Entrepreneurship, SME’s and ASEAN Economic Community

Dias Satria

www.diassatria.com

Anyone is having a plan to set up a business in the future?

Think about someone that you adore as an entrepreneur!

Definition

• Entrepreneurship is the process of starting a business, typically a startup company, based around an innovative product, process or service. The term "entrepreneur" is often conflated with the term "small business.” (Wikipedia)

Definition

What is AEC (ASEAN Economic Community)?The AEC is the realisation of the region’s end goal of economic integration. It envisions ASEAN as a single market and production base, a highly competitive region, with equitable economic development, and fully integrated into the global economy. (ASEAN.org)

Definition

• Small and medium-sized enterprises (SMEs; sometimes also small and medium enterprises) or small and medium-sized businesses (SMBs) are businesses whose personnel numbers fall below certain limits. The abbreviation "SME" is used in the European Union and by international organizations such as the World Bank, the United Nations and the World Trade Organization (WTO). Small enterprises outnumber large companies by a wide margin and also employ many more people. SMEs are also said to be responsible for driving innovation and competition in many economic sectors. (Wikipedia)

3 keys - Macroeconomics perspectives

Entrepreneurship

SMEAEC

Globalization: Free trade

Globalization: Australia

Qantas Airways is on track to complete 4000 of its planned 5000 job cuts by June 2015 (Sidney Morning Herald, May 2014)

As many as 65,000 workers could lose their jobs and up to $4 billion could be lost from the economy as a result of General Motors pulling the plug on Holden manufacturing in Australia, under one scenario put forward by economic modellers.

Budget Deficit Trade Deficit

High Unemployment

Hiking up house pricing

(Inflation)

Globalization: Indonesia

Economic and financial

crisis 1997

World Recession

2008

Freezing in multilateral trading system: problems

• Globalization and WTO (World Trade Organization)

• Problems in Multilateral trading system• Multilateral trading system under the WTO• Free Trade Area (NAFTA, AFTA/AEC and EU)

Who are involved in AEC 2015?

AEC: Flying geese economy 90s

High tech > Mid > Low

Reasons

• Facilitate the movement of goods, services, investments, capital, and skills.

• Increase trade (goods and services) and investment among member states.

• Promote and expand regional production sharing and network.

• Promote higher level of transparency and predictability.

Indonesia and other ASEAN nationsGlobal Competitiveness Index

2012 2013 2014

Indonesia 50 38 34

Malaysia 25 24 20

Thailand 38 37 31

Singapore 2 2 2

The most problematic factors for doing business 2014

1. Corruption2. Access to financing3. Inflation4. Inefficient government bureaucracy5. Inadequate supply of infrastructure6. Policy instability7. Foreign currency regulation8. Poor work ethic9. Tax rates10. Government instability11. Restrictive labor regulations12. Crime and theft13. Inadequate educated workforce14. Tax regulations15. Poor public health16. Insufficient capacity to innovate

Prospects and challenges: Indonesia

• High economic growth– Populations 248 Million– GDP 870.3 Billions (US$)

• High amount of labor force• Good governance • Infrastructure

AEC and Small Medium Enterprise

• Majority – SME’s• SME’s and Labour intensive• SME’s and local economic development

(Poverty reduction)

Problems in SME’s

1. One man show2. Manajemen yang sederhana (bahan baku

yang terbatas, proses produksi yang sederhana dan hasil produk yang bervariasi).

3. Pola permintaan konsumen yang monoton.4. Penggunaan alat produksi yang sederhana.

Problems in SME’s: a Survey

Marketing, 45%

Management, 35%

Fund, 20%

#support_locals: lesson learned from SA

Ebenezer Pl.

Sch. : Clothing company

Babahbikes and nomaden coffee: Malang

Innovation – Dynamic Market networking – Social media

Government supports

1. Increased supports for SME’s competitiveness1. Financial supports2. Transfer of knowledge (capacity building)3. Information Technology4. Marketing

2. Basic infrastructure3. Law Enforcement4. Good governance (Business registration)

Readings

1. Let’s change. (Rhenald Kasali)2. Grow with character. (Hermawan Kartajaya)3. Nationalism and economic competitiveness.