Marcopolis presents Indonesia Report focused on topics such as investments, doing business, economy and regional integration, featuring interviews with Indonesia's leaders. The sectors under review in this issue are agriculture, banking, energy, industry, telecom, IT, tourism, logistics and many more.
Interview with Andrew Tani, Founder & CEO of Andrew Tani & Co
Why did you decide to come to Indonesia?
I was leafing through a magazine in 1983 and saw an ad for a product coming out of Singapore—a sports and travellers drink from Norway. I touched base with the owner, and it turned out he was Indonesian. He found out I was doing management consulting in the Philippines and he said, "You have got to help me in my country." And so I came to Jakarta.
How was the beginning?
The beginnings are probably one for the books in the sense that we started without knowing the language, not knowing the people, and not having the resources to count on, except me as the single employee. I got my first driver and then my secretary almost simultaneously. Then came the first consultant, the second consultant and it just went on from there. We were at the right place at the right time, so to speak.
How do you adapt that strategy to Indonesia?
You need to have a solid team. That's what internal integration is about. If you have a solid team, they can keep taking care of the first half of the struggle to survive and grow the business. The second half is external survival, where you deal with the independent will of customers, competitors, suppliers and the regulators. You are out there creating a product scope with which you find customers, and then build from there.
We started with a motley group of not more than a dozen, importing videos from the U.K. That was the right product in the wrong market because it was all in English. We earned their trust to use subtitles, and that is how it all started. Thereafter we invited named authors for local seminars, because we needed to promote the company. We used the cash flow from the seminars to pay for exposing what we were doing. That is where the internal integration comes in, because many of the people who were with the company from the beginning are still with me.
What is AndrewTani & Co. today, not only as a brand, but as a company?
We got our first big break in March of 1988. I was invited to take the place of the Minister of Education as keynote speaker for the annual gathering of the national association of personnel managers. I was sitting in the last row at the back when my name was mentioned as the replacement for the keynote speaker. The man beside me said, "Who is this guy? We don't even know who he is." I walked to the front with my knees shaking. I was 33 years old at that time. I think I did well, because the following day it was in the papers, and I got invited to speak at 20 cities over the coming weeks. My topic was "corporate culture", so they called me, "Mr. Corporate Culture."
We proceeded to help two of the country’s largest groups of companies the following year, because they were at that corporate culture event. It all started there. We went on to help more Chinese family-owned conglomerates, 17 by last count. In 2001, we got a break to help Bank BNI, a government bank, and also the country’s first central bank in 1946. The CEO engaged us after an interview that was triggered by an ad that extolled, “Teams at work, troops at war,” in a local paper. That was our first state-owned enterprise.
From there, we got an opportunity to go for a beauty contest with Bank Indonesia, the country’s central bank. We were selected, and helped the governor from 2003 to 2008. After that came Pertamina, the national oil company and the country’s biggest business conglomerate.
In the mid-2000s, we served our first government ministry, the Ministry of National Education. In order to get there, we had to prove ourselves by helping the second largest Muslim organization here called Muhammadiya-Aisyiyah. Muslimat Nadhlatul Ulama and other government ministries followed suit.
We are now busy helping public companies to heighten their organizational effectiveness by improving their quality of management, leadership and process. We are in the process of organizing the People & Organization Development Community, for practitioners of the science and the art. We are also leading a movement to measure the national inertia.
As you can see, the broad spectrum of clients that our company have helped in Indonesia range from private sector conglomerates owned by businessmen who would risk going to hell to make a profit, to state-owned enterprises, to government ministries, and finally faith-based NGO's under the leadership of people who are focused on going to heaven.
What can AndrewTani & Co. do for companies?
Help them succeed in Indonesia. What companies need to understand is the Indonesian psyche—it is all about humility, sincerity, communication and grace. The Indonesian psyche has unique quirks and as you deal extensively with human beings yourself, you know that there are right and there are wrong ways of saying or not saying, and doing or not doing things. You also know that emotion overpowers reason nine times out of ten. Beware the emotions that you trigger and be even more aware that they will not tell if you did. Hands down, Indonesians will choose grace over confronting and embarrassing others.
The country was a Dutch colony for 350 years. Among other things, that forced subservience taught them to never allow anybody to take advantage of them again. We are free and we have awakened. We have a national identity, an identity that can now boast of political maturity and the smooth transition of power during successive national and local elections.
Should companies be looking at other parts of Asia?
Certainly. There are over 600 million people in ASEAN, the Association of Southeast Asian Nations. Almost half of that is in Indonesia. You are better off to base yourself in Indonesia and then you go for the rest of ASEAN. For sure many companies have established their regional and international headquarters in Singapore for reasons of convenience and the like. It’s just an hour and a quarter flight from Indonesia and all the facilities are there. All those Singapore-based companies, their main target is Indonesia. The economy GDP first surpassed a trillion dollars in 2012. Using mainly econometrics and demographics, many eonomists foresee Indonesia to become the 10th largest economy around 2030. This is the place to be. The demographics are right. It is a place where there is a lot of space and a lot of people to do something remarkable.
Talk about central government.
President Joko Widodo is doing a good job. He just pulled off a second cabinet reshuffle. His political master mind is on top of the game. The Indonesia Rupiah strengthened with the appointment of the new Finance Minister Ibu Sri Mulyani, who served a stint at the World Bank. President Jokowi has announced almost a dozen economic packages aimed at speeding up economic growth. Foreign direct investments and public-private partnerships are encouraged. Profits can be repatriated. So bring your investments, your technology and your great ideas.
Talk about the Islamic population.
Not a problem for business. We have helped two of the largest Islamic organizations develop a long-term development plan for their respective NGO's. We have established a community-based business with one of them. They are not incapacitated by dogma. It is the relationship of mutual respect and understanding that counts. It’s about touching them in the right way. They are very good people to become friends with. Of course, if you are here simply to take advantage of them and they feel it, then they will find a way to kick you out.
Developed economies have large companies that have highly educated and trained people, cutting-edge technology, and funds to invest. Share them with a country like Indonesia, that has gotten its act together. Peaceful elections, peaceful transition of power. Peace and order in check. Some terrorist activity, but the government is in full control.
Talk about Indonesia as an invesment destination.
Indonesia is a good place for European, American, even Arab investors, who misssed the China train. They might miss the Indonesia train to more astute ASEAN, Chinese and Korean investors. What the Indonesian businessmen need is a partner who can help them overcome the challenges of a large but less productive labor force, contract sanctity issues, and the high cost of money for capital-intensive businesses.
The infrastructure solution is in sight. There is a USD 400 billion infrastructure development plan in place. A prosperous Indonesia is good for the world because of our strategic location vis-à-vis China, Japan and the other ASEAN countries. A strong Indonesia is good for ASEAN free trade. Indeed, Indonesia is the country where a European or an American or an Arabian company should spark, and then get the economies of scale, and then go to the other smaller countries.
We are the fourth most populous country in the world today and the systems are working. There is still some poverty in some parts, and the government has a minister specially assigned to look after these less-developed parts of the country. To some businesses that are out there looking at geology or something to do with the Earth, Indonesia has all the minerals of commercial value.
The policy makers are implementing a strategy to develop the mineral resources and not export raw materials. It’s been painful for the medium term. Build the smelters here. Use the mineral resources, develop the people resources, and then go forward. That is the big strategy that the country has in play.
We are very interested to learn more about Penara.
Penara is the brand name that was coined by the Chairperson of the Muslimat Nahdlatul Ulama (MNU), Ibu Khofifah Indar Parawansa. Penara is short for two Indonesian words that literally mean “Indonesian woman.” Penara refers to an aggregated market having to do with the fact that the MNU is a Muslim women's organization that has existed since 1932. Penara was launched in Bandung, West Java only last 18 June 2016.
They number more than 20 million women, and they are very well organized. Across the country, they have more than 33,000 offices with 20 million female volunteers. The organization has received, and continues to receive, annual support from the donor agencies. The world wants to see the religious organizations in Indonesia to be well-managed and well-organized, because separatism in Indonesia is controlled due to the presence of these unified, humongous religious organizations.
The largest Muslim organization, Nahdlatul Ulama, has 90 million members. Six factions, moderate Muslims who are creating their own way of Islam, which is peaceful and loving. It is difficult for the outside world to understand that, because all we see are the small pockets of militant groups, but their number is few compared to these huge groups.
We facilitated a workshop for MNU, and the workshop came up with a strategy. In order to be sustainable, they need to reduce their dependence on grants from the donor agencies. They needed to have their own economic activity that would generate funds for their operations. They are a volunteer organization, so while nobody gets paid a salary, there are still hundreds of thousands of kindergartens, clinics, thousands of hospitals and prayer centers that are organized under that organization's umbrella.
Now the vision of the Chairperson was that we need to have economic activities. In order to do that, we need to get our Muslim women to become economically independent. The first five years of our plan was focused on developing spiritua and physical health. The second five years is for Indonesian women to gain economic independence, and that is where we are now.
Within these five years, we organized a market aggregator company called Netindo Utama Mandiri, jointly owned with the MNU, and deployed what we call Digital Business Ecosystem Partnership. The founding partners who have signed up already are a USD 7 billion telco, the largest in Indonesia and the 6th largest in the world, and BULOG (read logistics bureau), the sole government agency held responsible to monitor and remedy supply and demand conditions for prime commodities such as rice, sugar, cooking oil and beef with the end in view of keepig price at optimum levels through market operations. We are in the process of signing up a bank to provide our members with banking services.
The collaboration calls for Netindo Utama Mandiri to convince Indonesian women to sign up as Penara Members, become subscribers of the Telco ’s e-money service to enable payments using the cell phone as registered customers of our Kiosk Penara, where they can buy prime commodites and a host of other household and life needs at reduced prices. We recruit and supply our Kiosk Penara with the Penara product mix. Penara members will also receive offers for banking services at better terms negotiated by Netindo Utama Mandiri.
The Chairperson of the Muslimat Nahdlatul Ulama today happens to be the Minister of Social Affairs of the government of Indonesia. She graciously accepted our invitation to deliver a speech which really encouraged all the members of Penara, including the telco who were present and our other partners, that what we are doing has immense socio-economic value. Since the launch of Penara last 18 June 2016, about 5 weeks ago, we have registered over 2.000 members and 17 Kiosk Penara.
If one wants to be part of developing the socio-economic aspect of Indonesian life, Netindo Utama Mandiri is waiting for more partners for whatever else you can do for this large group of Muslim women on a missio to help their families and collectively help the nation to experience sustainable economic development.
If we can help the Penara members, their families will all be helped. We can reach out to the families and make them even more productive, first by getting prime commodities at the best prices. This country needs the socio-economic support from the rest of the world. We are a global community, and what is good for Indonesia will be good for the world.