GEE-B1 Entrepreneurship in Indonesia

COLUMBAN COLLEGE, INC.
COLLEGE OF BUSINESS AND ACCOUNTANCY

#1 1st St. New Asinan, Olongapo City, 047-222-3329, local 113 (CBA Office)
Entrepreneurship in the Indonesian Setting

An Analysis of the Business Environment and Economic Landscape in Indonesia
A Report Presented to the College of Business and Accountancy Faculty of Columban

College, Inc.
Tertiary Department, Olongapo City
In Partial Fulfillment of the Requirements for The Entrepreneurial Mind Course
by
GROUP 4
Mendoza, Shane
Oliva, Ma. Elizabeth A.
Palatan, Randell Jan M.
Rapada, Ariane Joyce
February 24, 2020
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ABSTRACT
Entrepreneurship is globally perceived as one of the largest contributing factors
in the growth of a nation, not only of its economy but of the lives of its people as well.
It refers to the activity of setting up a business or businesses, rooting from one’s own
original idea, taking on financial risks in the hope of profit. Nations all over the world
are continually promoting its development including Southeast Asian Nations and
Indonesia is no different. As students taking up Bachelor of Science in Accountancy
and hopefully become business owners in the future as well, this topic is very relevant
to us and to all students like us. For the purpose of investigating the economic
landscape in Indonesia and determining why it has the largest economy in the ASEAN,
this study aimed to answer the general question “What is the situation of the business
and entrepreneurial environment, and economic landscape in Indonesia?” and
investigate what are the things that drive the country's economic success. This study
was conducted through a qualitative approach. Simple interview questions were used
during the online interviews with the clients. The clients were chosen in variation to
achieve a wider picture based on different perspectives, a Filipino tourist, an
Indonesian professor, and an Indonesian laborer. The results from the interview were
studied and interpreted by the researchers. It was determined that entrepreneurship in
Indonesia is still uncertain due to lack of education, financial support and lack of
policies for entrepreneurship. Indonesia is still in a state of shift from a long regime of
controlled economy, this is the root of the uncertainties.
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TABLE OF CONTENTS
TITLE PAGE …………………………………………………………………….. i
ABSTRACT …………………………………………………………………....… 2
TABLE OF CONTENTS ………………………………………………………... 3
CHAPTERS
CHAPTER I: THE PROBLEM AND ITS SETTINGS
Introduction ……………………………………………………….. 5
Background and Other Information About Indonesia …………….. 6
Statement of the Problem …………………………………………. 7
Significance of the Study …………………………………………. 7
CHAPTER II: RELATED LITERATURE …………………………….. 9
CHAPTER III: METHODOLOGY
Methods and Techniques of the Study ……………………………. 20
Background of the Subjects ……………………………………….. 21
Research Instrument ………………………………………….…… 21
Data Gathering Procedure …………...………………………….… 22
CHAPTER IV: PRESENTATION AND INTERPRETATION OF DATA
Interviews ……………………………………………….………… 23
Summary of Results of Research from Other Resources …...…….. 29
CHAPTER V: CONCLUSION AND RECOMMENDATION
Conclusion ……………………………………………………….... 30
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Recommendation …………………………………………………. 31
BIBLIOGRAPHY ……………………………………………………………….. 32
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CHAPTER I
THE PROBLEM AND ITS SETTINGS
This chapter deals with the problem and its settings, including the title for the
study, its objectives and the general and specific problems the study wants to answer.
This chapter also deals with the identification of documents containing information
related to the study including the background of the country.
Introduction
Entrepreneurship is globally perceived as one of the largest contributing factors
in the growth of a nation, not only of its economy but of the quality of the lives of its
people as well. Richard Cantillon (1730) defined entrepreneurship as self-employment
of any sort and the entrepreneur as a bearer of uncertainty. Others define it as the
activity of setting up a business or businesses, rooting from one’s own original idea,
taking on financial risks in the hope of profit. Whatever definition it may have,
entrepreneurship is both a question and an answer to a country’s economic growth.
Nations all over the world are continually promoting its development including
Southeast Asian Nations where our focus is located, Indonesia. As students taking up
Bachelor of Science in Accountancy and hopefully become business owners in the
future as well, we conducted this research entitled “Entrepreneurship in the Indonesian
Setting: An Analysis of the Business Environment and Economic Landscape in
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Indonesia” in hopes that it will be relevant to us and to all students like us who might
be potential entrepreneurs in the future, determinants of the Philippine’s economic
landscape.
Background and Other Information About Indonesia
According to the information provided by the Central Intelligence Agency’s
World Factbook, the Dutch, the natives of Netherlands, began to colonize Indonesia in
the early 17th century then the Japanese occupation occurred from 1942 to 1945.
Indonesia declared its independence shortly before Japan's surrender, it required,
however, four years of at times brutal fighting, negotiations, and mediation of the
United Nations before the Netherlands agreed to transfer sovereignty to Indonesia in
1949.
Democracy ended in 1957 when President Sukarno, Indonesia’s first president
declared martial law and instituted "Guided Democracy." Only after a coup in 196 was
he gradually eased from power. For 31 years since 1967, President Suharto ruled
Indonesia with his "New Order" government where he was called a dictator. After
street protests toppled him in 1998, free and fair legislative elections took place in
1999.
In the present time, Indonesia is the world's third most populous democracy, the
world's largest archipelagic state, and the world's largest Muslim-majority nation.
Among the Southeast Asian nations, it has the largest economy and one of the fastest
developing countries.
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Though primarily viewed as a fast developing nation, Indonesia still currently
faces issues. According to the World Factbook, poverty, education, terrorism,
implementing economic and financial reforms, stemming corruption, reforming the
criminal justice system, and addressing climate change are some of the problems
Indonesia currently faces.
Statement of the Problem
Generally, the aim of this study is to answer the question “What is the situation
of the business and entrepreneurial environment, and economic landscape in
Indonesia?”
Specifically, this study seeks to answer the following questions:
1. Background of the Client
2. At first glance, how can you describe the market and business environment in
Indonesia?
3. What can you say about the economy in Indonesia?
4. What do you think are the problems of the business environment in Indonesia?
5. Is entrepreneurship or self-owned businesses promoted in Indonesia?
6. What is the implication of the study?
Significance of the Study
This study hopes to investigate the business environment and economic
landscape in Indonesia and determine if entrepreneurship is promoted in the country.
Furthermore, the study could be significant and beneficial specifically to the following:
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Students, especially those who are taking up The Entrepreneurial Mind course
and any programs related to business. The results may establish information to them on
the situation of entrepreneurship in Indonesia and how it is similar or different with the
Philippines. It will also establish in them knowledge that might help if they are
considering becoming entrepreneurs in the future.
Aspiring entrepreneurs, especially young Filipinos like us. It is important to
know the situation of entrepreneurship not only in the country but other neighboring
Southeast Asian nations as well to determine the potential and opportunities for
expansion and trading with immediate countries and gain knowledge on the issues and
trends they are experiencing as well.
Future Researchers, especially students who will take The Entrepreneurial Mind
course. The presented ideas may be used as reference data in conducting new research
or in testing the validity of other related findings. This study will also serve as their
cross-reference that will give them a background or an overview of how loyalty affects
both schools and students.
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CHAPTER II
RELATED LITERATURE
This chapter deals with studies and other information related to the report.
Related literature helps fill information gaps, provide answers to basic questions and
help bridge better understanding of the subject at hand.
Law of Indonesia Regarding Entrepreneurship
Though not specified in our research, there are some laws regarding
entrepreneurship and micro, small and medium-sized enterprises (MSMEs) and a
specific ministry dedicated to co-operatives and SMEs. According to an online
publication of OECD, MSMEs play an important role for economic growth and social
inclusion in Indonesia. Based on data from the Ministry of Co-operatives and SMEs,
Indonesian SMEs account for nearly 97% of domestic employment and for 56% of
total business investment. The development and implementation of an SME strategy
would be instrumental to improve the overall coherence of national policy measures,
objectives and measurable targets.
According to Siregar, A.M. (1969) in his Asian Survey journal article
“Indonesian Entrepreneurs”, an important role is given to entrepreneurs in the
government’s program to stabilize and rehabilitate Indonesian economy as a departure
from Sukarno’s regime where the majority of economic activities in the private sector
are considered harmful to the interests of the country. Guided Economy is now
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abolished, and lawmakers are waking up to the realization that no matter the
importance of the role of the government is in economy, the development of the
country is dependent on economic activities in the private sector.
Development of Entrepreneurship in Indonesia
According to our research, the economic history of Indonesia is shaped by its
geographic location, natural resources, as well as its people. Foreign contact and
international trade had also shaped and sealed the fate of the Indonesian archipelago, as
Indians, Chinese, Arabs, and eventually European traders reached the archipelago
during the Age of Exploration (15th to 17th century) and participated in the spice trade,
war and conquest.
History says that by the early 17th century, the Dutch East India Company
(VOC), one of the world's earliest multinational companies, had established their base
in Indonesia, monopolising the spice trade. By the 1800s, the colonial state had
emerged and benefited from trades of coffee, tea, rubber and palm oil, also from the
mining sector of oil, coal, tin and copper. It would then be succeeded by the Indonesian
Republic after World War II.
Though Indonesia’s beginnings in democracy turned sour when its first
president, Sukarno, declared Martial Law and implemented a Guided Economy policy
greatly affecting the economy because it prohibits many activities from the private
sector therefore businesses were somewhat controlled by the government.
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After abandoning the Guided Economy regime and implementing new laws
promoting MSMEs, now, in the 21st century, Indonesia rose to be the largest economy
in Southeast Asia, as one of the emerging market economies of the world, a member of
G-20 major economies and classified as a newly industrialised country.
Present Condition of Entrepreneurship in Indonesia
According to Santoso (2014) small and medium sized enterprises (SMEs) in
2012 reached 99.99 percent of total enterprises in Indonesia. The SMEs employ 107
million workers or almost 91 percent of the total Indonesia workforce in 2012. This
figure will surely increase in the following years in accordance with the need for jobs.
The workforce grows faster than the job opportunities causing the rise of
unemployment. In 2014 Indonesia’s unemployment rate is 5.9 percent, relatively high
compared to Malaysia (3.1 percent), Singapore (1.9 percent) and Thailand (0.8
percent). Entrepreneurs create new businesses, new businesses in turn create jobs,
intensify competition and may even enhance productivity through technological
breakthroughs.
According to the Cooperatives and Small and Medium Enterprises Ministry, the
entrepreneur rate in Indonesia is only 1.56 percent of the total population in 2013 and
rose to 1.65 percent in the second quarter, 2014. Indonesia is still behind Malaysia and
Singapore, which have entrepreneur rates of 5 percent and 7 percent and even further
behind developed countries such as Japan (10 percent) and United States (12 percent).
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Many researchers find that the ideal comparative number of entrepreneur rates in
developing countries like Indonesia is 2 percent of its population.
Business Environment in Indonesia
Indonesia is one of the more difficult countries to conduct business in.
According to the World Bank’s Doing Business Project (2020), the country is ranked
73rd out of 190 economies. The country is considered to be a lower-middle income
country and the ease of doing business score the World Bank gave to Indonesia was
69.6 out of 100.
The initial start-up of a business is one of the major problems an individual can
encounter as this involves obtaining necessary authorizations such as permits and
licenses. Out of 190 economies, Indonesia is ranked 140 in terms of the ease of starting
a business. This process does not only take time, but it also requires a considerable
amount of money. Starting a business in Indonesia also requires a good network among
local business and government circles.
For foreign entrepreneurs, the importance of these networks should be taken
into account to develop and maintain their position in the economy. An individual must
also be aware of cultural values prior to starting their business in order to establish
business partners, to well manage their employees, and to understand their future
market customers.
Despite these requirements, there are still many reasons why an individual
would decide to go through in starting a business. As reported by Worldometer (2020),
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Indonesia has the 4th largest population in the world, with over 273 million citizens.
The Indonesian consumer is very confident in the overall state of their economy. The
consumer-related market is strong as Indonesia continues to expand their growth in
retail, health, education, telecom, and financial services sectors. Indonesia has been
experiencing annual growth in GDP every year since 1999 and development in the
country strongly calls for more sources of these services.
Remaining in the business market is a struggle for businessmen in Indonesia
due to several problems that persist in the country. Current infrastructure, technology
and service networks in the country are insufficient and can not keep up with the fast
pace of the consumer-led economy. Transaction costs and inefficiencies consequently
arise which cause operations to be hampered. For foreign entrepreneurs, Indonesian
laws can become a barrier to continuing a business in the country. The settlement of
business and regulatory disputes is not settled by international laws and are settled
according to the local rule-of-law. The leading countries more effective business
markets, such as in Japan, Australia, and Korea, often lead foreign investors to also
steer away investing in Indonesia which is lacking behind. Corruption in the
government remains a significant concern to businesses in Indonesia and causes
difficulties in sustaining business operations.
Economic Landscape in Indonesia
Indonesia, the largest economy in Southeast Asia, has seen a slowdown in
growth since 2012, mostly due to the end of the commodities export boom. During the
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global financial crisis, Indonesia outperformed its regional neighbors and joined China
and India as the only G20 members posting growth. Indonesia’s annual budget deficit
is capped at 3% of GDP, and the Government of Indonesia lowered its debt-to-GDP
ratio from a peak of 100% shortly after the Asian financial crisis in 1999 to 34% today.
In May 2017 Standard & Poor’s became the last major ratings agency to upgrade
Indonesia’s sovereign credit rating to investment grade.
Indonesia’s Gross Domestic Product by purchasing power parity grew to $3.25
trillion in 2017 from a $3.093 trillion in 2016 placing it as the 7th largest economy in
the world and the biggest in Southeast Asia.
In 2016, Indonesia’s labor force was an estimated 125 million while the
population under poverty is 10.9%.
Indonesia’s agriculture includes but are not limited to rubber and similar
products, palm oil, poultry, beef, forest products, shrimp, cocoa, coffee, medicinal
herbs, essential oil, fish and its similar products, and spices
According to the World Factbook, to this day, its most famous industries
include petroleum and natural gas, textiles, automotive, electrical appliances, apparel,
footwear, mining, cement, medical instruments and appliances, handicrafts, chemical
fertilizers, plywood, rubber, processed food, jewelry, and tourism
Poverty and unemployment, inadequate infrastructure, corruption, a complex
regulatory environment, and unequal resource distribution among its regions are still
part of Indonesia’s economic landscape. President Joko WIDODO - elected in July
2014 – seeks to develop Indonesia’s maritime resources and pursue other infrastructure
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development, including significantly increasing its electrical power generation
capacity. Fuel subsidies were significantly reduced in early 2015, a move which has
helped the government redirect its spending to development priorities. Indonesia, with
the nine other ASEAN members, will continue to move towards participation in the
ASEAN Economic Community, though full implementation of economic integration
has not yet materialized.
Trends of Entrepreneurship in Indonesia
According to the World Economic Forum article (2019) over a third of young
people want to be entrepreneurs.
According to their recent survey, more than one-third of the country’s young
people, between the ages of 15 and 35, want to work for themselves.
The World Economic Forum’s latest annual survey of youth attitudes in
Association of Southeast Asian Nations (ASEAN) countries reveals a region buzzing
with entrepreneurial spirit. The survey asked what type of organization people work for
today, and where they would like to work in the future. In Indonesia, 34.1% of young
people currently work for themselves, and an additional 1.5% would like to.
The survey found that just over 26% of respondents work for themselves, up
slightly from the previous year, while almost 1% more aspire to in the future.
In certain countries or situations, the desire to be an entrepreneur may be driven
more by necessity than dreams of big business, as people feel they have no other option
but to work for themselves.
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Issues of Entrepreneurship in Indonesia
According to Barley (2014), there are three major hurdles in Indonesia
entrepreneur creation. First, it's a mentality problem. The education system does not
give what was needed to become an aspiring entrepreneurs. The education system was
only about telling students what to memorize and what to write. This is contrary to the
kind of education system that students in other developing countries have been
enjoying for many decades. In those countries, students are encouraged to come up
with brave and different ideas. Teachers are trained to inspire lively discussions,
challenging their students to solve real-life problems. This in the end helps to produce
bright young people who are ready to face the real world.
The second problem is that the financial sector is not favorable toward those
who dream of having their own businesses.
The lack of commitment from the government to establish a friendly
entrepreneurship climate is the third obstacle. The government administration failed to
build a business climate that was friendly to young generations and the small and
medium enterprises (SME) sector. Though the SME sector makes a very significant
contribution to the economy, absorbing more than 90 percent of the domestic
workforce and accounting for more than 50 percent of national gross domestic product
(GDP).
As a result, young people experience difficulties getting financial assistance and
access to startup grants and cheap loans. Free entrepreneurial workshops are also hard
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to find, in which the young can learn how to manage a business and develop products
or even how to find opportunities in foreign markets.
Successful Entrepreneurs in Indonesia
According to the Top 10 of Asia, there are a lot of inspiring success stories
Indonesia has to offer and these are only five of them.
Robert Budi and Michael Bambang Hartono are Chinese-Indonesian brothers
who made their mark in Indonesia. With their late father's tobacco business, Djarum
(the world's third largest maker of clove cigarettes), and their decade-old investment in
one of Indonesia's biggest banks, Bank Central Asia, the brothers are worth billions
combined.
In addition, the brother's controlling stake in telecom outfit, Sarana Menara
Nusantara, stakes in palm oil plantations as well as in Grand Indonesia (the largest
shopping mall in the country), has partly played a big role in their fortunes.
Edwin Soeryadjaya, also known as Tjia Han Pun, suffered many setbacks in life
on his road to business success. He is the son of former billionaire William
Soeryadjaya, who founded the automotive group PT Astra International before losing
control over the business in 1993. However, Edwin did not let all these setbacks
dampen his spirit.
A few years later, he re-emerged and began making a name for himself in
Indonesia and abroad; establishing Saratoga Capital and co-founding Indonesia's
second-biggest producer of power-station coal, Adaro Energy.
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Chairul Tanjung graduated from University of Indonesia with a bachelor degree
in dentistry. However, he got to an early start in business by selling study guides while
in school. His first venture was a medical and dental equipment trading business he
started in 1983.
In 1987, he established CT Corporation, formerly known as Para Group.
Through his conglomerate, he invested heavily in the media industry and retail
businesses.
Djoko Susanto, also known as Kwok Kwie Fo is a successful businessman and
entrepreneur in Indonesia. Having to drop out of school because of the Indonesian
government's ban on students with Chinese names, he started managing his parent's
grocery stall at the age of 17.
Soon, he started peddling cigarettes and opening more stalls before attracting
the attention of clove cigarette tycoon, Putera Sampoerna. They then collaborated and
opened similar stalls before opening a discount supermarket chain.
When Putera Sampoerna sold the business, Djoko Susanto went on to develop
the retail business portion of it into Alfa Supermarket which is now running more than
5,500 stores under several brands.
Lastly, Boenjamin Setiawan, also known as Dr. Boen, the founder of Kalbe
Farma. Started off in a modest garage in Tanjung Priok, Kalbe had been through rough
times during the 1998 financial crisis.
Boenjamin Setiawan sold off all his businesses except for Kalbe which later
became the largest pharmaceutical company in the country.
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In our research, we have noticed that there are mostly male entrepreneurs and
businessmen in Indonesia, because there are a lack of support and confidence from the
government to women entrepreneurs which is yet another problem of the country.
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CHAPTER III
RESEARCH METHODOLOGY
This chapter presents the methods and techniques used in the study, the
background of the respondents for the study, and the data gathering procedures.
Methods and Techniques of the Study
Determining the present condition of the business, market and entrepreneurial
environment, and economic landscape in Indonesia is the main focus of this study. This
study uses a research approach in which we read various articles both online and in
books that would supplement the readers on the situation in Indonesia. To add more
and direct information, we used the case study method which the researchers conducted
by finding clients that have seen or observed the business environment in Indonesia.
This will adopt a qualitative approach. Qualitative, as defined by Cruz (2013) in
his presentation, is any research conducted using an observational technique or
unstructured questioning. This is often viewed as a “soft-approach.” It is conducted
when structured research is not possible, when true response may not be available to
explain quantitative research results. However, it should not be viewed as conclusive
research.
Initially, a qualitative approach will be applied specifically to determine the
situation of the business, market and entrepreneurial environment, and the economic
landscape in Indonesia based on first-hand observation and research. A quantitative
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approach is needed to further enhance the validity of the study but it is not in the scope
of the paper.
Background of the Subjects
The study selected three different subjects. The reason is so that they may
provide information from three different perspectives and observations. The first
subject is Brother Raul Claveria. He is a Filipino seminarian at The SVD Retreat
House in Tagaytay who has travelled to Indonesia as a tourist and was able to stay in
Bali, Indonesia for 5 months. His observation as a tourist would provide a perspective
from a simple traveller. The second subject is Professor Maximus Gorky Sembiring, a
renowned researcher and an Associate professor in Educational Management and
Distance Education, Universitas Terbuka in South Tangerang, Indonesia. His
observations would give a perspective of a person in the education sector in Indonesia.
The third and last subject is Derry Dewantara, an Indonesian airport staff. His insight
would give a perspective from a simple Indonesian worker.
Research Instrument
In the conduct of this study, a casual online interview with no particular
questionnaire form was conducted asking questions about entrepreneurship in
Indonesia. This is done to have a more natural approach to the subject matter as it is
only their observation and to avoid highly technical and somewhat scripted answers.
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The questions however, were very much grounded to the statement of the problems.
Data Gathering Procedure
The researchers did the following procedures in the conduct of the study:
1. The researchers searched for source materials and references in the Internet and
in the Library for related literature and studies useful in understanding
entrepreneurship in Indonesia;
2. The researchers looked for subjects to interview for their observation of
entrepreneurship in Indonesia;
3. The subjects were interviewed online due to their remoteness regarding the
main topic of the study;
4. After data gathering, the researchers collected it for the analysis, summary and
interpretation and comparison of what the subjects had to say and what the
source materials in books and online states;
5. And lastly, the researchers formed a conclusion and recommendation based on
the results.
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CHAPTER IV
PRESENTATION AND INTERPRETATION OF DATA
This chapter deals with the results of the interviews and how the subjects’
observations are similar or different to what online articles state on the state of
entrepreneurship, market, business and economic landscape in Indonesia.
INTERVIEW
An Interview with Bro. Raul Claveria
Bro. Raul Claveria is a Filipino seminarian at The SVD Retreat House in
Tagaytay. He was a tourist in Indonesia for a long period of time. Though he kept on
moving from place to place, he stayed in Bali, Indonesia for 5 months where he was
able to observe the business environment.
According to Bro. Raul, when it comes to the volume of tourists, it is
observably high. Large numbers of tourists come from different foreign and
neighboring nations with an estimated 300 flights per day and that is only in Bali, a
small part of Indonesia.
Claveria added that when it comes to the business environment, it is thriving.
He focused on the high profits of hotels, restaurants and other businesses who mostly
cater to foreign tourists. He observed the strong economy of Indonesia and connected it
to being a known tourist destination in Southeast Asia which is why the inflow of
revenue is fast particularly in Bali.
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One of the problems he observed in the business environment is the
overwhelming competition in the market. He said that there were a lot of businesses
but added that everyone is still earning because there are many consumers so the
demand is high for the various products and services they offer.
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An Interview with Professor Maximus Gorky Sembiring
Professor Maximus Gorky Sembiring is a renowned researcher and an
Associate professor in Educational Management and Distance Education, Universitas
Terbuka in South Tangerang, Indonesia.
In an online interview, Prof. Maximus said that he thinks the entrepreneurial
situation and business environment in Indonesia is quite similar to other Association of
Southeast Asian Nations (ASEAN).
Sembiring said that there are so many huge and rapid changes in the business
environment in Indonesia and other ASEAN with the introduction of 21st century
technologies and new innovative methods to the business world which he said makes
the situation uncertain at times.
When asked if entrepreneurship is motivated or promoted in the country, he
only said that it's not really easy to make them in black or white. He added that it
depends on many factors and conditions.
However, in most cases, he stated that at least for now, the business
environment in Indonesia is still dominated by entrepreneurs and ‘self-owned’
businesses.
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An Interview with Mr. Derry Dewantara
Mr. Derry Dewantara is a young Indonesian airport staff who lives in Bandung,
Indonesia.
According to Derry Dewantara, Indonesia can improve its economy by
diversifying its sectors. It relies too much on the primary sector such as exporting palm
oil and coal. It should focus more on improving the secondary sectors and tertiary
sectors.
In addition, he said that Indonesia needs to invest more in its infrastructure.
Besides Java and Sumatra, infrastructure is a ‘joke’ in Indonesia. Even in Java,
infrastructure is minimal compared to Malaysia and Singapore.
Derry stated that Indonesia needs to get rid of its corruption. It needs to get rid
of nepotism and bribes in order to improve the efficiency of its bureaucracy. He
described Tanjung Priuk, which is the largest port in Indonesia, as SouthEast Asia's
most inefficient port.
Most public officials require 'gifts' to process something quickly for example:
passports, identity card. Without any 'gifts' it would take a very long time for the
government to process it.
Dewantara said that Indonesian workers are also not that productive, the
government must increase the productivity of Indonesian workers so that they can have
26
higher wages to increase the standard of living as more productive workers are
beneficial to the economy. He said that education is the key.
Indonesia may also need to improve its technology, it lags behind other nations
in technology as foreign countries still mine its natural resources. The royalties given to
Indonesia are insignificant compared to the total value of the mined resources.
Indonesia exports crude oil which is refined by Singapore to be exported back to
Indonesia, as a result we lose money when we export. Indonesia should begin to build
refineries to maximize its resources so that it can sell refined oil which is more
valuable than crude oil.
Foreign Direct Investment also needs to increase in the country as the
government doesn't have enough public spending to invest in infrastructure projects
throughout the whole country.
When asked about the business environment, according to Derry Dewantara,
there are a number of businesses that are likely to succeed in Indonesia. Forestry and
logging are the best. Palm oil is a great business as well but also very capital intensive.
Having an Indonesian partner is suicidal, he said, describing Indonesian businessmen
as ‘greedy’, doesn't like to work and always have their hands out for more.
Despite the negative stance on businesses, according to Derry, entrepreneurship
is trending right now because of unemployment and underemployment. The ubiquity of
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e-commerce, around the planet, is another powerful driver for entrepreneurship, he
said.
However, Derry said that entrepreneurship is not a new trend - it's been very
active and well-recognized for about 30 years, and it's not going to go away. A
moderate-sized city of about 300,000 will express about 8,000 startups per month. This
start-up rate can be expected to double or triple in the next 10 years.
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Summary of Results of Research from Other Resources
According to our research, Indonesia’s market and business environment,
although filled with micro, small and medium-sized enterprises, is still one of the
hardest places to conduct businesses in because of its difficult start-up procedures.
Research also suggests that the economy is still the biggest in Southeast Asia
and one of the biggest in the world but is beginning to slow down in the past years.
Assets are rising but so does Liabilities and soon, the latter might catch up.
Entrepreneurial Trends include a large population of young individuals wanting
to be entrepreneurs, driven by the search for a better quality of life and an escape from
poverty, unemployment and underemployment.
Entrepreneurial Issues include a recurring observation on the lack of education
for entrepreneurship unlike in the Philippines, a lack of financial support for women
entrepreneurs and a lack of financial support from the government.
Online articles suggest a mixed view of entrepreneurship or self-owned
businesses, some would say it is lacking while other studies state that there is a great
increase in the number of entrepreneurs and could increase in the next few years.
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CHAPTER V
CONCLUSION AND RECOMMENDATION
This chapter deals with the summary of findings, the final conclusion of the
study and recommendations for future use and studies.
Conclusion
Based on the summary of our findings and online interviews conducted, we
therefore conclude that the situation of the business and entrepreneurial environment,
and economic landscape in Indonesia is still unclear due to a lot of factors.
Observations of the subjects differ from what articles online and in books state.
Indonesia might be the largest economy in SouthEast Asia, but it is also still
problematic especially when it comes to entrepreneurship. The lack of education,
policies, financial support from the government, and support to women entrepreneurs
are some of the main problems of Indonesia aside from the great unemployment rate.
Based on our research, we could only connect these problems and uncertainties
to the fact that Indonesia has only held their first free election in 1999 therefore it is
only beginning to experience the real essence of democracy. Policies are only
beginning to be made regarding entrepreneurship and its effect on the economy. In
other words, its problems are rooted in the fact that Indonesia is still in a time of shift
from the economy-controlled regime to the innovations of the world regarding
30
entrepreneurship. Indonesia has a lot of potential if it could finally grasp the ideas of
the 21st century.
Recommendation
Based on our findings and conclusion, we recommend to prioritize education
and policy-making about entrepreneurship to motivate young individuals to become
entrepreneurs as it is a great factor in the growth of a nation’s economy. This
recommendation is not only for Indonesia but to the Philippines as well.
We also recommend a deeper study in this subject matter using a better
qualitative approach or a quantitative approach with a bigger population to conduct a
survey to enhance credibility and findings.
We hope this simple report study will be useful to future researchers in their
endeavors as a reference material.
31
BIBLIOGRAPHY
World Factbook (2020) East Asia/Southeast Asia: Indonesia. Retrieved on February
22, 2020. Retrieved from:
https://www.cia.gov/library/publications/the-world-factbook/geos/id.html
Indonesia Investments. (2019). Doing Business in Indonesia. Retrieved from
https://www.indonesia-investments.com/business/item7
World Bank’s Doing Business. (2020). Economy Profile: Indonesia [PDF file].
Retrieved from
www.doingbusiness.org/content/dam/doingBusiness/country/i/indonesia/IDN.pdf
International Trade Administration. (2019). Doing Business in Indonesia. Retrieved
from https://2016.export.gov/indonesia/doingbusinessinindonesia/index.asp
Worldometer. (2020). Population by country (2020). Retrieved from
https://www.worldometers.info/world-population/population-by-country/
Top 10 of Asia (2015) Top 10 Most Inspiring and Successful Business People in
Indonesia. Retrieved from
http://top10asia.org/10successfullbusinesspeopleindonesian.php
Siregar, A.M. (1969) Indonesian Entrepreneurs. Asian Survey Vol. 9, No. 5 (May,
ublished by: University of California Press

1969), pp. 343-358. P
32
OECD (2018) SME and Entrepreneurship Policy in Indonesia 2018. Retrieved from
http://www.oecd.org/publications/sme-and-entrepreneurship-policy-in-indonesia-2018-
9789264306264-en.htm
J. Kapoor (5 July 2019), The 7 Basic Laws of Entrepreneurs Should Know About.
33

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COLUMBAN COLLEGE, INC.

COLLEGE OF BUSINESS AND ACCOUNTANCY

Entrepreneurship in the Indonesian Setting

A Report Presented to the College of Business and Accountancy Faculty of Columban

Oliva, Ma. Elizabeth A.

Palatan, Randell Jan M.

Rapada, Ariane Joyce

February 24, 2020

Entrepreneurship is globally perceived as one of the largest contributing factors

Indonesia is no different. As students taking up Bachelor of Science in Accountancy

and entrepreneurial environment, and economic landscape in Indonesia?” and

achieve a wider picture based on different perspectives, a Filipino tourist, an

studied and interpreted by the researchers. It was determined that entrepreneurship in

controlled economy, this is the root of the uncertainties.

TITLE PAGE …………………………………………………………………….. i

TABLE OF CONTENTS ………………………………………………………... 3

CHAPTER I: THE PROBLEM AND ITS SETTINGS

Background and Other Information About Indonesia ​…………….. 6

Statement of the Problem ​…………………………………………. 7

Significance of the Study ​…………………………………………. 7

CHAPTER II: RELATED LITERATURE …………………………….. 9

CHAPTER III: METHODOLOGY

Methods and Techniques of the Study ​……………………………. 20

Background of the Subjects ​……………………………………….. 21

Research Instrument ​………………………………………….…… 21

Data Gathering Procedure ​…………...………………………….… 22

CHAPTER IV: PRESENTATION AND INTERPRETATION OF DATA

Summary of Results of Research from Other Resources ​…...…….. 29

CHAPTER V: CONCLUSION AND RECOMMENDATION

THE PROBLEM AND ITS SETTINGS

related to the study including the background of the country.

Entrepreneurship is globally perceived as one of the largest contributing factors

people as well. Richard Cantillon (1730) defined entrepreneurship as self-employment

entrepreneurship is both a question and an answer to a country’s economic growth.

Bachelor of Science in Accountancy and hopefully become business owners in the

future as well, we conducted this research entitled “Entrepreneurship in the Indonesian

Setting: An Analysis of the Business Environment and Economic Landscape in

be potential entrepreneurs in the future, determinants of the Philippine’s economic

Background and Other Information About Indonesia

According to the information provided by the Central Intelligence Agency’s

Indonesia declared its independence shortly before Japan's surrender, it required,

United Nations before the Netherlands agreed to transfer sovereignty to Indonesia in

Democracy ended in 1957 when President Sukarno, Indonesia’s first president

Though primarily viewed as a fast developing nation, Indonesia still currently

faces issues. According to the World Factbook, poverty, education, terrorism,

implementing economic and financial reforms, stemming corruption, reforming the

Indonesia currently faces.

Statement of the Problem

of the business and entrepreneurial environment, and economic landscape in

Specifically, this study seeks to answer the following questions:

1. Background of the Client

3. What can you say about the economy in Indonesia?

5. Is entrepreneurship or self-owned businesses promoted in Indonesia?

6. What is the implication of the study?

Significance of the Study

This study hopes to investigate the business environment and economic

landscape in Indonesia and determine if entrepreneurship is promoted in the country.

considering becoming entrepreneurs in the future.

Aspiring entrepreneurs, especially young Filipinos like us. It is important to

trends they are experiencing as well.

both schools and students.

help bridge better understanding of the subject at hand.

Law of Indonesia Regarding Entrepreneurship

entrepreneurship and micro, small and medium-sized enterprises (MSMEs) and a

Background and Other Information About Indonesia …………….. 6

Statement of the Problem …………………………………………. 7

Significance of the Study …………………………………………. 7

Methods and Techniques of the Study ……………………………. 20

Background of the Subjects ……………………………………….. 21

Research Instrument ………………………………………….…… 21

Data Gathering Procedure …………...………………………….… 22

Summary of Results of Research from Other Resources …...…….. 29