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Topic: Youth Unemployment

Creative Business:
The Art of Seeking
Table of Content: Opportunity in
Crisis
Effects………………………………………………………………p.2 - 5
Welcome to The Circle of Devil
All are coming from the Demand Side
ACFTA: An Awakening Alarm

Barriers…………………………………………………………..p.5 - 7
Mental Model and Academic-Business’ Mismatch
Education and Health Care

Solution…………………………………………………………p.7 – 12
The Economic-Fluctuation-Proof Business
Community Development and Business? Why Not!
KLASSAMIRZA: 3P (People, Planet, Profit) Creative Business

Conclusion……………………………………………………p.12
The –preneur Thinking
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Word Count: 3,915

Creative Business: The Art of Seeking Opportunity in Crisis

The 2008 economic slowdown had threatened countries’ concerned economic problem to be
increased - the unemployment rate. Every 1% of the slowdown in US economic growth had
decreased the economic growth in most Asian countries by 0.5-1% (Kuncoro, 2008). About
7.000 textile labors in Bandung, West Java, Indonesia, had been layoff, followed by 15.000
others, in the same industry, went jobless due to slower demands from abroad (Kompas, 2008).
A lot of these fired-labors were young women from suburbs who married in young ages due to
the culture value and have young children. Outsourcing system has become a favor for the firms,
leaving young fathers in job insecurity. Receiving Rp1.095.790 nominal wages per month
(Kompas, 2009a), textile labors have faced tough life in big cities such as Bandung and Jakarta
with just above the minimum wages of Rp1.069.000 in Jakarta (Kompas, 2009a). With 5-7%
inflation rate in Indonesia (Ma'ruf, 2009), they practically only receive Rp270.094 real wages per
month (Badan Pusat Statistik, 2009), making everything seems do not have value anymore.
Many of these young families had ended up being youth unemployment and their children’
futures remain questioned.

Welcome to the Circle of Devil

In a picture of poverty, everything reveals, from the quality of public service, education, inflation
to unemployment. It has become a representative of the speed of one nation’s civilization and a
multi-sectors parameter. As a source of the future, young generation determine the competence
of one country. If parents have no job or have below-standard-income and live in a poor
condition, they will likely raise their children insufficiently, without enough food and adequate
education. The children will grow as part of uncompetitive young adult population, hard to find
job, and become young parents who will continue the remarks of their parents; raising their
inborn children in a poor condition. The following result is a broken generation which named as
an underdeveloped nation.
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Deputy of BPS, Arizal Ahnaf, said to Tempo Interaktif that open unemployment in Indonesia
was dominated by graduates of vocational school (17,26%), high school (14,31%), and college
degrees (12,59%) (Mahrub, 2009). The additional unemployment then will mostly come from
young productive age. A lot of programs have been implemented to answer the youth
unemployment problem such as minimum wages policy. However, this macro scale effort
seemed ineffective as the below causal data between number of poor family (East Java’s poverty
line by March 2009 is Rp188.317) and unemployment rate in East Java Province show (table 1).

Year #Poor Population in East Java #Unemployment in East Java

2005 8.390.996 1.082.221

2006 7.455.655 1.051.295

2007 7.137.699 1.366.503

2008 6.651.280 1.296.000

2009 6.022.590 1.033.000

Table 1
Number of poor population and unemployment in East Java Province, Indonesia 2005 - 2009 (in person)
BPS, 2005-2009

The number of poor populations in East Java from 2008 to 2009 has decreased by 628.690
people. However, the number of unemployment in the same period decreased by only 263.000
people, which left 365.690 new people unemployed and live in poverty. This condition means
for every one person who ultimately unclassified from poverty line, there will be four additional
people classified as living below poverty line. Welcome to the circle of devil where the
government has tried to fix one sector reactively, but another victim appears as a cause of
careless treatment of previous sector, causing more problems in a circle.

All are coming from the Demand Side

As private consumption had built 63% of Indonesia’s GDP composition (table 2), a distraction in
domestic consumption will give fatal outcome for the country’s fundamental economy. There are
9.43 million people considered as open unemployment in Indonesia and about 35% of them
come from high school to college degrees (Mahrub, 2009). It means about 3.3 million young
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people have to consume less. This number is not including those with other classifications of
unemployment in young ages such as close, frictional, and half unemployment.

Source: The World Bank. April, 2008.

The less consumption means serious distraction on the demand side which leads to less income
for industries. Less income will reduce the net income in companies and force them to do layoff.
Where most job seekers are youth, massive layoffs will create more youth unemployment in
Indonesia. The government has to spend more subsidies. Taxes as the most government income’s
source (Direktorat Jenderal Pajak, 2010) will be decreased as income taxes and other taxes
coming from supply sides reduced due to lower net income. As a matter of fact, a whole nation
will suffer; both the people and the government.

ACFTA: An Awakening Alarm

In the global recession, only countries with strong economic foundation will survive. It means
sustainable jobs in real market and fixed-investments. My country should learn on how well
China survived from the recent economic recession. While Indonesia demanded a lot on hot
money on stock exchange which yawned up during the recession, China, in contrast, has enjoyed
the economic prosperity. This more-than-billion-people country has successfully invited a lot of
fix investments by inducing investors their cost competence and labor productivity. It is, of
course, done through long year process yet the fastest economic growth in history (Fogel, 2010).
More foreign investments come in the form of manufacture plants. As the result, these long-term
investments have provided the Chinese real sustainable jobs and transfer technology.
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ASEAN (Association of South East Asian Nations) – China Free Trade (ACFTA) had been
signed in 2004 and has been effectively implemented on most sectors since January 1, 2010
(Gandhi, 2009). All related parties in 2004 hoped that the treaty will benefit them from the
unlocked tariff and non tariff barriers. ACFTA is an awakening alarm for Indonesia as many
lower price imported products will penetrate the domestic market. Indonesian entrepreneurs who
are lack of competition will close their businesses or at least hold their current production
capacity. With the effort to push down the production cost, current employees are the most
subject who will be given the layoff policy; making the job security vulnerable.

The world has given my country more than five years to prepare. With 9.43 million people
jobless (Mahrub, 2009), I could not imagine how my country will survive to face the global
competition. Lack of good infrastructure, such as broken roads for distribution, low standard
schools, and 13-15% credit interests for business (KOMPAS, 2009b) have already made my
country become uncompetitive on primary points on free trade implementation. No need to
further mention all developing countries impacted on this treaty; most developed countries even
put their concerns on their existing competences to China. Six industrial sectors in Indonesia
have asked for one to two years extension to the government (Hanum, 2009). For countries in
ASEAN who positively seeking benefits by the time they signed the treaty, ACFTA is a
multiplier of economic boost, but for unprepared countries, it is a disaster, which will lead to
increasing rate of unemployment.

Mental Model and Academic-Business’ Mismatch

A country ideally should have 2% of its population subjected as entrepreneurs to boost the
economic growth at the level of global competition. Thus, why is rate of entrepreneurs to the
population in Indonesia is stagnant at 0.18%? (Napitupulu, 2009).

To know what have become the barriers to youth unemployment’s problem, we cannot
generalize one syndrome as a root cause for all areas. The youth unemployment problem in
Jakarta is totally different with the Papua’s. Take an example of 12.59% open unemployment
coming from college graduates in Indonesia. After asking my thirty three college graduates
friends who have just worked or been looking for jobs in companies in November 2009, about
50% of them are mostly complaining. They complained about salary which less than
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Rp7.000.0000/month to long process promotion. Overall, as an employee with less than two year
experience, they had too high expectation. The mental models were not prepared as an achiever.
They should have perceived to accept their first companies as stepping-stone. Actually, if they
worked for passion and patience did not too much think about money, in the near future the
money would come by itself.

I still remember in 2000, the way we studied in middle school was the teacher stood in front of
the class and recited everything in the books. This was also happened in higher education such as
high schools and colleges. The result was a-full-theories-students who were good in memorizing.
Only in 2006, our minister of education started preparing Competency Based Curriculum, which
let the teacher and students engaged in two-way interaction. However, education is a long
process and the distribution of adequate education through the whole state is such a hard thing
for our government to get ready for 2010 ACFTA.

The entire government departments have to work side-by-side, if they do not want one of them
become a fire department. A ministry of education slowly responded to curriculum method.
Students were fulfilled with theories without enough cases and practices. What have business
sectors needed do not meet with what have academic institutions provided. Business sectors have
to spend more cost for training and unfortunately accept few numbers of applicants. Academic
sectors were sometimes lack to teach entrepreneurship or management study. Graduates were not
induced to create job opportunities. These are important because no matter what we study, every
subject belongs to business, either we want to open new business or we want to use our study as
professional in companies. The result is the ministry of labors would have harder jobs to
decrease number of unemployment. As unemployment getting higher due to careless treatment in
a root cause, the ministry of social affair has to request more aids for social programs such as
foods and shelters. The ultimate ministry is now named as a fire department whose jobs will
never stop as long as no repairs and synchronization among the ministries.

Education and Health Care

With the implementation of macroeconomic theories in most countries’ economic policies, the
gap between China and some ASEAN’s countries would not disappear because the theories
conditioned all players stay in a perfect competition, means that we have same level of education
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level and welfare. What my county needs are even distribution of good education and health care
in a whole state. With less than 5% students graduated from colleges (Harian Analisa, 2006) and
societal degradation due to earthquakes and diseases, the TFP (total factor productivity) of the
Indonesians remain low. Healthiness toward quality of foods and housing is important to make
sure that employees work and create healthy working environment. However, as most cases in
undeveloped areas, how this could be achieved with millions of people living below poverty line

No matter how much business open in a country, if the workers do not have good mental models
and low TFP, the business will not run productively, threatened to be uncompetitive and closed.

Solutions: The Economic-Fluctuation-Proof Business

If manufactures had to close the plant due to slower global demands, then what business that can
survive through the economic fluctuation? One of my favorite business players in Indonesia,
Ciputra, said during my training “If you want to start your own business, start with your
passion”. Passion will not lie; it will lead to success. Someone with passion will create
something unique. Just add a touch of entrepreneurship and the unique creation will result in
form of creative business. Beside uniqueness, I observed that creative business has been proved
as an economic-fluctuation-proof business in Indonesia during Asian monetary crisis in 1998 and
economic recession in 2008. Cinemas were fulfilled by non-Hollywood movies created by young
talented directors such as Mira Lesmana with Laskar Pelangi (Lesmana, 2008) and Hanung
Bramantiyo with Ayat-ayat Cinta (Bramantiyo, 2008). These two movies even brought up to
several movies festivals in Europe. Fashion boutiques were inspired a lot by young new fashion
designers. New cafes with shocking new name popped out around South Jakarta, just like what
my friends did with Komodo Coffee which combined hot brewed Nusa Tenggara coffee with
charity project in respected island and Sushi Boon, a mobile car sushi bar concept with affordable
price in Bandung, West Java. These fresh ideas followed by other related new jobs such as food
stylish and merchandise providers.

During economic slowdown, a lot of people lost their stock and jobs and needed recovery, thus
creative business will be one of the solutions. People will always need amusements. It is also
dynamic since most young owners of this business will always full of creative ideas, innovations,
and nerves to hit the competition. Creative business just needs a combined passions, out-of-the-
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box ideas, strong willingness, and opportunity. Yes, opportunity! A group of young Bangladeshi
women might have super skills to make beautiful artsy fabrics, but they probably would not be
financially independent like now if Grameen Bank had not helped them by lending easy loans to
start their small business.

Community Development and Business? Why Not!

If a mismatch between business sectors and academic sectors already exist, those who do not
finish education will be far left behind.

The program that my friends and I have just finished called Community Development. Held in
three villages, Kalapanunggal, Palasarigirang, and Walangsari, in Sukabumi, West Java,
Indonesia from January 28 – March 1, 2010, the program could be sustainable solution to answer
youth unemployment problem since the purpose is to make families in these villages become
financially independent through home industry. Community development and business? Sounds
like opposite, but it appears to be the most sustainable social work I have ever done. As a college
student who passes by the real markets every day, I really understand that micro business, formal
or informal, is a life backbone in developing countries. Community Development (shorten name
as ComDev) is a four-credit subject in sixth semester in my college. We had to live with the
indigenous families for five weeks and transfer our so-far-business-knowledge to create products
sourced from raw materials available around the villages. We worked together to combine our
business knowledge and native knowledge from our new partners, who were also become our
new host parents. Since most of natural resources in those villages were agriculture based, most
of students have created new form of foods. My group made Bayam Kriuk (Spinach Crackers)
as the new way to enjoy spinach.

Why small business in Community Development could answer youth unemployment problem?

As culture in Sukabumi, a lot of villagers married in young ages (my host mother married in the
age of 14!). Many of young men migrated to nearby cities to get better jobs, leaving the village
lack of young productive people and less job opportunities. Some young men and woman are
unable to compete in Jakarta, simply because living cost or returned again after failure looking
for the jobs. The ultimate purpose of ComDev is to create feasible, sustainable, and profitable
business run by families in these three villages by seeking any opportunity that these villages
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have. This program has actually been held for the third time in the same location. Now, young
families, young men and women, could be more productive by having their own products to
market. They have run the business with good passion too as they cultivate and develop their
own villages.

Where did they get start-up investment?

Community Development program has

used a very unique way to distribute
investment to the villagers. Since credit
interest in Indonesia is high, we did not
use any terms applied in conventional
banking system. The investment simply
based on the first hard work between
student groups/builders and partners and
trust that is built through five weeks stay
with families. As a start-up my college
distributed a total of Rp2.000.000 for each family and builder. There were a total of seventeen
builders and partners in the program. These amounts of money were separated into three time
installments during a month. The first installment, Rp1.000.0000, was mostly used for research
and development activities and fix investments such as stoves, pans, and plastic sealers. The
second installment, Rp500.000, was mostly used for production and raw materials. Last
installment of Rp500.000 used for further expansion such as marketing. All of these investments
went to the hand of builders. In the end of the month, we got much more than the investment and
expanded to various distribution channels, mostly in traditional markets. Bayam Kriuk itself
received a total of Rp875.000 profits within four weeks.

Ultimately, the total sales went to the hand of our partners and both parties negotiated for profit
sharing. This money would be continues investment for further production. The builders have to
control the production and market within the next six months, but afterward the life of the
business will goes on the hand of our partners. Our college also has left a fixed capital in a form
of kiosk in Kalapanunggal village as a one of distribution channels and a central of local
products market in the areas (figure 1).
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How do the Villagers Know about Running Business?

Start-up business needs opportunity to grow and opportunity could come not only in the form of
tangible forms, but also intangible such as education. Some of my faculty members had given
their times to teach our partners from marketing, selling, to finance subjects for free, two times a
week in Kalapanunggal. Very patient activity since many of partners were not finished school,
but we believe that even though education is a slow process, it can be so powerful. As the results
we could see a lot of local products have improved from fewer standards to fully creative labels
as professional products. In ComDev, builders also volunteered in teaching elementary students
whose schools run by few teachers who could teach more than four subjects in many classes. For
me, ComDev is not simply a social program; it is a new form of venture capital applied for
developing countries.

KLASSAMIRZA: 3P (People, Planet, Profit) Creative Business

A lot of people in villages in Indonesia have good talents in crafts, but they are just afraid to start
small business or sign easy-state banks-loan due to lack of knowledge. Many of them ended up
borrowing money from local private creditors who do not ask for credit terms but charge
unreasonable percentage of interest which have caused many young families in debt. Far away
before the ComDev 2010 program, in 2007, I found a group of shoe makers in Pabuaran village,
Bogor, West Java, who was trained for micro business loan from government. I was thinking to
try some of my shoes designs to them and was surprised that their shoes are masterpieces. No
wonder their hand-made shoes are gorgeous since they used to make high-end brands footwear
which qualified for export. Ironically, the high prices of the shoes they have made do not reflect
their economic conditions. We then engaged in face-to-face talk and figured out that they could
not stay out from this situation as they could only be bulk buyers’ cheap labors.

On the same time, I was thinking to make my elementary school’s dream came true: to have
fashion line. With the help of my uncle from the local government, I recruited a total of three
shoe makers to work on my shoes designs. In December 2008, under the brand of
KLASSAMIRZA, which named after my father who has contributed a lot for my education, I
began running my own small business. I feel satisfied that in my early 20 I could earn money and
have business which in-line with my passion on design. KLASSAMIRZA (figure 2) is my first
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start-up business away from other college-project-businesses. It took about four months to set my
mental model as entrepreneur who dares to take risk, borrows money, and become a good human
resource manager for myself and my workers. Everything I have done simply to make my vision
come true. Getting loan from family does not mean that I could stay relax; I am actually holding
a big trust from special people, my family.

With strong willingness, small research, believe, and hard work I

could market my shoes in Jakarta and Java through Multiply.com
and in the fourth month I started to apply recycled materials on my
shoes. The story about recycled materials is very interesting. I might
be parts of few people in the world who were lucky among the 2008
economic recession since I reutilized stack of unused textiles which
failed to be exported abroad due to demands stoppages. I called this
the art of seeking opportunity. I have not used any commercials
advertising for my shoes; instead, I used “the power of word of
mouth” where media covered the story about the making of my
shoes. In the fifth month, I registered KLASSAMIRZA Trashforward Project 2009 to BYEE ‘09
(Bayer Young Environmental Envoy 2009) competition. My project was one of the projects
who won the chance to go to Leverkusen, Germany with other 59 green projects from nineteen
countries. Through BYEE 2009, I could improve the application of recycled materials to 20-70%
on shoes, count the carbon footprint of production process, focus on caused-environmental
marketing and on-line market which reduced 30% carbon released from traditional shopping
(BesTari, 2010), invite national and international media to cover the business activity, and
expand my markets abroad.

KLASSAMIRZA business focuses on 3P (People, Planet, Profit) which takes care of its workers
and consumers, responsible for environment, and give sustainability of the business through
profit. Since the use of recycled materials, I have used about 100 kilograms recycled textiles and
could avoid shipping cost and import tax from previous textiles I imported from Korea and India.
By reducing cost, I could set at least 30% of cost of goods sold to increase my shoe makers’
wages. At least five people have been helped to get better jobs and 100 kilograms of textiles
wastes have been transformed into goods with higher values. Imagine, if such business got
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bigger, more wastes reduced, more workers get better payments, and more new innovative
products introduced to the market. I hope there would be more people could contribute to the
green business activities.

The -preneur Thinking

Quoted from Anita Roddick, “there is no real freedom without economic freedom”. Thus, by
actively involving in entrepreneurial and leadership activities, young people can be independent
in their young ages. It is no longer the trend that we line up for job vacancies after graduate.
Whatever majors we study and skills we have, everything is related to –preneur: technopreneur,
sociopreneur, to marketpreneur. What we need now is not simply creating the business; we need
business with strong distinctive uniqueness and have overall good supports: productivity,
information, and fighter mental. Stay innovative and sensitive to the markets, even during the
economic crisis, are key success to creative business. It is important to think what kind of added-
value that we can create to address what markets want. Haven’t found what markets want?
Create what they want by creating new needs that consumers have not realized.

People respond to incentives. If venture capitalists are rare in your country, build awareness to
public by submitting your creative-business-ideas to any competitions. Be confident with your
ideas and find your external mentors. Keep asking, watching, and learning around. If your ideas
got published, you will build trust to public to invest their money in. Governments are
encouraged to lower credit interests, ease the terms for micro-scale entrepreneurs to grow the
business, and improve the infrastructure. Creativity and productivity can be pushed-in and
rewarded if private sectors also involve in holding competitions, competition-based-recruitments,
scholarships, financing, and sponsorships. By building entrepreneurship and leadership mental
model, young generation will be ready to face the global competition.
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Sources:
1. Kuncoro, Mudrajat. February 16, 2008. Antisipasi Resesi dan Gejolak Ekonomi Global – GATRA.

2. KOMPAS. November 20, 2008. 7.000 Buruh Tekstil Dirumahkan – KOMPAS.

3. KOMPAS. January 6, 2009a. Kompas.com. Upah Buruh Industri Merosot. Available at

http://nasional.kompas.com/read/2009/01/06/08194745/upah.buruh.industri.merosot

4. Ma’ruf, Wahid. January 7, 2009. Inilah.com. BI: Inflasi 2009 Capai 5%-7%. Available at
http://www.inilah.com/berita/ekonomi/2009/01/07/73929/bi-inflasi-2009-capai-5-7/

5. BPS (Badan Pusat Statistik/Center of Statistic Bureau). 2009. Rata-rata Upah Riil Per Bulan Buruh
Industri di Bawah Mandor, 2005 - Triw III 2009 (IHK 1996=100). Jakarta: Report of Badan Pusat
Statistik.

6. Mahrub, Harun. January 5, 2009. Tempo Interaktif. Jumlah Pengagguran di Indonesia 9,43 Juta
Orang. Available at http://www.tempointeraktif.com/hg/ekbis/2009/01/05/brk,20090105-
153874,id.html

7. BPS (Badan Pusat Statistik/Center of Statistic Bureau). 2005-2009. Number of poor population and
unemployment in East Java Province, Indonesia 2005 – 2009 - Report of BPS.

8. The World Bank. April 2008. Indonesia: Economic and Social Update.

9. Direktorat Jenderal Pajak. 2010. Available at

http://www.pajak.go.id/index.php?option=com_content&view=article&id=10013:penerimaan-anggaran-
jangan-hanya-mengandalkan-pajak&catid=87:Berita%20Perpajakan

10. Fogel, Robert. February 2010. Foreign Policy. $123,000,000,000,000*China’s estimated economy by
the year 2040. Be warned.Available at
http://www.foreignpolicy.com/articles/2010/01/04/123000000000000

11. Gandhi, Grace S. December 22, 2009. Tempo Interaktif. Pasar Bebas ASEAN-Cina Timbulkan
Pengangguran? Available at
http://www.tempointeraktif.com/share/?act=TmV3cw==&type=UHJpbnQ=&media=bmV3cw==&y=JEd
MT0JBTFNbeV0=&m=JEdMT0JBTFNbbV0=&d=JEdMT0JBTFNbZF0=&id=MjE1MjI0

12. KOMPAS. April 3, 2009b. Kompas.com. BI: Bunga Pinjaman Sudah Turun. Available at
http://bisniskeuangan.kompas.com/read/2009/04/03/17502786/BI:.Bunga.Pinjaman.Perbankan.Sudah.Tur
un

13. Hanum, Zubaedah. December 2, 2009. Enam Sektor Industri tidak Masuk FTA ASEAN-China –
Media Indonesia

14. Napitupulu, Ester Lince. September 11, 2009. Kompas.com. Lulusan Perguruan Tinggi Hanya
Berorientasi Jadi Pencari Kerja. Available at
http://edukasi.kompas.com/read/2009/09/11/20374961/lulusan.perguruan.tinggi.hanya.berorientasi.jadi.pe
ncari.kerja

15.Harian Analisa. May 2, 2006. 69,51 Persen Penduduk RI Belum Tamat SMP. Available at
http://www.mail-archive.com/proletar@yahoogroups.com/msg20150.html

16. Cover taken from http://johnimbong.com/dl/wl/johnimbong.com-Creativity.jpg

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