Jakarta. Indonesian entrepreneurs can utilize local factors of production to build competitive advantages to beat the economic downturn, said executives at Enterpreneurs’ Organization, a global business networking company, in an interview on Thursday.
Vijay Tirathrai, global chief executive officer at Enterpreneurs’ Organization (EO), a Virginia-based organization that has a network of 11,000 entrepreneurs spread out in 48 countries around the world, said investors remained upbeat about Indonesia despite its lacklustre economic performance in the first quarter.
“Indonesia has a tremendous resource in its large population,” said Tirathrai, explaining that the country’s population could be a huge advantage and entrepreneurs in the country could accordingly capitalize on its local factors of production.
Tirathrai was appointed to the global CEO position on June 1.
“China doesn’t have Facebook, Whatsapp or Amazon. But they have critical mass to consume home-grown technologies, so Indonesia might be able to match that.”
Indonesia was Tirathrai’s first stop on his tour as EO’s newly appointed CEO, as he is set to travel to Hong Kong, China, Berlin, Finland, the United Kingdom and India over a period of six weeks before returning to the United States.
He picked Indonesia because of tbe importance of the country to the organization and the world economy.
Indonesia, the world’s 16th biggest economy, is a major producer of global commodities like palm oil, coal and rubber.
At the interview, Tirathrai unveiled that a survey from the organization, which was founded in 1987 and whose members now employ more than 2.4 million people worldwide, showed that “the whole economic environment is not bleak.”
According to the latest Global Online Survey that EO conducts biannually, 61 percent of respondents “want to increase the number of employees and 88 percent predicted that there would be easier access to capital in the next 6 months.”
Tirathai said financing for investment has now been diversified: companies do not only rely on banks and capital markets, but also can be derive cash infusions from venture capitalists or even angel investors.
“This dismisses any of the negative talk we hear about the slowdown,” Tirathrai said.
Views on Indonesia
Tirathrai was accompanied by Ronald Walla, the head of EO’s Indonesian chapter during the interview, who said that currently the majority of entrepreneurs in the country tended to focus on short-term performance.
EO’s Indonesian chapter has 106 members from various industries, including manufacturing, services, media, garments and entertainment with combined sales of more than $6 billion.
Ronald said the main issue for local companies is how to increase value and add profitability. He said that there were lots of opportunities for local entrepreneurs should they become more “open-minded” and increase efforts to access new markets in the world.
He was referring to the few Indonesian companies that have expanded overseas, as entrepreneurs were too busy in capturing the local market.
However, with the global economic slowdown dragging the local economy, sales from companies have been affected.
Indonesia’s first quarter economic growth reached its slowest pace since 2009. Gross domestic product grew by 4.7 percent in January-March from the same period last year, slower than the 5.01 percent year-on-year growth in the fourth quarter of last year.
“In the second term, hopefully entrepreneurs can make bolder moves,” Walla added.
International agencies, like the World Bank and the International Monetary Fund, have given Indonesia’s economic growth a bleak outlook.
The World Bank cut its forecast for Indonesia’s growth this year with exports forecast to remain weak, while consumers are still struggling with a high interest rate environment.
The Washington-based lender estimated Indonesia’s economy would expand by 5.2 percent this year, lower than its October estimate of 5.6 percent.
With additional reporting from Muhamad Al Azhari
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