Essay World Bank

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Table of Content:

Effects………………………………………………………………p.2 - 5

Welcome to The Circle of Devil

All are coming from the Demand Side

ACFTA: An Awakening Alarm

Barriers…………………………………………………………..p.5 - 7

Mental Model and Academic-Business’ Mismatch

Education and Health Care

Solution…………………………………………………………p.7 – 12

The Economic-Fluctuation-Proof Business

Community Development and Business? Why Not!

KLASSAMIRZA: 3P (People, Planet, Profit) Creative Business

Conclusion……………………………………………………p.12

The – preneur Thinking

Topic: Youth Unemploymen

Creative Business

The Art of Seeking

Opportunity in

Crisis



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Word Count: 3,915

Creative Business: The Art of Seeking Opportunity in Crisis

The 2008 economic slowdown had threatened countries’ concerned economic problem to be

increased - the unemployment rate. Every 1% of the slowdown in US economic growth had

decreased the economic growth in most Asian countries by 0.5-1% (Kuncoro, 2008). About

7.000 textile labors in Bandung, West Java, Indonesia, had been layoff, followed by 15.000

others, in the same industry, went jobless due to slower demands from abroad (Kompas, 2008).

A lot of these fired-labors were young women from suburbs who married in young ages due to

the culture value and have young children. Outsourcing system has become a favor for the firms,leaving young fathers in job insecurity. Receiving Rp1.095.790 nominal wages per month

(Kompas, 2009a), textile labors have faced tough life in big cities such as Bandung and Jakarta

with just above the minimum wages of Rp1.069.000 in Jakarta (Kompas, 2009a). With 5-7%

inflation rate in Indonesia (Ma'ruf, 2009), they practically only receive Rp270.094 real wages per

month (Badan Pusat Statistik, 2009), making everything seems do not have value anymore.

Many of these young families had ended up being youth unemployment and their children’

futures remain questioned.

Welcome to the Circle of Devil

In a picture of poverty, everything reveals, from the quality of public service, education, inflation

to unemployment. It has become a representative of the speed of one nation’s civilization and a

multi-sectors parameter. As a source of the future, young generation determine the competence

of one country. If parents have no job or have below-standard-income and live in a poor

condition, they will likely raise their children insufficiently, without enough food and adequate

education. The children will grow as part of uncompetitive young adult population, hard to find

job, and become young parents who will continue the remarks of their parents; raising their

inborn children in a poor condition. The following result is a broken generation which named as

an underdeveloped nation.



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Deputy of BPS, Arizal Ahnaf, said to Tempo Interaktif that open unemployment in Indonesia

was dominated by graduates of vocational school (17,26%), high school (14,31%), and college

degrees (12,59%) (Mahrub, 2009). The additional unemployment then will mostly come from

young productive age. A lot of programs have been implemented to answer the youth

unemployment problem such as minimum wages policy. However, this macro scale effort

seemed ineffective as the below causal data between number of poor family (East Java’s poverty

line by March 2009 is Rp188.317) and unemployment rate in East Java Province sho w (table 1).

Year #Poor Population in East Java #Unemployment in East Java

2005 8.390.996 1.082.221

2006 7.455.655 1.051.295

2007 7.137.699 1.366.503

2008 6.651.280 1.296.000

2009 6.022.590 1.033.000

Table 1

Number of poor population and unemployment in East Java Province, Indonesia 2005 - 2009 (in person)

BPS, 2005-2009

The number of poor populations in East Java from 2008 to 2009 has decreased by 628.690

people. However, the number of unemployment in the same period decreased by only 263.000

people, which left 365.690 new people unemployed and live in poverty. This condition means

for every one person who ultimately unclassified from poverty line, there will be four additional

people classified as living below poverty line. Welcome to the circle of devil where the

government has tried to fix one sector reactively, but another victim appears as a cause of

careless treatment of previous sector, causing more problems in a circle.

All are coming from the Demand Side

As private consumption had built 63% of Indonesia’s GDP composition (table 2), a distraction in

domestic consumption will give fatal outcome for the country’s fundamental economy. There are

9.43 million people considered as open unemployment in Indonesia and about 35% of them

come from high school to college degrees (Mahrub, 2009). It means about 3.3 million young



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people have to consume less. This number is not including those with other classifications of

unemployment in young ages such as close, frictional, and half unemployment.

Source: The World Bank. April, 2008.

The less consumption means serious distraction on the demand side which leads to less income

for industries. Less income will reduce the net income in companies and force them to do layoff.

Where most job seekers are youth, massive layoffs will create more youth unemployment in

Indonesia. The government has to spend more subsidies. Taxes as the most government income’s

source (Direktorat Jenderal Pajak, 2010) will be decreased as income taxes and other taxes

coming from supply sides reduced due to lower net income. As a matter of fact, a whole nation

will suffer; both the people and the government.

ACFTA: An Awakening Alarm

In the global recession, only countries with strong economic foundation will survive. It means

sustainable jobs in real market and fixed-investments. My country should learn on how well

China survived from the recent economic recession. While Indonesia demanded a lot on hot

money on stock exchange which yawned up during the recession, China, in contrast, has enjoyed

the economic prosperity. This more-than-billion-people country has successfully invited a lot of

fix investments by inducing investors their cost competence and labor productivity. It is, of

course, done through long year process yet the fastest economic growth in history (Fogel, 2010).

More foreign investments come in the form of manufacture plants. As the result, these long-term

investments have provided the Chinese real sustainable jobs and transfer technology.



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ASEAN (Association of South East Asian Nations) – China Free Trade (ACFTA) had been

signed in 2004 and has been effectively implemented on most sectors since January 1, 2010

(Gandhi, 2009). All related parties in 2004 hoped that the treaty will benefit them from the

unlocked tariff and non tariff barriers. ACFTA is an awakening alarm for Indonesia as many

lower price imported products will penetrate the domestic market. Indonesian entrepreneurs who

are lack of competition will close their businesses or at least hold their current production

capacity. With the effort to push down the production cost, current employees are the most

subject who will be given the layoff policy; making the job security vulnerable.

The world has given my country more than five years to prepare. With 9.43 million people

jobless (Mahrub, 2009), I could not imagine how my country will survive to face the global

competition. Lack of good infrastructure, such as broken roads for distribution, low standard

schools, and 13-15% credit interests for business (KOMPAS, 2009b) have already made my

country become uncompetitive on primary points on free trade implementation. No need to

further mention all developing countries impacted on this treaty; most developed countries even

put their concerns on their existing competences to China. Six industrial sectors in Indonesia

have asked for one to two years extension to the government (Hanum, 2009). For countries in

ASEAN who positively seeking benefits by the time they signed the treaty, ACFTA is a

multiplier of economic boost, but for unprepared countries, it is a disaster, which will lead to

increasing rate of unemployment.

Mental Model and Academic-Business’ Mismatch

A country ideally should have 2% of its population subjected as entrepreneurs to boost the

economic growth at the level of global competition. Thus, why is rate of entrepreneurs to the

population in Indonesia is stagnant at 0.18%? (Napitupulu, 2009).

To know what have become the barriers to youth unemployment ’s problem, we cannot

generalize one syndrome as a root cause for all areas. The youth unemployment problem in

Jakarta is totally different with the Papua’s. Take an example of 12.59% open unemployment

coming from college graduates in Indonesia. After asking my thirty three college graduates

friends who have just worked or been looking for jobs in companies in November 2009, about

50% of them are mostly complaining. They complained about salary which less than



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Rp7.000.0000/month to long process promotion. Overall, as an employee with less than two year

experience, they had too high expectation. The mental models were not prepared as an achiever.

They should have perceived to accept their first companies as stepping-stone. Actually, if they

worked for passion and patience did not too much think about money, in the near future the

money would come by itself.

I still remember in 2000, the way we studied in middle school was the teacher stood in front of

the class and recited everything in the books. This was also happened in higher education such as

high schools and colleges. The result was a-full-theories-students who were good in memorizing.

Only in 2006, our minister of education started preparing Competency Based Curriculum, which

let the teacher and students engaged in two-way interaction. However, education is a long

process and the distribution of adequate education through the whole state is such a hard thing

for our government to get ready for 2010 ACFTA.

The entire government departments have to work side-by-side, if they do not want one of them

become a fire department. A ministry of education slowly responded to curriculum method.

Students were fulfilled with theories without enough cases and practices. What have business

sectors needed do not meet with what have academic institutions provided. Business sectors have

to spend more cost for training and unfortunately accept few numbers of applicants. Academic

sectors were sometimes lack to teach entrepreneurship or management study. Graduates were not

induced to create job opportunities. These are important because no matter what we study, every

subject belongs to business, either we want to open new business or we want to use our study as

professional in companies. The result is the ministry of labors would have harder jobs to

decrease number of unemployment. As unemployment getting higher due to careless treatment in

a root cause, the ministry of social affair has to request more aids for social programs such as

foods and shelters. The ultimate ministry is now named as a fire department whose jobs will

never stop as long as no repairs and synchronization among the ministries.

Education and Health Care

With the implementation of macroeconomic theories in most countries’ economic policies, the

gap between China and some ASEAN’s countries would not disappear because the theories

conditioned all players stay in a perfect competition, means that we have same level of education



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level and welfare. What my county needs are even distribution of good education and health care

in a whole state. With less than 5% students graduated from colleges (Harian Analisa, 2006) and

societal degradation due to earthquakes and diseases, the TFP (total factor productivity) of the

Indonesians remain low. Healthiness toward quality of foods and housing is important to make

sure that employees work and create healthy working environment. However, as most cases in

undeveloped areas, how this could be achieved with millions of people living below poverty line

No matter how much business open in a country, if the workers do not have good mental models

and low TFP, the business will not run productively, threatened to be uncompetitive and closed.

Solutions: The Economic-Fluctuation-Proof Business

If manufactures had to close the plant due to slower global demands, then what business that can

survive through the economic fluctuation? One of my favorite business players in Indonesia,

Ciputra, said during my training “If you want to start your own business, start with your

passion”. Passion will not lie; it will lead to success. Someone with passion will create

something unique. Just add a touch of entrepreneurship and the unique creation will result in

form of creative business. Beside uniqueness, I observed that creative business has been proved

as an economic-fluctuation-proof business in Indonesia during Asian monetary crisis in 1998 and

economic recession in 2008. Cinemas were fulfilled by non-Hollywood movies created by young

talented directors such as Mira Lesmana with Laskar Pelangi (Lesmana, 2008) and Hanung

Bramantiyo with Ayat-ayat Cinta (Bramantiyo, 2008). These two movies even brought up to

several movies festivals in Europe. Fashion boutiques were inspired a lot by young new fashion

designers. New cafes with shocking new name popped out around South Jakarta, just like what

my friends did with Komodo Coffee which combined hot brewed Nusa Tenggara coffee with

charity project in respected island and Sushi Boon, a mobile car sushi bar concept with affordable

price in Bandung, West Java. These fresh ideas followed by other related new jobs such as food

stylish and merchandise providers.

During economic slowdown, a lot of people lost their stock and jobs and needed recovery, thus

creative business will be one of the solutions. People will always need amusements. It is also

dynamic since most young owners of this business will always full of creative ideas, innovations,

and nerves to hit the competition. Creative business just needs a combined passions, out-of-the-



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box ideas, strong willingness, and opportunity. Yes, opportunity! A group of young Bangladeshi

women might have super skills to make beautiful artsy fabrics, but they probably would not be

financially independent like now if Grameen Bank had not helped them by lending easy loans to

start their small business.

Community Development and Business? Why Not!

If a mismatch between business sectors and academic sectors already exist, those who do not

finish education will be far left behind.

The program that my friends and I have just finished called Community Development. Held in

three villages, Kalapanunggal, Palasarigirang, and Walangsari, in Sukabumi, West Java,

Indonesia from January 28 – March 1, 2010, the program could be sustainable solution to answer

youth unemployment problem since the purpose is to make families in these villages become

financially independent through home industry. Community development and business? Sounds

like opposite, but it appears to be the most sustainable social work I have ever done. As a college

student who passes by the real markets every day, I really understand that micro business, formal

or informal, is a life backbone in developing countries. Community Development (shorten name

as ComDev) is a four-credit subject in sixth semester in my college. We had to live with the

indigenous families for five weeks and transfer our so-far-business-knowledge to create products

sourced from raw materials available around the villages. We worked together to combine our

business knowledge and native knowledge from our new partners, who were also become our

new host parents. Since most of natural resources in those villages were agriculture based, most

of students have created new form of foods. My group made Bayam Kriuk (Spinach Crackers)

as the new way to enjoy spinach.

Why small business in Community Development could answer youth unemployment problem?

As culture in Sukabumi, a lot of villagers married in young ages (my host mother married in theage of 14!). Many of young men migrated to nearby cities to get better jobs, leaving the village

lack of young productive people and less job opportunities. Some young men and woman are

unable to compete in Jakarta, simply because living cost or returned again after failure looking

for the jobs. The ultimate purpose of ComDev is to create feasible, sustainable, and profitable

business run by families in these three villages by seeking any opportunity that these villages



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have. This program has actually been held for the third time in the same location. Now, young

families, young men and women, could be more productive by having their own products to

market. They have run the business with good passion too as they cultivate and develop their

own villages.

Where did they get start-up investment?

Community Development program has

used a very unique way to distribute

investment to the villagers. Since credit

interest in Indonesia is high, we did not

use any terms applied in conventional

banking system. The investment simply

based on the first hard work between

student groups/builders and partners and

trust that is built through five weeks stay

with families. As a start-up my college

distributed a total of Rp2.000.000 for each family and builder. There were a total of seventeen

builders and partners in the program. These amounts of money were separated into three time

installments during a month. The first installment, Rp1.000.0000, was mostly used for research

and development activities and fix investments such as stoves, pans, and plastic sealers. The

second installment, Rp500.000, was mostly used for production and raw materials. Last

installment of Rp500.000 used for further expansion such as marketing. All of these investments

went to the hand of builders. In the end of the month, we got much more than the investment and

expanded to various distribution channels, mostly in traditional markets. Bayam Kriuk itself

received a total of Rp875.000 profits within four weeks.

Ultimately, the total sales went to the hand of our partners and both parties negotiated for profitsharing. This money would be continues investment for further production. The builders have to

control the production and market within the next six months, but afterward the life of the

business will goes on the hand of our partners. Our college also has left a fixed capital in a form

of kiosk in Kalapanunggal village as a one of distribution channels and a central of local

products market in the areas (figure 1).



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How do the Villagers Know about Running Business?

Start-up business needs opportunity to grow and opportunity could come not only in the form of

tangible forms, but also intangible such as education. Some of my faculty members had given

their times to teach our partners from marketing, selling, to finance subjects for free, two times a

week in Kalapanunggal. Very patient activity since many of partners were not finished school,

but we believe that even though education is a slow process, it can be so powerful. As the results

we could see a lot of local products have improved from fewer standards to fully creative labels

as professional products. In ComDev, builders also volunteered in teaching elementary students

whose schools run by few teachers who could teach more than four subjects in many classes. For

me, ComDev is not simply a social program; it is a new form of venture capital applied for

developing countries.

KLASSAMIRZA: 3P (People, Planet, Profit) Creative Business

A lot of people in villages in Indonesia have good talents in crafts, but they are just afraid to start

small business or sign easy-state banks-loan due to lack of knowledge. Many of them ended up

borrowing money from local private creditors who do not ask for credit terms but charge

unreasonable percentage of interest which have caused many young families in debt. Far away

before the ComDev 2010 program, in 2007, I found a group of shoe makers in Pabuaran village,

Bogor, West Java, who was trained for micro business loan from government. I was thinking to

try some of my shoes designs to them and was surprised that their shoes are masterpieces. No

wonder their hand-made shoes are gorgeous since they used to make high-end brands footwear

which qualified for export. Ironically, the high prices of the shoes they have made do not reflect

their economic conditions. We then engaged in face-to-face talk and figured out that they could

not stay out from this situation as they could only be bulk buyers’ cheap labors.

On the same time, I was thinking to make my elementary school’s dream came true: to have

fashion line. With the help of my uncle from the local government, I recruited a total of three

shoe makers to work on my shoes designs. In December 2008, under the brand of

KLASSAMIRZA, which named after my father who has contributed a lot for my education, I

began running my own small business. I feel satisfied that in my early 20 I could earn money and

have business which in-line with my passion on design. KLASSAMIRZA (figure 2) is my first



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start-up business away from other college-project-businesses. It took about four months to set my

mental model as entrepreneur who dares to take risk, borrows money, and become a good human

resource manager for myself and my workers. Everything I have done simply to make my vision

come true. Getting loan from family does not mean that I could stay relax; I am actually holding

a big trust from special people, my family.

With strong willingness, small research, believe, and hard work I

could market my shoes in Jakarta and Java through Multiply.com

and in the fourth month I started to apply recycled materials on my

shoes. The story about recycled materials is very interesting. I might

be parts of few people in the world who were lucky among the 2008

economic recession since I reutilized stack of unused textiles which

failed to be exported abroad due to demands stoppages. I called this

the art of seeking opportunity. I have not used any commercials

advertising for my shoes; instead, I used “the power of word of

mouth” where media covered the story about the making of my

shoes. In the fifth month, I registered KLASSAMIRZA Trashforward Project 2009 to BYEE ‘09

(Bayer Young Environmental Envoy 2009) competition. My project was one of the projects

who won the chance to go to Leverkusen, Germany with other 59 green projects from nineteen

countries. Through BYEE 2009, I could improve the application of recycled materials to 20-70%

on shoes, count the carbon footprint of production process, focus on caused-environmental

marketing and on-line market which reduced 30% carbon released from traditional shopping

(BesTari, 2010), invite national and international media to cover the business activity, and

expand my markets abroad.

KLASSAMIRZA business focuses on 3P (People, Planet, Profit) which takes care of its workers

and consumers, responsible for environment, and give sustainability of the business through

profit. Since the use of recycled materials, I have used about 100 kilograms recycled textiles and

could avoid shipping cost and import tax from previous textiles I imported from Korea and India.

By reducing cost, I could set at least 30% of cost of goods sold to increase my shoe makers’

wages. At least five people have been helped to get better jobs and 100 kilograms of textiles

wastes have been transformed into goods with higher values. Imagine, if such business got

http://klassamirza.multiply.com/

http://klassamirza.multiply.com/





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Sources:

1. Kuncoro, Mudrajat. February 16, 2008. Antisipasi Resesi dan Gejolak Ekonomi Global – GATRA.

2. KOMPAS. November 20, 2008. 7.000 Buruh Tekstil Dirumahkan – KOMPAS.

3. KOMPAS. January 6, 2009a. Kompas.com. Upah Buruh Industri Merosot . Available athttp://nasional.kompas.com/read/2009/01/06/08194745/upah.buruh.industri.merosot

4. Ma’ruf, Wahid. January 7, 2009. Inilah.com. BI: Inflasi 2009 Capai 5%-7%. Available athttp://www.inilah.com/berita/ekonomi/2009/01/07/73929/bi-inflasi-2009-capai-5-7/

5. BPS (Badan Pusat Statistik/Center of Statistic Bureau). 2009. Rata-rata Upah Riil Per Bulan Buruh

Industri di Bawah Mandor, 2005 - Triw III 2009 (IHK 1996=100). Jakarta: Report of Badan Pusat

Statistik.

6. Mahrub, Harun. January 5, 2009. Tempo Interaktif. Jumlah Pengagguran di Indonesia 9,43 Juta

Orang. Available at http://www.tempointeraktif.com/hg/ekbis/2009/01/05/brk,20090105-

153874,id.html

7. BPS (Badan Pusat Statistik/Center of Statistic Bureau). 2005-2009. Number of poor population and

unemployment in East Java Province, Indonesia 2005 – 2009 - Report of BPS.

8. The World Bank. April 2008. Indonesia: Economic and Social Update.

9. Direktorat Jenderal Pajak. 2010. Available athttp://www.pajak.go.id/index.php?option=com_content&view=article&id=10013:penerimaan-anggaran-

jangan-hanya-mengandalkan-pajak&catid=87:Berita%20Perpajakan

10. Fogel, Robert. February 2010. Foreign Policy. $123,000,000,000,000*China’s estimated economy by

the year 2040. Be warned.Available at

http://www.foreignpolicy.com/articles/2010/01/04/123000000000000

11. Gandhi, Grace S. December 22, 2009. Tempo Interaktif. Pasar Bebas ASEAN-Cina Timbulkan

Pengangguran? Available at

http://www.tempointeraktif.com/share/?act=TmV3cw==&type=UHJpbnQ=&media=bmV3cw==&y=JEdMT0JBTFNbeV0=&m=JEdMT0JBTFNbbV0=&d=JEdMT0JBTFNbZF0=&id=MjE1MjI0

12. KOMPAS. April 3, 2009b. Kompas.com. BI: Bunga Pinjaman Sudah Turun. Available athttp://bisniskeuangan.kompas.com/read/2009/04/03/17502786/BI:.Bunga.Pinjaman.Perbankan.Sudah.Tur

un

13. Hanum, Zubaedah. December 2, 2009. Enam Sektor Industri tidak Masuk FTA ASEAN-China – Media Indonesia

14. Napitupulu, Ester Lince. September 11, 2009. Kompas.com. Lulusan Perguruan Tinggi Hanya Berorientasi Jadi Pencari Kerja. Available at

http://edukasi.kompas.com/read/2009/09/11/20374961/lulusan.perguruan.tinggi.hanya.berorientasi.jadi.pe

ncari.kerja

15.Harian Analisa. May 2, 2006. 69,51 Persen Penduduk RI Belum Tamat SMP. Available at

http://www.mail-archive.com/[email protected]/msg20150.html

16. Cover taken from http://johnimbong.com/dl/wl/johnimbong.com-Creativity.jpg

http://nasional.kompas.com/read/2009/01/06/08194745/upah.buruh.industri.merosot


http://www.inilah.com/berita/ekonomi/2009/01/07/73929/bi-inflasi-2009-capai-5-7/


http://www.tempointeraktif.com/hg/ekbis/2009/01/05/brk,20090105-153874,id.html




http://www.pajak.go.id/index.php?option=com_content&view=article&id=10013:penerimaan-anggaran-jangan-hanya-mengandalkan-pajak&catid=87:Berita%20Perpajakan








http://bisniskeuangan.kompas.com/read/2009/04/03/17502786/BI:.Bunga.Pinjaman.Perbankan.Sudah.Turun



http://edukasi.kompas.com/read/2009/09/11/20374961/lulusan.perguruan.tinggi.hanya.berorientasi.jadi.pencari.kerja





http://johnimbong.com/dl/wl/johnimbong.com-Creativity.jpg




















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Essay World Bank