Entrepreneurship policy implementation model in Indonesia

Int. J. Entrepreneurship and Small Business, Vol. X, No. Y, xxxx

Entrepreneurship policy implementation model in Indonesia Isti Raafaldini Mirzanti*, Togar M. Simatupang and Dwi Larso School of Business and Management, Bandung Institute of Technology, 10 Ganesha St., Bandung 40132, Indonesia Fax: +62-22-2504249 Email: [email protected] Email: [email protected] Email: [email protected] *Corresponding author Abstract: The needs for entrepreneurship policy are raised in line with the interests to identify the impact of entrepreneurship. The government should thus provide a conducive environment for the emergence of entrepreneurship. However, there is limited information about the implementation of entrepreneurship policy. It is necessary to conduct a preliminary research to describe the model of entrepreneurship policy in the case of Indonesia. The research uses the documentation-reading technique and categorisation of entrepreneurship policy programs based on content and level of analysis (micro, meso and macro level). The results show there are 12 government programs related to entrepreneurship, which aim to increase the number of entrepreneurs or new ventures. At the micro level, the policy is targeted to individual, which its contents are business skills, opportunity identification skill, and psychological endowment including self motivated. At the meso level, entrepreneur is defined as an organisation that creates an added value through entrepreneurial process with the content includes business incentives and administration burden. At the macro level, the impact of entrepreneurship influences jobs creation and start-up creation nationally in which the policy content includes entrepreneurship culture, entrepreneurship infrastructure, and education. Keywords: public policy; entrepreneurship program; entrepreneurship policy model. Reference to this paper should be made as follows: Mirzanti, I.R., Simatupang, T.M. and Larso, D. (xxxx) ‘Entrepreneurship policy implementation model in Indonesia’, Int. J. Entrepreneurship and Small Business, Vol. X, No. Y, pp.xxx–xxx. Biographical notes: Isti Raafaldini Mirzanti is a lecturer. Her research interests are in the area of entrepreneurship policy, entrepreneurship process, and start-up business valuation. She teaches business initiation, new venture management, business growth, management of technology, and family business. Togar M. Simatupang is a Professor of operations and supply chain management. He has extensively published in logistics, supply chain management and entrepreneurship journals. He has been attributed Highly Copyright © 20XX Inderscience Enterprises Ltd.

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I.R. Mirzanti et al. Commended Award by Emerald Literati Network for his research in supply chain management. His current research and teaching interests focus primarily on supply chain collaboration, operations management, logistics management, service science and creative economy. Dwi Larso is an Associate Professor in innovation management and entrepreneurship. His research includes innovation, entrepreneurship, and small business development. He is a conceptor of entrepreneurship track and MBA in creative and cultural entrepreneurship. He is also active in the Chamber of Commerce and Industry. This paper is a revised and expanded version of a paper entitled ‘Mapping on entrepreneurship policy in Indonesia’ presented at IICIES 2014, Bali, Indonesia, 12–14 August 2014.

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Introduction

Entrepreneurship has emerged as a focus of public policy. The government plays an important role to provide a conducive environment for the emergence of entrepreneurship (Minniti, 2008), which can be achieved, for instance, by implement entrepreneurship policy. Policy implementation is a linking between policy formulation and expected policy outcomes. It is a process to apply policy products and to carry out necessary efforts to attain desired outcomes. The successful of entrepreneurship policy implementation is shown by the increasing number of start-ups and jobs, as well as reducing the number of poverty. An example of successful entrepreneurship policy implementation can be seen in Ireland (Acs et al., 2007), which emerged to attract foreign direct investment (FDI), focusing on a very narrow range of high potential start-up entrepreneurs, who mostly run businesses in export-potential manufacturing and international trade services. Ireland also implemented enterprise development program (EDP) from 1978, targeting managers, professionals (engineers and accountants), and academics to start businesses with high growth potential. EDP entrepreneurs received extensive state assistance in terms of loan guarantees and soft supports. The case study of Ireland suggested that the entrepreneurial activity became increasingly important with the development of policies to grow hightechnology sectors. During the 1990s, entrepreneurial activity in Ireland was characterised by increasing number of new businesses. The rapid growth in the size of the Irish labour force has translated into an increasing number of consumers spending. During the 1970–2000 period, Ireland’s per capita income grew at 8.7%, and after 1997 FDI gained significant increase. Thailand implements entrepreneurship policy using state-guided entrepreneurship, which is very helpful to foster entrepreneurial activities. After economic crisis in 1997, Thailand were launched a series of economic reform to assist its economic recovery, and the entrepreneurship policy was a part of it. The policy reforms were known as ‘Thaksinomics’, designed to stimulate domestic demand and to reduce Thailand’s reliance on foreign investment (Looney, 2003). Thailand used a model that was relied upon a resource-based perspective, entrepreneurial orientation, and relevant literature pertaining to state-guided entrepreneurship. This model played an active role in

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facilitating the entrepreneurial start-ups and initial growth. However, subsidies or interventions were limited to encourage market competition. Market-driven entrepreneurial activities would foster the success of entrepreneurs, resulting in overall national economic growth. Governmental intervention includes funding, regulation, information technology, network, market-driven entrepreneur, demand condition, suppliers, and competition. The Thailand government directed each sub-district or village to utilise locally available resources and knowledge to develop and to market unique products, such as export quality hand-made handicrafts. The government provided initial support, such as funding through a low-interest loan and training for who were interested in participating in the program. Only the most promising producers – judged by the quality and export potential of the products – were chosen to receive full support, including promotion and distribution (Suntornpithug and Suntornpithug, 2008). The successful implementation of entrepreneurship policy was also experienced by Singapore. It started during Lee Kuan Yew’s administration (1965–1990), with a decision that ministers would undertake the task of starting new venture(s). The state control of business could ensure the productive exploitation of national resources. The government had public visibility and projected a perception of public interest. The state, in these economies, could seek international aid for enterprise development. In Indonesia, entrepreneurship has been growing rapidly in the past 20 years as indicated by the increasing number of schools in various levels of education, whether regular or vocational, offering entrepreneurship courses. In addition, the number of educated entrepreneurs has also increased around 20%. It indicates the changing of the young generation’s orientation from working for other people or companies to a tendency toward self-employment. However, the Coordinating Minister for Economic Affairs stated that the number of entrepreneurs in Indonesia was still small, about 0.18% of the population (Basuki, 2011). In 2013, the government organised National Entrepreneurship Movement called Gerakan Kewirausahaan Nasional (GKN) at the Gelora Bung Karno Stadium, Jakarta, a celebration of the ‘Global Entrepreneurship Spirit’ that identified the increasing number of youths who chose to be entrepreneurs. Furthermore, the government underlined its commitment to develop pro-entrepreneur, small medium enterprises, and cooperatives policies and programs (Deskinfo, 2013). According to Doing Business Report 2012, Indonesia was ranked 129th, degraded from 126th in 2011. Doing Business Report is a series of annual reports investigating regulations in terms of ease of doing business, such as enhancement of business activity and constraints. It presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 countries. The 2012 Report also showed that entrepreneurship policy in Indonesia that included variable policy instability was ranked fourth among the most problematic factors for doing business. The remaining factors were corruption, inefficiency in government bureaucracy, and inadequate supply of infrastructure. The entrepreneurs’ perception towards the government as policymakers is that the government has not facilitated the ease of doing business. Instead, the role of government is highly expected in business. Clear regulations and prevention of any misinterpretation should be made to encourage trust and optimal participation from investors, as well as building the required industries and infrastructures. It can be gained by evaluating all existing regulatory frameworks and taking strategic steps to revise and to change regulations. However, there is little available information about the implementation of entrepreneurship policy in Indonesia,

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how entrepreneurship policy works in Indonesia, and policy product related to entrepreneurship. The number of references of entrepreneurship policy implementation at the regional or country level mostly originates from developed country, an only a little from developing countries. It is thus important to examine entrepreneurship policy for the result is very rewarding and significant in describing formulation and implementation of entrepreneurship policy. This preliminary research aims to describe the model of entrepreneurship policy implemented in Indonesia using the documentation-reading technique. It focused on categorisation of entrepreneurship policy programs based on policy content and level of analysis. The research questions are: 1

what the objectives of entrepreneurship policy

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what the categories of existing entrepreneurship policy at the implementation stage

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what the policies’ products (program or interventions).

The paper is structured as follows. Section 2 concerned with the existing research and theories related to entrepreneurship policy. Section 3 concerned with the research method used to discover research question and to demonstrate the systematic searching process. Section 4 discusses the research finding. Section 5 concerned with the analysis and discussion of research findings. Finally, Section 6 provides the conclusions and suggestions for further research.

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Literature review

2.1 Entrepreneurship policy There are many researchers that focus on exploring the definition of entrepreneurship (Bygrave, 1989). However, there is not only one definite definition of entrepreneurship that can be generally accepted to differentiate who are and who are not entrepreneurs. It depends on the focus of who defines it and from which perspective one looks at it. Some researchers look at entrepreneurship from the view of economics, sociology, and psychology; the others look from the management and social perspectives. Therefore, entrepreneurship is a multi-dimensional concept. Previous research on entrepreneurship definition categorised into two approaches based on supply-demand. This distinction is sometimes referred to push and pull factors (Vivarelli, 1991). First, the supply side approach from the labour market perspective refers to entrepreneur traits such as risk-taking and self-motivation (Low, 2009). The supply side approach is dominated by the characteristics of population or demographic composition. Key elements are the resources and abilities of individuals, their attitudes towards entrepreneurship, and their cultural and institutional environment (Verheul et al., 2002). Second, the demand side approach from the product market perspective and the carrying capacity of the market of entrepreneurship focuses on entrepreneurial processes and activities such as the entrepreneur’s function or what entrepreneurs do. The demand side approach, representing opportunities for entrepreneurship, can be viewed from consumers and firms’ perspectives. The greater the diversity of consumer demand, the more room created for potential entrepreneurs. The opportunities are influenced strongly by technological developments and government regulation. The latter approach proves

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more useful for policy research (Low and Macmillan, 1988; Low, 2009; Gartner, 1990; Rocha and Birkinshaw, 2007), because in policy context, entrepreneurship focuses more on its impact, particularly new businesses and jobs creation. Therefore, competition among businesses will be higher and will eventually increase productivity and impact on economic growth (Henrekson and Stenkula, 2011). Hebert and Links (1988) conducted a study about the history of the term of entrepreneurship. It started from 1755, the publication of Essai in which Richard Cantillon used the word and described entrepreneur as someone who exercises business judgment in the face of uncertainty, their activities such as buying means production at certain prices in order to combine them into a new product. In the early of 1800s, economists Jean Baptiste Say and John Stuart Mill further popularised the academic usage of the word ‘entrepreneur’ (Hebert and Link, 1988). Mill provided a clearer distinction between an entrepreneur and business owners such as shareholders of a corporation – who assume financial risk, but do not actively participate in the day-to-day operations or management of the firm (Hall and Sobel, 2006). Thus, the entrepreneur is the doer, who not only owns the business but also performs entrepreneurial activities such as identifying opportunities, assembling and mobilising required resources, implementing a practical action plan, maximising opportunities and harvesting the rewards in a timely and flexible way. Further research by Schumpeter (1942) defined entrepreneurs as leaders and contributors that are tolerant to uncertainty, do business, make changes by creative destruction, and seek to create new profit opportunities. Schumpeter highlighted the role of entrepreneur as an innovator – using creativity and innovation for solving problems – or someone who carries out new combinations of resources to create products that did not exist previously. These new combinations lead to the obsolescence of others and is called as a creative destruction (Hall and Sobel, 2006; Drucker, 1985). Thus, entrepreneurship does not always mean doing business such as trading, but entrepreneurs should have to offer added values such as problem-solving or innovation (Schumpeter, 1942). Regarding uncertainty, it is related to earning uncertain profit (Hebert and Link, 1988; Kirzner, 1982). This explanation can differentiate entrepreneurs and managers; while both do business, the entrepreneur deals with uncertainty regarding the profitability of their new combinations of resources or the assurance of profit gain not wages (Hebert and Link, 1988; Knight, 1921). Cantillon (1755[1964]), Knight (1921) and Schumpeter (1942) generate the clear definition about entrepreneurship as the process where an individual or organisation deals with uncertainty to create an added value (innovation, technology) by owning and operating new or established markets (start-up firm, existing firm) and making profit through identifying or creating opportunities, assessing and developing markets, managing resources, and producing and selling goods or services. Policy is a part of the environmental factors that should support the development of entrepreneurship. Currently, entrepreneurship policy and SME policy are used interchangeably. Lundström and Stevenson (2005) made the first effort to comprehensively define the term of entrepreneurship policy, namely policy measures taken to stimulate entrepreneurship aimed at the pre-start, start-up, and early post start-up phases of the entrepreneurial process. The primary objective is to encourage more people to consider as entrepreneurs, to move into the nascent stage, and to proceed into the start-up and early phases of a business.

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The need of entrepreneurship policy arises in line with the increasing interests of research to identify the impact of entrepreneurship. Some compelling driving forces behind these interests include the growing body of research on the relationship between entrepreneurship and economic growth (Carree and Thurik, 2003; Kirzner, 1982; Wennekers and Thurik, 1999), the essential contribution of new firms to employment growth and economic renewal (Audretsch and Thurik, 2001; Kirchhoff, 1994; Friis et al., 2002), and influences on the differing rates of business ownership and entrepreneurial activity across nations (Carree et al., 2002; Reynolds et al., 2004). The role of entrepreneurship in economic growth has also been identified by international organisations such as the Organization for Economic Cooperation and Development (OECD) and the European Union (EU) (Lundström and Stevenson, 2005). The role of government represents the catalyst (Lundström and Stevenson, 2005; Hart, 2003). Governments should plan the strategy, build the vision, mobilise key players, and commit to provide resources in promoting the emergence and development of new entrepreneurs and dynamic enterprises (Kantis et al., 2002). Policymakers at all levels of government have a strong interest in promoting entrepreneurship, so they pay attention to entrepreneurship policy because of the need for revitalisation of their economic performance (Acs and Szerb, 2007).

2.2 Models of entrepreneurship policy The emergence of entrepreneurship policy formulation is a necessary response to fundamental industrial and economic restructuring – a shift from managed economy to entrepreneurial economy. There are several different frameworks on entrepreneurship policy. The study of entrepreneurship policy conducted by Lundström and Stevenson (2001) was intended to answer the question, “what should be done to produce higher level of entrepreneurial activity?”, but the existed knowledge related to that topic was limited. The study was based on what governments are actually doing in several countries. The object focused on objectives, policy measurement, the weighting of their focus on different policy measures, and their rationale. The study found that entrepreneurship policy is different from one country to another. After doing a comprehensive study in several countries, Lundström and Stevenson came up with the framework of entrepreneurship policy, which indicated the determinant variables of entrepreneurial activities. Determinant variables include level of economic development, population growth, growth in the immigration rate, growth in per capita GDP, etc.; while the impact of entrepreneurial activities are varied, such as high standards of living, demand for products and services, etc. (Lundström and Stevenson, 2001). The policy-making process in the entrepreneurship field is complex. Many areas of government policy affect levels of entrepreneurial activity such as regulatory, trade, labour market, regional development, social, and even gender policies. It means that the governments must adopt more horizontal structures for developing and implementing an integrated policy approach (Lundström and Stevenson, 2005). Dutz et al. (2000) explored the relationships between entrepreneurship and economic development in low-income countries. In this context, they suggested that two policies are critical for promoting growth. The first is protecting commercial freedom, property rights, and contracts; and the second is fostering opportunities for grassroots. Research by Wennekers and Thurik (1999) divided entrepreneurship policy into two types of interventions. The first is aimed at promoting the creation of technology-based

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firms in selected industries and the second is aimed at promoting newly-created firms, regardless of sector, by giving better access to the financial, organisational, and technological resources. They suggested a role for government in stimulating cultural or social capital and creating appropriate institutional framework at the country level to address the supply side of entrepreneurship, for example by focusing on the number of people who have the motivation, financial preparation, and skill to launch a new business. Research conducted by Kim et al. (2010) examined the effect of finance, labour and tax policy measures on entrepreneurial activity. In their research, entrepreneurship policy was classified by the two dimensions, the unit of analysis and level of analysis. The unit of analysis can be individual and aggregated; while the level of analysis can be regional, country-wide, or even international, which compares many countries. The individual unit is used for examining the relationship between individual characteristics such as personal traits, motivation, and educational background. The aggregate unit is used for finding determinants of entrepreneurial activities such as firm birth rate. Furthermore, Kim et al. (2010) found that the entrepreneurship policy research at regional level identifies determinants of regional entrepreneurial activity in the single country, country-wide, and international level. At the national level, Kim et al. (2010) used finance, labour and tax policy to measure the effect of public policy on entrepreneurial activity. The entrepreneurship policy model developed by Verheul et al. (2002) includes interventions that impact on the demand side of entrepreneurship and the supply of potential entrepreneurs; affect the availability of resources and knowledge for potential entrepreneurs; shape entrepreneurial values in society; and alter the risk reward profile of entrepreneurship, the decision-making process of individuals, and their occupational choices. The Global Entrepreneurship Monitor (GEM) team introduced an entrepreneurship policy model that used a combination of conventional and entrepreneurial models. The main focus of the conventional model was established firms as the engine of economic growth, while small businesses were the next priority. The entrepreneurial process model focused on the entrepreneurial sector, i.e., the conditions that shaped it and its direct economic consequences. The entrepreneurial framework condition (i.e., element of environment, opportunities, motivation and capacity) referred to the conventional model and replaced the primary focus on the major established firms. The entrepreneurial framework highlighted the contemporary emphasis on business churning, such as births, deaths, expansions, and contractions of firms as the driver of growth. GEM proposed the total entrepreneurial activity (TEA) index to measure the national level of entrepreneurial activity (Reynolds et al., 1999).

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Research method

This research uses a descriptive study. The process identifies entrepreneurship policy programs at the implementation stage, with the researcher’s initial framework adopted and modified from logic model by Balthasar (2011). It is based on the presumption that entrepreneurship is a process and the entrepreneurship policy should then involve the entire process of entrepreneurship, including opportunity identification, idea evaluation, and action (business implementation). The input is differentiated based on levels of analysis (micro, meso and macro level). It is considered as an initial condition where

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there is no policy implemented and covers all conditions required for people to start their new venture. The activities are defined as the implementation of entrepreneurship policy, which is categorised based on the policy content (entrepreneurship education, entrepreneurship culture, etc.). It serves as a condition where several entrepreneurship policies are implemented. The output of entrepreneurship policy can be described as start-up business at the micro level, remain/exit business at the meso level, and job creation at the macro level. Table 1

Research design for entrepreneurship policy at implementation stage Level of analysis Micro

Categories • Skills • Opportunity

Techniques Document readings

• Motivation Entrepreneurship Meso policy Macro

• Administrative burden • Incentive • Entrepreneurship culture • Entrepreneurship infrastructure • Education

Issues

Expected results • The objectives of entrepreneurship policy • Policy products related to entrepreneurship in different level of analysis • The categories of existing entrepreneurship policy

• Policy program • Categories of program

Sources

• Entrepreneurship programs launched at ministries

The analysis is conducted within the principles of categorisation of entrepreneurship policy content. As shown in Table 1, the study uses an exploratory qualitative descriptive research design by documentation-reading technique, which orderly identifies and categorises policies related to entrepreneurship. The categorisation are derived from entrepreneurship definition as stated above, the process where an individual or organisation deals with uncertainty to create an added value (innovation, technology) by owning and operating new or established markets (start-up firm, existing firm) and making profit through identifying or creating opportunities, assessing and developing markets, managing resources, producing, and selling goods or services. Entrepreneurship is divided into three level of analysis. First, the micro level; entrepreneur is defined as an individual. In regards to deal with uncertainty to create an added value (innovation, technology) and to make profit through entrepreneurial process (identifying or creating opportunities; assessing and developing markets; managing resources, producing, and selling goods or services), they need business skills such as business feasibility, assessing risks, business plan, etc; and opportunity identification skill. According to Verheul et al. (2002), at the micro level, individual needs certain conditions for entrepreneurship, namely psychological endowment (attitudes, skills, action) including self motivated. Second, the meso level; entrepreneur is defined as an organisation who create an added value through entrepreneurial process. In supporting and doing that, organisation needs condition such as business culture incentives, reducing of administration burden, etc., which are crucial elements to start-ups’ entry into new markets and innovation (Verheul

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et al., 2002). Third, the macro level which defines the impact of entrepreneurship as jobs creation and start-up ventures creation. Crucial elements of entrepreneurship at the macro level are a variety of competitive selections that lead to the impact of entrepreneurship (entrepreneurship culture, entrepreneurship infrastructure, education), namely competitiveness or economic growth (Verheul et al., 2002). The sources used in the study are identified from government programs related to entrepreneurship, which are implemented by ministries. Furthermore, the sources are filtered and put in a group based on the entrepreneurship policy categorisation proposed. The entrepreneurship policy content at the macro level encompassed entrepreneurship education; entrepreneurship infrastructure such as business loan services or venture capital, and access to the internet; and entrepreneurship culture (Hoffmann, 2011; Verheul et al., 2002; Minniti, 2008). At the meso level, entrepreneurship policy content includes administrative burden (covering all programs related to registration systems, patents, one stop services, entry/exit barrier regulations, export and import regulations, and intellectual policy rights), simplifying investment and business procedures, providing incentives for specific groups relating to technology transfer, technology commercialisation, and business incentives, including all programs related to labour market regulation, business tax and fiscal incentives (Kim et al., 2010; Wennekers and Thurik, 1999). Furthermore, the entrepreneurship policy content at the micro level includes entrepreneurship and business skills – programs to increase the competency and skill of entrepreneurs, opportunities – programs related to market access, and access to finance or soft loan, and motivation – programs related to an incubator or mentorship, role models, and exposure (Lundström and Stevenson, 2005; van Vuuren and Nieman, 1999; Reynolds et al., 1999).

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Research findings

The categorisation of entrepreneurship policy is differentiated based on the level of analysis and the content. At the micro level, the categories cover skills, opportunity, and motivation; at the meso level, the categories cover administrative burden, incentives, and business incentives; while at the macro level, the categories cover entrepreneurship culture, entrepreneurship infrastructure, and education. Identification of entrepreneurship programs that are implemented by ministries are listed below.

4.1 Center for Community Learning Activities (PKBM) PKBM serves as a forum for communities to provide services and entrepreneurship education programs adopted from the Ministry of Education. This program targets people who want to learn and to create businesses in the field of technology services. The goal of PKBM is to create skilled manpower in the field of information and technology services that will be used as business opportunities. The learning process in PKBM uses the following approach: 1

the foundation of education refers to the curriculum of entrepreneurship education and learning strategy for community through training

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basis of expertise is provided by the instructor or an experienced practitioner

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3

the foundation of marketing uses the marketing-by-doing approach. PKBM provides an infrastructure such as an office setting

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the foundation of character is given in the form of motivation which touches human values that are not only concerned with capitalism.

4.2 Business Incubator Center Initiated by Ministry of Industry, Business Incubator Center serves as a place to create new entrepreneurs in the field of telematics, particularly educated entrepreneurs in universities through incubation programs. The objective of this program is the commercialisation of research in the university, creation of new jobs, and forming cooperation between universities, industries, communities, and the government. The Business Incubator Center’s vision is to integrate learning theory, practice, and apprenticeship in the industry (involved in design, manufacture and providing solutions to production problems). The target of this program is to create graduates who are ready to run a business/venture, collaborate with industry or SMEs through mentoring programs, and to provide services, especially in the field of information technology to improve the competitiveness of the product. Business Incubator Center is currently available in four cities: Depok, Salatiga, Solo and Kudus.

4.3 National Entrepreneurship Movement or Gerakan Kewirausahaan Nasional (GKN) This program is initiated by Ministry of Cooperatives and SMEs. The target of the GKN program is to create new entrepreneurs who are able to drive the local economy. The GKN program is intended to raise the entrepreneurial spirit and motivation of people, especially the young generation. The GKN program’s purposes are as follows: 1

to raise the entrepreneurial spirit, especially in youth, to become a productive, reliable, and resilient entrepreneur with a competitive edge

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to motivate the young generation to become creative and innovative entrepreneurs with a global perspective

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to become capable of using information and extend networking in all sectors

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to improve entrepreneurship knowledge and skills specifically for new start-up entrepreneurs

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to encourage the growth of cooperatives and SMEs

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to expose successful entrepreneurs in order to encourage the development of new entrepreneurs.

4.4 Community Entrepreneurship Program (Pendidikan Kewirausahaan Masyarakat/PKM) Community Entrepreneurship Program (PKM) is a program which provides entrepreneurship education and business skills that can be held by educational institutions or training courses depending on needs and business opportunities. The program is

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supported by business, industry, and business partners, in order to access new or existing businesses. The objectives of the PKM program are: 1

to encourage and to create new entrepreneurs through training or courses

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to instil ethical behaviour and entrepreneurship

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to provide sufficient entrepreneurship knowledge and skills

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to provide skills in the field of production of goods/services

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to conduct entrepreneurship skill training through entrepreneurship practice.

4.5 Young Agricultural Generation (Generasi Muda Pertanian) Young Agricultural Generation is a program that generates and increases the ability, interest, and entrepreneurial skills of the young generation in the area of agriculture. This programs is initiated by Ministry of Agriculture and intended to improve the competence of young farmers in accessing technology, capital, markets and management, thus becoming productive, innovative, creative, and competitive professional entrepreneurial young farmers with a global perspective. One of the activities is Agricultural Training Camp (ATC), an agricultural training for school-age children to provide knowledge and skills in agriculture so they can grow and develop an appreciation and interest in agriculture. The objectives of the program are: 1

to improve the role of the young generation in developing agriculture

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to integrate and to synergise development programs with young agricultural development programs

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to introduce the agricultural world to the young generation so they know, love, and interest in agriculture

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to create young, entrepreneurial, creative, innovative, competitive, and professional farmers with a global perspective.

4.6 Entrepreneurship Program (PERAHU) PERAHU (Pengembangan Pewirausaha Muda) is a program to incubate new start-up businesses consisting of training, technical assistance, internships, mentoring, and access to capital partnerships such as business incubation programs where participants will receive entrepreneurship knowledge, motivation and skills improvement. Participants who pass the psychological test will not be given capital assistance, but a capital partner instead.

4.7 Entrepreneurship Training (Pelatihan Kewirausahaan) Entrepreneurship training is a mentoring program for 10,000 prospective entrepreneurs in various regions across Indonesia. This program is an advanced entrepreneurial training program that has been conducted since early 2013. The program provides business assistance in various field types each year. The program aims to encourage the development of self-employment because it has strategic value, can improve the welfare

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of the community, expand new employment opportunities, and sustain the economy. Entrepreneurship training programs are conducted through continuous practice, monitored and followed up so that the training progress can be measured. After participating in the training process, the candidates are required to practice entrepreneurial theories that are adopted based on their interests, talents, and abilities. Entrepreneurs are required to have a flexible capability for resilience, innovative product creation, and continuous quality improvement. Developed programs in entrepreneurship training include business training, technical training, labour management, productive labour-intensive management, apprenticeship, technology appropriation, and mentoring.

4.8 National Industry Policy (Kebijakan Industri Nasional) This program aims to strengthen the national innovation system and develop a culture of innovation, including the allocation of funding and facilities for strengthening the national innovation system that produces innovative products in the field of food, energy, biotechnology, industrial manufacturing, technology infrastructure, transportation and defence industries, agricultural processing technology and fish processing, and natural disaster management, as well as other innovation-based knowledge.

4.9 Training for SME Consultancy Trainer (Diklat Konsultan Diagnosis IKM/Shindanshi) Training for SME Consultancy Trainer is a program for people who already hold a certificate of competency and have been registered in the Directorate General of Small and Medium Enterprises (SMEs) in order to provide consultation services for SMEs. The training course model, namely Training for SME consultancy trainer, has been implemented by the Ministry of Industry since 2006. SMEs diagnosis consultant activities are as follows: 1

to conduct a thorough analysis and diagnosis of SMEs problems

2

to conduct a more in-depth analysis on specific aspects of SMEs.

4.10 Regional IT Center of Excellence (RICE) RICE aims to accelerate the development of the telematics industry by providing support for a start-up company in the field of telematics and ICT local communities. The establishment of RICE is expected to provide business start-up consultation. The RICE activities include training, seminars, socialisation, communication forums, exhibitions (RICE Expo) and assistance in the form of creating prototypes. It is currently available in ten cities: Jakarta, Bogor, Bandung, Cimahi, Surabaya, Denpasar, Manado, Makassar, Balikpapan and Medan.

4.11 Scholarship program for trainer (Tenaga Penyuluh Lapangan) Entrepreneurship scholarship is a program for high school graduates from various regions in Indonesia in order to become SMEs worker. The program aims to accelerate the growth of micro, small, and medium enterprises in Indonesia. This program is prioritised for students who live in remote areas, disadvantaged areas, border areas, post-disaster or

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post-conflict areas, and autonomous regions. The College of Industrial and Management in Jakarta has become one of the educational institutions designated as the organiser of this scholarship program.

4.12 Soft Loan (KUR) KUR (Kredit Usaha Rakyat) is a program that is intended to reduce poverty by empowering SMEs. The program aims to improve access to capital and other resources for small and micro enterprises in order to accelerate the development of the real sector and empowerment of SMEs. The government works to help and to support the implementation of credit provision and underwrite institutions, with insurance agencies serving as the guarantor on loans and financing institutions such as banking by distributing soft loans to SMEs and cooperatives. The KUR program targets groups of people who have been trained to enhance empowerment and independence in the cluster. Business actors are able to take advantage of the funding scheme derived from formal financial institutions such as banks, cooperatives, BPR, etc. The business sectors that are allowed to obtain KUR are all productive sectors. Table 2

Entrepreneurship program at implementation stage

Ministries

Policy program

Categories

Target

Ministry of Education

Center for Entrepreneurship Community Learning education, technical skill (technology, computer), Activities (PKBM) marketing skill, motivation

Ministry of Industry

Business Incubator Center

Skill, motivation

Produce graduates who are ready to run a business or perform cooperation or partnerships with industries in providing services, particularly in the field of information and technology

Ministry of Cooperatives and SMEs

National Entrepreneurship Movement (GKN)

Motivation, skill, exposure, venture capital

Create 1,000 potential startup business proposals for developing young entrepreneurs from various universities

Ministry of Education

Community Entrepreneurship Program (PKM)

Entrepreneurship education

Encourage the entrepreneurial spirit

Ministry of Agriculture

Young Agricultural Skill, entrepreneurship Generation (Generasi education, Muda Pertanian) entrepreneurship culture, entrepreneurship infrastructure

Create entrepreneurial young farmers who are creative, innovative, competitive, and professional with a global perspective

Ministry of Industry

Training and mentoring Entrepreneurship Program (PERAHU)

Increase the number of entrepreneurs

Create entrepreneurs in technology, information and communication-based business

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Table 2

Entrepreneurship program at implementation stage (continued)

Ministries

Policy program

Categories

Target

Ministry of Labor and Transmigration

Entrepreneurship Training (Pelatihan Kewirausahaan)

Business training, technical training, management training, internships, implementation of appropriate technology, and mentoring

Create about 10,000 successful entrepreneurs in various businesses each year

Ministry of Industry

National Industry Policy (Kebijakan Industri Nasional)

Mentoring

Enhance the role of small and medium enterprises to GDP

Ministry of Industry

Training for SME Consultancy Trainer (Diklat Konsultan Diagnosis IKM/Shindanshi)

Training for trainers

Trainers for SME consultancy activities

Ministry of Industry

Regional IT Center of Training, seminar, socialisation, Excellence (RICE) communication forum, exhibition (RICE Expo), mentoring

Accelerate the development of the telematics industry by providing support for start-up companies in the field of telematics

Ministry of Industry

Scholarship Program Training for trainers for Trainers (Tenaga Penyuluh Lapangan)

Accelerate the growth of small and medium enterprises through preparing training for trainers

Ministry of Cooperatives and SMEs

Soft Loan (KUR)

Capital aids for SMEs

5

Venture capital

Discussion

The data sources are government programs which are implemented by ministries. Documentation-reading technique is used in this research and data verification is conducted by peer evaluation. Government programs or policies are sorted and categorised into different content and level of analysis. The categories of entrepreneurship policies are as follow: at individual level (micro level), the topic covers business skills (programs to increase the competency and skill of entrepreneurs), opportunities (programs related to market access, and access to finance or soft loan), and motivation (programs related to an incubator or mentorship, role models, and exposure). The objective of entrepreneurship program at the micro level is an increasing number of start-up businesses or new entrepreneurs. The entrepreneurship program at micro levels are as follows: Business Incubator, Young Agricultural Generation, PERAHU, PKBM, GKN, National Industry Policy and RICE. Furthermore, at firm level (meso level), government programs are filtered based on administrative burden (covering all programs related to registration systems, patents, one stop services, entry/exit barrier regulations, export and import regulations, and Intellectual Policy Rights), simplifying investment and business procedures, providing

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incentives for specific groups relating to technology transfer, technology commercialisation, and business incentives, including all programs related to labour market regulation, business tax, and fiscal incentives. Unfortunately, the result shows at the meso level, government programs have not been explored yet. There are several regulations from law products related to entrepreneurship, but there has been no indication of government programs at the meso level that supported entrepreneurship or may have not been implemented yet, such as incentives for start-up businesses or micro and small businesses, incentives for actors who implement the appropriate technology, and ease of doing business, though there are one-stop service programs. On the macro level, the entrepreneurship policy contents are entrepreneurship education, entrepreneurship infrastructure (business loan services or venture capital, and access to the internet, and entrepreneurship culture. Several government programs that have been implemented are soft loans (KUR), Young Agricultural Generation Training for SME Consultancy Trainers, Scholarship Program for Trainer, PKBM, GKN, and PKM. The categorisation of government interventions encompasses venture capital, entrepreneurship education, entrepreneurship culture, entrepreneurship infrastructure, and training for trainers. Documents reading on the entrepreneurship programs generate the list of the targets (objectives), which are creating entrepreneurs and increasing the number of entrepreneurs.

6

Conclusions

The entrepreneurship policy aims to increase the number of entrepreneurs or new ventures. Its implementation at the micro level is still largely focused on development of skills, which cover managerial, business, and technical; motivation, which covers incubators or mentorship, role models, and exposure; and opportunity, which covers exposure, access to markets, and access to finance. At the macro level, government intervention focuses on venture capital, entrepreneurship education, entrepreneurship culture, entrepreneurship infrastructure, and training for trainers. At ministerial, twelve entrepreneurship programs are implemented in Indonesia; they are Business Incubator Center, Young Agricultural Generation (Generasi Muda Pertanian), Entrepreneurship Training (Pelatihan Kewirausahaan), Entrepreneurship Program (PERAHU), Center for Community Learning Activities (PKBM), National Entrepreneurship Movement (GKN), National Industry Policy (Kebijakan Industri Nasional), Regional IT Center of Excellence (RICE), Community Entrepreneurship Program (PKM), Training for SME Consultancy Trainers (Diklat Konsultan Diagnosis IKM/Shindanshi), Scholarship Program for Trainers (Tenaga Penyuluh Lapangan), and Soft Loans (KUR). The categories are based on the level of analysis (micro, meso, and macro level) and the entrepreneurship content. This research has a limitation, which some of the entrepreneurship policies may have not been included, since the numbers of policies documents are very huge. Future research should be done to complete the data with comprehensive understanding, including interviews with the actors from the government, entrepreneurs, academics, and communities. Furthermore, additional analysis has to be performed to evaluate entrepreneurship policies in order to increase entrepreneurial activities. In the context of entrepreneurship policy and its implementation in Indonesia, this research is very useful

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for government to find out priority in entrepreneurship policy. This study is expected to give an academic contribution such as a descriptive study on exposure the entrepreneurship policy in Indonesia, then suggest a more customised and structural entrepreneurship policy for promoting entrepreneurship.

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