I SPECIAL FEATURE I

ENTREPRENEURIAL GOVERNMENT

When Gorontalo was still part of North Sulawesi prov ince, the reqency administration could only earn Rp7.5 billion ($815,0 00) in 2000 from local taxes. Five years after Gorontalo became the 32nd prov ince of Indonesia under the leadership of former

businessman Fadel Muhammad, that fiqu re had multiplied by more than six times to Rp46 billion in 2006. BY ISHAK RAFICK

Bureaucrats, accord ing

to University of Indone­

sia economist Rhenald Kasali, are inclin ed to

spend as mu ch money as

possible in order to obtain a

bigger bud get the follow­

ing year.

In contrast, entrepreneurs are concer­

ned with how to manage their budgets

efficiently to obtain greater output or

revenue.

Fade l Muhammad, former businessman

and co-founder of the Bukaka Group who

was elected as the first governor of Goron

ralo in 2001, is among the few bureau­

88 GlobeAsia I MA Y 2007

crars in the country who act like an ent re­

preneur. In 2002, a few months after he was

officially installed, the M inistry of Hom e

Affairs cha nneled cent ral government

funds worth Rp35 billion as sran -up

capit al to develop the new province.

\X!hile other governors might have

used the funds to build new offices for

themselves or oth er provinci al institu­

tion s, Fadel used the mon ey to build an

airport, sea port and roads. "W ithout these

£1cilities, the new province will never grow,"

he said . He had three obj ect ives. First was

to resolve the severe lack of intr astruc­

ture facilities in C oronralo, Seco nd

was to help ensure that agriculture pro ­

du ce could be qu ickly transpo rted to the

market or sea pon so that it would not be left:

decaying in productio n cente rs. T hird, co end Coronralo's dependency on North

Sulawesi for air trans por r.

"Anyone visiting Coronralo no long­

er has co go through Manado (the No rth

Sulawesi capital)," brags the governo r. who

admits to being a workaholic with an 1' ­

hour daily schedule. It was only later rhat rno nev was

allocated to develop a local legisbti\·c

cou ncil building on a sloping hill, and a governo r's office atOp the h ill with a com­

-nand ing view of th e sea, lake, bay and

almost every part of the 12,445 sq krn province. Now, Fadel has also bui lt a

cubcrnarorial reside nce in from of th e m ain

rootball field, In contrast to h is backgrou nd as an

engineer and his years of expe rience deve­

lop ing heavy industries at Bukaka, Fadel has

been focu sin g on th e agricultu re sector as

the basis for develop ing th e local eco nomy.

H is am bitio n is to turn G o romalo into

what he cal ls an "agropolitan p rovin ce,"

wh ich essent ially me ans that the agricul­

ture and fishery secto rs will become the

province 's eco no m ic backb one, with co rn

p rod uctio n as an em ry point.

"Agrop olitan is th e m ost feasible

altern ative lfl developing G oronta lo,"

asserts Fadel, po inting o ut the facts

that the province has a sizable stock of

arable land , and tha t m ost of its peop le are

farmers - con centraring m ain ly on corn

pr oduction - wh ile h um an resources in other

eco no m icsccto rsarevcry lim itedandski llsand

ed uca tion levels are low.

NO EASY TASK The 54-year old Fadel realized from the

star t th at it wo uld not be easy to car ry out

h is plan . Arn in Mootalu, an econom ist and

local lawm aker, says th at th e people ini t ially

doubted the govern or 's concepts, bu t as

th ey too k note of how seriou s he was abo ut

implement ing h is plan , suPPOrt sta rted to

flow in .

"Fade l won a landslide victory (With

81 % of votes) for a seco nd term in th e 20 06

elect ion . This clearly shows th at the peop le

support hi m ," says Amin. Fadel is, inciden­

tally, h on ored in the Ind on esian Reco rd

M useum as the governor with the b iggest

share of votes.

Ahmad Pakaya, regent of Coronralo

(bo th th e province and a regency with in it

sha re th e same name) until 2006, remai ns

one of Fadel's stro nges t critics.

But , says Stalin Sam ad , an em ployee at

th e local airport, "the presence of such an

influent ial o ppo nent has onl y m ad e Fadel's

sta r shine even br igh ter beca use his po licies

are clearly inte nded to im prove the welfare

of the people, particu larly farmers and sma ll

bu sin essm en ,".

Stalin says th e differences between the

gove rnor and th e former regent are in­

structive. Ahma d , a reti red senior army

officer, was fond of develop ing "presti­

g ious" pro jects such as the Plaza sho p­

ping m all (which rem ain s vaca nt) , an

Eiffel-sryle tow er, and a zoo (which is st ill

flnd ing tro uble in locating animals) tha t

togethe r cost the local budge t aro und Rp 7

billion .

In contrast, Fadel's policies have bee n

focuse d on de velop ing h uman reso urce

capacity, improvin g th e ed ucat io n sector

and peop le's welfare, says local economist

Ma nto Rahmalo.

Fade l has freed po o r people from

ed ucati o n fees and hospital b ills. T he

n um ber of pub lic healrhcarc cente rs has

inc reased from 33 un its in 200 1 to 52 in

2006, plus extra mobile hea lt hca re servic e

and doctors,

T he G oront alo

provin cial ad m in istra­

tion claims tha t the

number of people

living in pover ty has

d rastically declined from

72 % in 20 01 to 26 % last

year.

THREE PILLARS C ha irman of the Goron­

ralo cha p ter of th e In ­

donesian C hamber o f

Com me rce and Ind ustry

(Kad in), Ru sli H abibic,

fishermen's income has "Fadel's policies have more than trip led from an

been focused on ave rage Rp282,000 per

mont h to Rp 987 ,000. Indeveloping human just o ne in itiative in this

sect o r, th e ad ministration resource has launched a p rogram

that p rovides cap ital an d capacity, improving ot her facilitie s to help

fish ermen increase o ut-the education sector put.

Fadel has been even and people's welfare," m ore agg ressive in the

Manto Rahmalo. agric u lture sector, deplo­

saysrhreepillarshavcbeenpu tin placeb y Fadel

th at will influ en ce th e fu ture develop m ent of

Gorontalo.

T hese are the accele ration of h um an

resource development via ed uca tion , turn­

ing G orontalo into an agropolitan province

based in itially on co rn production, and de­

velop ing th e fishery sector in coastal areas,

wh ich also fun ctio ns as a showcase for the

tourism sector.

"Fade l has worked hard for all of these,"

says Rusli, who is also president o f co nstru c­

tio n firm PT Cahaya Mandi ri Persada.

Fadel und erstands that ed uca tion plays

a key role in th e develo pment o f his pro­

vince. His first move was to revise the ed u­

catio n cu rric ulum in the p rovince. " I asked

ed uca tion experts to design a regio nal-based

curriculum . \'V'e are the first (p rovince) to

do this,"

H e explai ns that the natio nal cur

riculum is intended to serve the human

resources needs of b ig cities, so it's not

sur prising th at scho olleavers have no inter­

est in th e agr icu lture, fishery and anim al

hu sbandry sectors.

"Even th ose who could not gradu­

ate from junior high schoo l are no longer

w illing to co rne down to the paddy fields, I

didn't want thi s to happen in G orontalo ," he

says. "So I cha nge d th e cu rriculum so that

th e crop land s an d th e sea co uld be properly

developed for ou r welfare."

T he results, aside fro m th e grea ter

budget fo r the ad m inistration, include

impressive economi c grow th of 7 .06% in

20 06, the highest in th e co un ny.

Fishery o ut put jumped to 43 ,000 tons

in 2005 fro m 19,0 00 to ns in 200 1. The ad­

m inistration claims tha t

ying new tech nol ogies to

boost agr icultu ral o ut put an d qual ity. H e

mob ilizes regem s, m ayo rs, d istri ct heads

and village heads to assist farmers.

In the past , corn production had been

in the range of two to three to ns per hec­

tare. \X/ith th e int rod uction of better

q uality seeds im ported from Makassar in

Sou th Sulawesi, omput doubled to between

fou r an d five to ns per hectare.

O ut put was then pushed even high er,

to between five and six tons per hectare, by

using seeds result ing from th e blen ding of

the M akassar an d local seeds .

Last year, the local administration in­

trod uced the use of a new nu trition agent

develop ed by an alu m ni of the Bogor

Agriculture Institute. Um ar H asan Sapurra, an d prod uct io n is claim ed to have increased

to 10.9 tons per hectare, wi tho ut the use of

fert ilizer.

Goro nta lo's corn p roduction has now

MA Y 2 0 0 7 I GlobeAsia 89

I SPECIAL FEATURE I

reached 560 ,000 ton s, a 400% jum p from

the level four years ago. "I'm still no t

sat isfied becau se th e product ion level in

C h ina can reach 17 tons per hectare, wh ile

the qu ality or its so il is no different ro

G oronralos ," says the gove rnor.

Desp ite higher production , pri ces have

not been under pressure, but instead have

m oved up ward as quali ty improves and

thro ugh the wor k of a logistics agellLY set up

by the ad m inistra tion that operates a p rIce

buffer system.

The average price o f corn in the past

was abo ut Rp :100 per kg, but thi s has

now surged to betwee n Rp 1.400 -Rp 1,700

per kg. "If the price o f co rn Ialls below

the targeted floor pr ice, the agen cy will

purchase the co rn from farmers. T h is

prevents traders and spec u lato rs [rom

mam pu laring pr ices," says Fadel.

Does thi s means he's agains t the

m arket mechan ism ? "I'm respo nsible fo r

improving the weifI re o f farm ers 1Il

C oron ralo, not letting them become the

easy prey of spec ulators and traders," he

respo nd s.

"Under the cur ren t co nd itions, I do n't

believe in free mark et mechan isms.Throu gh

the bu ffer system, the govern me nt can

interven e," he argues.

90 GlobeAsia I M A Y 2 0 0 7

SCOUTING FOR MARKETS Fadel has also been active Ir1 looking for

overseas markets. Last year, for instanc e,

the governor signed Mol.ls with Japan

and So ut h Korea to export Gorontalo

products.

Jap an now abso rbs around 36 1l-h of

Coron ralo's agricu lrure expo rts, Sou th

Korea 34.55()lo, wh ile the rem ainder goes

to Hong Kong , India, th e Philippines,

Taiwan and Mal aysia.

C orn farme rs claim they are now

enjoying be tter lives. "People in my village

have been bu yin g TVs and motorcycles

with cash. T hey have plenty o r mon ey

afte r their harvests," says Muchrar Baabura,

head of Paris village in Goronralo regen cy.

A sim ilar accounr is given by corn

exporter Leonard Yokorn, w hose WIfe is

the local Mi tsubish i car dealer. "Since the

beginning of thi s year, my wife has

man aged to sell abo ut 20 cars per month .

Some of them (bu yers) have even swapp ed

the ir co rn for cars. We accepted ir."

Fadel has also set up the G or omalo

Internation al Mai ze Information C ent er

(GIM lC), the world 's second cen ter for

info rmatio n and tech no logy on co rn after

on e in Brazil.

T he Rp 15 billion facility sits on a five

hectare b lock of land in Bone Bolan go

regen cy. Fadel hopes that peop le from

various parts of the co untry and the worl d

will on e day com e to Gorontalo to learn

everythi ng about co m.

After his success in increasing corn

production, Fadel now wa nts to tu rn

Go ron talo into the center for hybrid rice

pro du ction in the country, He wan ts

Go ron talo to contribute 200,000 tons ro

the 2 m illion ron national rice reserves.

It's an am biuo us target. Goro ntalo now

prod uces 130,350 to ns ofrice per year, wh ile

consum ption In the province, w ith some

1 m illion peo ple. IS about 128 ,250 tons,

giving an excess of only about 2, 100 to ns.

"\XTe'll expa nd our pad dy fields (fro m

the existing 25 ,000-30 .000 hectares)," says

Fadel. "But rlus is not enough. What

is more important IS to develop the hu ­

man resources capacity through training so

tha t we can ado pt hybrid technology and

impro ve infrastr ucture. particularly irriga­

tion systems."

T he ad m inistration ho pes that these

steps will help to boost production levels

from the current 4.74 tons per hectare ro

12 ton s per hectare or about SL'( rons per

hectare of high qu ality nee.

Another area for fu ture development is

biodiesel. T he adrmnistra non has laun ched

a campa ign for people to get involved in

planung jarhropa. a tropi cal p lant that

can be used as raw material fo r bioluel

prod ucuon .

In February, the ad ministrati on signed

an MoU with Singapore-based firm Clean

Fuel to develop a biofu el m anu fact uring

plant In Bon e Bolan go regen cy with total

investment of arou nd Rp 1.7 trillion. The

plant will have a product ion capac ity of 300

mi llion liters per year.

No t everyone is happy with what is

happening in C oronralo. Corn exporrer

Leonard Yckom, for instance, com plains

about the lack of infrastruc ture faciliries.

"The Coronralo sea POrt is roo small. It

must be further expanded so that exportS

can be accelerated," he says.

Poor roads and a sho rtage of po\\"er are

oth er pro blems. Brown outs are regular. an d

on ly a relatively small road lrnks jalaludin Airport and the prov incial capital. :-'!anv be­

lieve tha t their eng inee r gO\'erno r wi ll also fix

those problems when the tim e comes. GA

T he straigh t talking former business­

man and min ister as usual gets to the po int

o n the hurd les he faces in developing his

province. A former ind ustr ialist, he is now

widely acclaimed as a successful agricu lturist

having d ram atically increased corn produc­

tion and improved th e fisheries sector ill his

province.

D espite his success, he acknowledges

that the odds are still Stacked against provin­

cialleaders in the latitude th ey have to run

add Muh ammad still cut

an imp ressive figure as he

sat dow n for a breakfast

interview wi th ClobeAsia. T he governor of Goro n­

ralo Province is often in the

news and is now held up as

exam ple of how ent repre­

neur ial gove rnmen t can transfo rm a poor

backward region int o one of Indon esia's

fastest growing econom ic areas.

rr the ir provinces. H e says rhar rhe Region al

Autonomy Law which unleashed eco no m ic

dynami sm in Indonesia's far flung region s is

str uctura lly flawed and that unless changes

are made, the cent ral govern ment will con­

tinue to pull the strings.

"All the autho rity to concep tua lize the

law was in the cenr ral govern me nt and in­

facr the govern ment in Jakart a was reluctant

to push the law," he no tes. "For instance the

impl ementing regulations to support th e

M AY 2 0 0 7 I GlobcAsia 91

=---"--,,---------""'"'---------------­

I SPECIAL FEATURE I

produ ct growth last year was a stirling 7.3%

as compared to the nationa] GOP growth of 5.6%

"We need ro adopt entrepreneurial

thin king with in government," he notes.

\Vhen I was starti ng out on my programs

I searched the internet for information

and infact contacted the Kenn edy School

of Govern ment and comm unicated with

the dean to learn more. W hat I have done

is not new and the programs have been intro duced in many other count ries."

\Vhat he has don e is introd uce corpo­

rate culture into local bureaucracy where

perform ance is rewarded. H is best perform ­

ing staff, for example, receive remuneration

in terms of bonuses tha t is 300% higher

than their salary.

"I am not a commo n man," he not es."

If I do some something, I have to do with

excellent performance. JUSt doi ng thin gs so, so is not my style."

Fadel is now courting investm ents to

improve the region's woeful infrasrruc­

rure by getting rid of regulations that were

deemed unfriendly to business. He wants

ro cont inue to im prove the agricultural and

fisher ies sectors as these are the biggest job

creators and is also urging Jakarta to devote

more resources ro these two sectors. H e adds

tha t Indonesia needs more ent rep reneurs in

these secto rs as they are the backbo ne of the

"We are in acritical period today because we have alarge population and some critical problems to tackle but only alimited budget to run the country. Indonesia is still susceptible to Balkanization and the only way to prevent it is to have strong economic growth in the regions." law have not been issued but we governors

are now pushing hard for them."

Another pro blem facing regional

governments is tha t the cent ral govern­

ment has no t marched develop ment in the

provinces with political power. In many

sectors, includ ing agriculture and telecom ­

munication s the central governmem still

calls the shots and Fadel notes that he needs

central governm ent appro val to use pon fa­

cilities in neighboring regions to export his province's rising corn production.

Even fertilizer and seeds must come

from the central govern ment and he says

that Jakarta tends to use a one system fits

all approach to man aging the provinces. "T hat is wrong because each region has

92 GlobeAsia I MA Y 2 0 07

different needs and we have to implement

regulations accord ingly. The bureaucrats in

Jakarta are still stuck in the old mindset .1IlJ they need to change with the time."

Not one to take no for an answer. Fal : ~i

has pu shed ahead 111 implementing his programs nonetheless. "To overcome the

prob lems, I have to be pro-active and use

my connections in the cent ral government

to push through my prog rams."

T he resul ts of h is efforts have been

impressive and ot her provincial governors

are taking notice. Over the past six years,

he has increased Corontalo's budget from

Rp407 billion and a turnover of Rp 300

billion ro a budget of Rp407 billion and

a turnover of Rp3.2 trillion. Domestic

national economv,

"It the gO\'ernmem does this, the

count rv v.ill Start ro grow in two years. I al­

readv have the program and if the current

gO\'ernment wants me to, I can design it for

the ent ire country,' he says. Despi te grow­

ing criticism of President Susilo Bamb ang

Yudhoyono, Fadel adds that he cont inues to

support the president because if the govern­

ment fails, the count ry could fractur e.

"'\{le are in a critical period today because we have a large popu lation and

some critical problems to tackle but only a

limited budget to run the count ry. !ndone­

sia is still susceptible ro Balkan ization and

the only way to prevent it is to have strong

economic grov.'th in the regions." GA