Indonesia’s social enterprises to government: Help us to help you

Government officials in the world’s fourth largest country say social enterprises can help create an economy that “leaves no one behind” – while entrepreneurs call for more support in return. Our DICE Young Storymaker Astari Sarosa reports from last week's Indonesia Development Forum in Jakarta

Astari Sarosa

Government representatives in Indonesia – the world’s fourth most populous country – last week signalled strong support for social enterprise and emphasised its role in economic growth that “leaves no one behind”.

Opening the Indonesia Development Forum (IDF) in Jakarta, the minister of national development planning, Bambang Brodjonegoro, said structural transformation of the economy required creating quality job opportunities, improving the investment climate, increasing entrepreneurship, and improving the competitiveness of business, including social enterprises.

The annual two-day event, which included sessions dedicated to social enterprise, was co-organised by Brodjonegoro’s department (known as BAPPENAS), and the Australian government.

Brodjonegoro added: “We rely too much on natural resources, but the grand plan is to also improve our human capital.” Among President Joko Widodo’s objectives for his second term in office, which runs from 2019 until 2024, is investing in human resources alongside infrastructure.

Indonesia is a middle-income country and the largest economy in southeast Asia, but ranks below most of its neighbours when it comes to preparing people for the future of work and developing their knowledge and skills, according to the Human Capital Index 2017. Most workers in Indonesia are employed in informal work that isn’t subject to labour laws and doesn’t offer benefits. Access to formal jobs for women, people with disabilities and other marginalised groups is particularly low.

A session at IDF on fostering social enterprise was moderated by Ahmad Daging Gunadi, director of the development of small, medium and cooperative businesses in BAPPENAS, who highlighted to Pioneers Post the contribution of social enterprise in sectors such as education, health, and environment – areas “that somewhat have been a burden for the government.” He added: “We don’t have the resources to solve everything, so social enterprises have been helping us.”

'We don’t have the resources to solve everything, so social enterprises have been helping us’

But some of these entrepreneurs want help in return. Threadapeutic creates bags, accessories, and soft furnishings out of leftover fabrics, and partners with Ku Ka, a foundation that supports underprivileged communities, to deliver skills training for adults. “We hope that the government can give support with this training programme, so we can help more people,” said Threadapeutic’s founder, Nagawati Surya.

Gunadi told Pioneers Post the forum had opened up ideas and possibilities for how the government might help social enterprises in the future, including by providing coaching and funding. “We heard what the social entrepreneurs asked from us and we are considering doing something about it. We want to give them support so they can be more sustainable,” he said.

The number of social enterprises starting up in Indonesia has risen significantly in recent years, according to research published last December by the British Council and the UN – among those enterprises surveyed, 70% were set up in the last two years. And the growth appears to have helped job creation: the number of full-time workers employed by social enterprises increased by 42% from 2016 to 2017.

Government representatives, educators, and social entrepreneurs along with the founding chair of Social Enterprise UK, Baroness Glenys Thornton, discussed ways to grow the sector further at last week’s event, in a session hosted by the British Council – which, alongside the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), will advise BAPPENAS on social enterprise policy.

Dr. Ari Margiono, Leonardo Adypurnama Teguh Sambodo, Maria R Nindita Radyati, Baroness Glenys Thornton in Social Enterprise Policy Consultation session

Dr. Ari Margiono, Leonardo Adypurnama Teguh Sambodo (director of industry, tourism and creative economy, BAPPENAS), Maria R Nindita Radyati (founding director of MM-Sustainability, Trisakti University), Baroness Glenys Thornton (founding chair, Social Enterprise UK) at the Forum's Social Enterprise Policy Consultation session.

Baroness Thornton, a champion of social enterprise in the UK’s House of Lords, shared her experience of advocating for more awareness and support. In the early 2000s, Social Enterprise UK helped get social enterprise recognised as a valid business model in the country, and ensured that all political parties supported it, just as they supported any other business, she said. At that time, the government was “very keen” to provide resources and build infrastructure. “This sounds very familiar, because that’s what I’ve been hearing from your minister this morning,” she said.

Other Indonesian officials echoed this positive note. The director of industry, tourism and creative economy in BAPPENAS, Leonardo Adypurnama Teguh Sambodo, described how the government had come to recognise social enterprises. In the past five years, BAPPENAS learned how social enterprises balance profit and social impact, he said. “Then we were convinced that we need to focus more on social enterprises in 2020-24, as they make a huge contribution by creating more inclusive jobs.”

‘We need to focus more on social enterprises in 2020-24, as they make a huge contribution by creating more inclusive jobs’

But the impact of many Indonesian social enterprises may be limited by challenges they face. Maria R Nindita Radyati, founding director of the masters programme in sustainability (MM-Sustainability) at Trisakti University explained that often, they are built on an eagerness to create social impact, but forget about the business part – and thus struggle to remain sustainable.

Nancy Magried, CEO of Batik Fractal – a social enterprise that uses technology to help preserve traditional Indonesian craft while enabling workers to earn fair wages – highlighted two other concerns: identity and funding. “With social enterprises here, money is always tight. It is discouraging, because we also don’t get support from the government, the investors don’t care about the social impact, and many organisations don’t understand the difference between charity and social enterprise.” A bill to define social enterprise in Indonesia was introduced in 2016, but has not yet been approved by the People's Representative Council of Indonesia.

‘Investors don’t care about the social impact, and many organisations don’t understand the difference between charity and social enterprise’

Thornton, who has worked in the voluntary, co-operative and private sectors for more than 30 years, shared some advice for growing the social enterprise space in Indonesia. First, collaborate with others, including the private sector and the government.

And secondly, she reminded the audience of the business side: “Not all social enterprises need investors, but all social enterprises need customers. Focus more on how the government can help social enterprises get into a supermarket or places that are reachable to the market.”

The DICE Young Storymakers programme is a joint initiative of Pioneers Post and the British Council. Fourteen young journalists from six countries have been selected and will be reporting on social and creative enterprise in the coming months.

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