Ease off on privatization, says Harvard guru

Andi Haswidi, The Jakarta Post, Jakarta

Dubbed one of the most influential business gurus, Michael E. Porter, also a distinguished author and a professor at Harvard Business School, said Wednesday in Jakarta that the Indonesian government was placing too much emphasis on the privatization program compared to removing business hurdles.

Speaking at a seminar on "Developing Competitiveness in a Global Environment", Porter said that in enhancing business competitiveness, the fight against corruption should be the main priority of the government.

According to Porter, the privatization program should not be the government's number one priority as fighting corruption, and eliminating excessive bureaucracy and the problems caused by conflicting regulations were more important.

"I told the government last night, 'I didn't tell you that you have to privatize. I didn't say that it's the number one priority. It should be the number five priority,'" Porter said, referring to his meeting with senior government officials in Jakarta on Tuesday evening.

"You have to create the right business environment to allow companies to operate productively because in today's world economy, nobody is going to come to Indonesia and do business if the environment is not productive," he said.

According to the World Economic Forum's 2006 Global Index, even though Indonesia has moved up 19 places from the previous year, the country is still only the 50th most competitive economy in the world.

Another critical aspect of competitiveness, Porter said, was the adoption of economic policies that would allow enterprise clusters to form and work together.

"Governments at both the provincial and national level should be able to work together," he said.

Porter said that it appeared to him that Indonesians were fighting among themselves over dividing up the pie rather than thinking about how they could be a part of a collaborative process to expand it.

"The mind-set is so much about `I want yours for myself', rather than creating an environment where this country can grow. The mind-set is about dividing up the pie rather than expanding the pie," he argued.

He said that government alone could not create wealth. There was only one type of entity in society that could actually create wealth, and that was firms.

"Only firms can create wealth. Firms may be state owned, but that's not what's important. Firms create wealth when they create products and services that they sell, and profit from the local market and international market. So no matter how good the business environment is, Indonesia will only be successful when its firms become competitive," he explained.

In order to be competitive, Porter said, a company must have a strategy.

"Strategy is about creating a unique position in the market. Deliver something different!"

"The worst mistake in strategy is to get into a competition, and competing on the same thing with competitors. It's not good for customers, either," he said.

Characterizing the country as a business entity with 220 million stakeholders, Porter urged Indonesia to find its own unique potential that could differentiate it from other countries.

"I wouldn't think in terms of size or market as meaning uniqueness. I would think about what are the kind of needs in Asia or in Indonesia that are unique, that we (Indonesia) understand better than companies from the U.S. and Europe," he said.
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