the Minister of State-owned Enterprises to be the director of PT TWC Borobudur, Prambanan & Ratu Boko. He believes that the rich diversity and beauty of this country must be promoted in a better and more integrated manner. A graduate of Columbia University in New York, Agus is a man of strong convictions. The President Post apologizes for wrongly identifying Agus Canny as VP for Corporate Marketing of Jababeka Group. That is actually his previous position before joining PT TWC Borobudur, Prambanan & Ratu Boko.

PICTORIAL EVENT st The 21 Anniversary of the Coronation of Sri Sultan HB X In his elegant speech the Sultan said that the anniversary was not a political but a genuinely cultural event. By Gunawan Wibisono


t was an extraordinary occasion marking Sri Sultan Hamengku Buwono X’s 21st anniversary of his coronation outside the Yogyakarta region. The anniversary took place in Manohara Hotel, which is in the vicinity of the Borobudur Temple on Saturday, March 6th, 2010. The idea to hold the anniversary in Borobudur was initiated by Mr SD Darmono (left in top left photo), the president commissioner of the Borobudur Tourism Park (TWCB) and approved by the Sultan, who endorses the effort to boost the tourism industry in Central Java, Yogyakarta, in the Borobudur area in particular. The anniversary ceremony started after a dinner party at 6 pm and was attended by hundreds of people and dignitaries around Magelang and Yogyakarta. The audience consisted of peo-

ple of various social and different ethnic backgrounds, attesting the Sultan of Yogya’s strong advocacy for pluralism, the philosophical basis of the Indonesian State. In his elegant speech the Sultan said that the anniversary was not a political but a genuinely cultural event. With the Borobudur Temple perched majestically in the background, on a finely-furnished stage a group of young and wellbuilt dancers performed Beksan Lawung Ageng, a war dance authentically created by Palace artists and rarely performed anywhere outside the Palace. A thought worth thinking about What if the anniversary of Sri Sultan HB X’s coronation was held in a genuinely traditional way, equipped with the palace ancient four-wheeled chariot and its ornaments plus the Borobudur Temple with its rich cultural heritage as its background?  If it was well prepared and well organized, it could be a coronation anniversary event many would say look more majestic than Queen Elizabeth of England’s coronation anniversary at the Buckingham Palace. If only those who are in charge of the tourism industry in the country could see the opportuni-

The President Post OFFICE Menara Batavia 25th Fl. Jl. K.H. Mas Mansyur Kav. 126 Jakarta 10220, Indonesia Phone : (021) 572 7337 Fax : (021) 572 7338 Email : Web :

ty and had made rigorous planning and proper actions, such event would no doubt attract enormous number of domestic as well as foreign tourists. Let’s make it happen!

The anniversary ceremony started after a dinner party at 6 pm and was attended by hundreds of people and dignitaries around Magelang and Yogyakarta.

PUBLISHED BY Yayasan President University CEO & EDITOR IN CHIEF Ali Basyah Suryo CONTRIBUTORS Atmono Suryo Cyrillus Harinowo Hadiwerdoyo Naresh Makhijani Taufik Darusman Thomas W. Shreve Jeannifer Filly Sumayku Eka Putri


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