In the Chinese calendar, the year of 2013 is referred to The Year of the Water Snake (starting 10 February 2013 and ended 11 February 2014). Unfortunately, the number 13 is somewhat less preferred, mythologized as an unlucky number. That is why the number is not used in buildings or homes in most part of Asia. Hence, 2013 is also predicted to be a hard year for business, where competition will even be fiercer than before.
The fact that competition is getting tighter is certainly related to the development of global condition. The crisis that hit Europe and America, in addition to being a challenge, is as well as an opportunity to capture the flow of global capital. As Asia is still the sexiest market for global businesses, Indonesia will certainly have to compete with other emerging market countries on the continent, such as China, India, South Korea, Vietnam, Thailand, Malaysia, the Philippines, and Singapore.
Global Intelligence Alliance (GIA), a global intelligence agency market, had announced that of hundreds emerging market countries, there are 30 countries that are the most popular for investment and trade. Among those countries, Indonesia ranks fifth, above Singapore, Thailand, Vietnam, and other ASEAN countries, even Asia’s giants such as South Korea. Indonesia is only one level below Russia.
Even though considered more preferred than other ASEAN countries for investment and trade, Indonesia still has to improve in order to remain more competitive than other countries. The government must work hard to resolve ‘homework’( on many issues, such as high cost economy which triggered by infrastructure problem, extortion by bureaucrats, public officials, politicians, and certain civil groups. The government should also be able to provide a sense of security and certainty to investors, especially with the escalating demonstration by workers, and ensure safety in areas which conflicts often occur.
Improvements that needs to be done have becoming even more important since the government has set a national economic growth rate of 6.8% in 2013. This target can be achieved if, of course, if the business community thrive and investment increases. The good news on this from the Investment Coordinating Board (BKPM) is that until September 2012, investment applications that they have received reach Rp678 trillion or about US$75 billion. If the investment climate can be maintain, investment target of Rp390 trillion in 2013 will not be a problem.
For investors who invest in the short term, labor issues might not be a problem. This also applies for investors in infrastructure sector. But for investors in the manufacturing sector, labor issues are certainly a problem. Especially for investors in the manufacturing sector who just started their business in Indonesia. If labor demonstration often happens, they might reconsider their investment. Legal certainty and security is very much needed.
In addition to extending the red carpet for foreign investors, the government is also obliged to provide stimulation for local businesses. Especially in order to enhance the competitiveness level of national enterprises. Recommendations from Bank Indonesia (BI) for banks to be more efficient in their operation, so interest rates can be lowered, and require banks to increase credit to the corporate world are positive steps for the business world.
Hopefully, banks’ obligation to disburse 20% of its credit to Small and Medium Enterprises (SMEs), as determined by BI for 2013, can be implemented in earnest. At least this move will stimulate the creation of new entrepreneurs. Until today, the number of entrepreneurs in the country is still very minimal. According to data from the Ministry of Cooperatives and Small and Medium Enterprises of the Republic of Indonesia, only about 1.56% of the 235 million Indonesian population is entrepreneur, dominated by SMEs.
According to Minister of Cooperatives and SMEs, Syarief Hasan, ideally a country can progress if it has a minimum of two percent entrepreneur. Similar statement has been expressed by Vice President Boediono, Coordinating Minister for the Economy Hatta Rajasa, and Chairman of the National Economic Committee Chairul Tandjung, who is also the owner of CT Corp. Indonesia still lags behind other countries such as the U.S., 12% of the country’s population is entrepreneur, Japan (10%), Singapore (7%), Malaysia (4%), and Thailand (4.1%).
The classic problem that made the number of entrepreneurs in Indonesia is minimal, especially that made young people reluctant to pursue interest in business, is the difficulty to access capital. Understandably, banks are still more interested in consumer lending rather than business loans as they still traumatized by crisis of 1998. Even when business credit disbursed, banks are very selective, and set interest rate very high. So, it is not surprising if even major corporations prefer foreign banks for business partner, as it offers more competitive interest rate.
In essence, existing challenges must be converted into opportunities by the nation’s entrepreneurs, so they can com better in an era of global competition. They should never again be hampered by high interest rates, bureaucracy maze. unofficial retribution, inadequate energy supplies, raw material scarcity, distribution difficulty, and other matters. It is easier to say than done to make everything better, but if it’s not started now, Indonesian entrepreneurs would eventually only be local champions forever.