Agus Pramusinto, Ph.D

Gadjah Mada University

Yogyakarta, Indonesia

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INTRODUCTIONIndonesia is a unitary state, consisting of:

More than 234 million people, the fifth largest in theworld (compared to Australia 18 million in onecontinent; Brunai 375 thousands)

14,000 -17,000 islands

More than 5,000 kilometers from west (Sabang inAceh) to east (Merauke in Papua)

Has 3 time differences

33 provinces; 398 districts; 93 cities (December 2008)

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SUCCESS AND FAILURE OF

THE NEW ORDER GOVERNMENTEconomic growth: 6-7% per year (until 1995: NewEmerging Country; New Asian Tiger)

GDP per capita increased from US$ 70 (1968) toUS$ 1,000 (1996)

In 1997, financial crisis hit IndonesiaFinancial crisis economic crisis political crisis

Exchange rate from US $1=Rp. 2,500 to Rp 17,000A series of riots and demonstrations

Suharto was overthrown in May 21, 1998

In 2008, another financial crisis came. The numberof unemployment in Indonesia has increased.Companies have laid off employees

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Why Entrepreneurship?Entrepreneurship plays in economic development(Hebert and Link, 1989; Styles and Seymour, 2006;Fourie, 2008; Shinnar et al., 2009) and in socialtransformation (Thompson, 2002; Alvord, Brown, andLetts 2004; Bornstein, 2004; Mars and Garrison, 2009).

In the United States, entrepreneurship is an integralcomponent of the United States economy. Smallenterprises are reckoned to have been key creators ofnew employment opportunities since 1980s (Grichnik,2008).

In Japan, entrepreneurship of small businessescontributes more than a half of employmentopportunities in industries and contribute a third ofindustrial output (Fourie, 2008).

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Characteristics of Entrepreneurship

1. Skill requirements:

Identification of opportunitiesNetworkingConverting opportunities into business

InfluenceFacilitation of team dynamicsChallenging the status quo

Motivating individuals2. Knowledge

The business world as a system

Corporate ethics3. Personal competence

Self acceptance

Drive and determinationOpportunity obsessedTolerance of risk

Tolerance of uncertaintyCreative problem solversAdaptable

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Osborne's and Gaebler's Ten Principles

of Reinvention are:

Catalytic GovernmentCommunity-owned GovernmentCompetitive GovernmentMission-driven GovernmentResults-oriented GovernmentCustomer-driven GovernmentEnterprising GovernmentAnticipatory GovernmentDecentralized GovernmentMarket-oriented Government

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Social Entrepreneurship and

Social TransformationEntrepreneurship can as well refer to socialaspects such as social entrepreneurship. Socialentrepreneurship is described “as the creationand undertaking of a venture intended topromote a specific social purpose or cause in acontext of mobilization” (Murphy & Coombes,2009: 326).

Alvord, Brown, and Letts (2004) note that qualityin the application of principles and practices ofentrepreneurship creates scalable andsustainable social transformation.

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Table 1

Number of Open Unemployment by Level of Education

Level of

education

Year

2003 2004 2005 2006 2007 2008

Diploma 119,983 237,251 322,836 297,185 330,316 519,867

University 245,486 348,107 385,418 375,601 409,890 626,202

Total 445,469 585,358 708,254 672,786 740,206 1,146,069

Source: Central Bureau of Statistics, 2003-2008

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Table 2.

Number of Graduates of State and Private Education

Level of

education

Academic Year

2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008

Diploma 171,628 205,134 121,354 101,373 38,079 61,218

University 281,070 478,242 231,820 222,529 147,189 212,521

Total 452,698 683,376 353,174 323,902 185,268 273,739

Source: Department of National Education, 2008

Budget AllocationThe Indonesian government allocates Rp. 37 billion tothe program, with each autonomous institution of highereducation receiving Rp. 2 billions, while each polytechnicgets Rp. 500 million.

Under the program, 70 percent of the money isearmarked for business start-ups. Individual studentscan obtain a maximum of Rp, 8 million in loans, whilegroups of 3-5 people can receive loans to a maximum ofRp 40 million per business group. The amount of loanreceived depends on the proposal and feasibility of thebusiness plan.

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The Implementation of program activities

Preparation phase (1-2 months)

Socialization and selection of students who are participants in the program

Identification and selection of students who are participants in the program

Preparing the implementation team and the training materials

Phase (2-3 months):

Entrepreneurship education and training

Developing the business plan (business plan)

Selection of the business plan, a process that involves third parties (bankingand businesses/corporations)

Apprenticeship (internship) to SMEs

Implementation Phase (6-9 months)

Students or students groups who launch start ups selected on the basis oftheir business plans

Cashing working capital (disbursement of the working capital

Integrated guidance by the team of supervisors drawn from institutions ofhigher education and SMEs to assist students resolve problems they face

Monitoring and evaluation13

Public Governance in Human Resources DevelopmentInstitutions of higher learning as the managers of the program:

Conduct socialization to students and Small and Medium Businesses(SMEs)Identifying and selecting students and SMEsProvide necessary knowledge and guidance on entrepreneurshipProvide guidanceCarry out monitoring and evaluation of the programMake activities report

Participating students in the entrepreneurship nurturing program , as participants in the program:Participate in selection processFormulate the business planAttend training and education sessionsCarry out apprenticeship(internship) in SMEsEstablish and run businessRepay the working capitalMake regular reports on the development or progress of the business

Lecturer/MentorCarry out guidanceLink SMEs and studentsCarry out monitoring and evaluation of the programProvide consultancy to students

BusinessmenCarry out guidance and supervision on entrepreneurship in a practical wayGive feedback advice or tips on business developmentBecome business partners of students who are participants in the program

Regional governmentFacilitate students who are participants in the program work on all issues that relates to starting,developing a business, right from technicalities, management, market information, permits and so on.Assist in establishing connection with business networks

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Indicators of SuccessInstitutions of Higher Education:

Number of students who are participants in the program

Number of entrepreneurial students who start businesses

Number of business units created

Sustainability of the program

Number of surviving business units and sustainability of businesses

Involvement of businessmen and level of satisfaction with the execution of theprogram

Effectiveness and efficiency in the use of funds

Existence of the entrepreneurial education institution

Students and Business UnitsEntrepreneurship knowledge

Entrepreneurial skill and attitude

Business networking

Business management capability

Business development

Larger Market

Sound cash flow

Number of employees

Total sales revenue and assets

Total of inventory and its variation

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EvaluationNinety (99) groups submitted business proposals,and 77 groups were declared successful. Businessproposals for 62 groups have been approved forfunding. However, only 61 groups collected the money.

About 60 percent of the groups succeeded inmaintaining and developing their businesses, while40 percent failed to do so.

Women groups characterized those groups that failed.

There is no difference in performance amongstudents drawn from different faculties. In fact,students who are drawn from the faculty ofeconomics, show high likelihood of failing than is thecase with those from other faculties.

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Factors influencing the

failureErroneous business planning

Distraction: business and study

Weaknesses of the program

Mistakes in the program

Motivation

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Conclusion

Entrepreneurship is an important element in human resourcedevelopment. There is need to enhance such spirit in both theprivate sector and public sector. By adopting the entrepreneurialspirit, human resource will become more innovative and creative,which values will contribute significantly to the creation of jobopportunities and assist the economy rise out of the ongoingrecession.

There is need to develop the student Entrepreneur Program in moreserious way. The implementation of the program in Indonesia hasregistered mixed results, with some successes and failures. Manyfactors have been led to the failure of the program among others,program weaknesses, errors/mistakes of the program, and factorsrelating the participants such as students busy academic schedule.

The objective of the program is to ensure that entrepreneurialknowledge all participants acquire during the program enables themto succeed in managing their businesses. However, for those whofail to do so, considering the high demand for innovative andproactive human resources in the public and private bureaucracydriven by the ever increasingly competitive world, such knowledge,will be very beneficial in their roles as employees in the private andpublic sectors.

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Seoul, Korea, 19-23 October 2009

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