In a classroom at the SMK Negeri 8 school in Pasar Minggu, Jakarta, twenty-five sixteen-year-old students are preparing to start a business. They don’t yet have a product, or a defined strategy, but they are clear about each other’s role in the company they will build and grow over the coming year.
“My name is Sukma and my position is President Director,” announces one student, standing proudly near the front of the class. One by one, other students follow, stating their name and position title, which range from human resources and public relations to advertising and marketing.
It is the second meeting of this group of students, who have each been selected to take part in an entrepreneurial and financial literacy training course designed by Prestasi Junior Indonesia (PJI). Florentina Jabar, a PJI Program Officer, explains that the students are not necessarily the most gifted, but rather show a desire to learn about applied business and entrepreneurship.
While the students will only create a virtual company under this particular program, the real-life considerations and pitfalls of running a business are built into the curriculum. Once the students have decided on their product, they will be
split into five business units to work out the financials of running their company, allocating wages, production costs, share dividends and corporate social responsibility contributions – in other words, initiatives to benefit broader society.
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Founded in 2006 by Robert Gardiner and Marzuki Darusman, PJI is a business and entrepreneurial education institution affiliated with Junior Achievement Worldwide, based in USA. SMKN 8, a vocational school specializing in business and economics, is one of more than 170 schools currently implementing PJI programs across various locations in Java, East Kalimantan and West Papua. While the curriculum is designed by PJI, the programs are primarily delivered by local teachers.
Although the programs teach specific vocational skills, Mr. Gardiner sees their value more in changing the way students think about their future.
“It’s not a matter of transferring knowledge to these students,” said Mr. Gardiner. “The prime concern is developing the confidence for these young people to make decisions, to be brave enough to start their own entities.”
The Student Company project facilitated at SMKN 8 is one of 15 different programs currently offered by PJI, involving a total of 17,000 students from the elementary to tertiary level of schooling. However, Mr. Gardiner said that roughly 85 percent of the organization’s activities engage students between 15-19 years-old.
“It is a crucial age, because these young people are becoming increasingly aware of what they have to do after school,” said Mr. Gardiner.
According to the most recent statistics compiled by the International Labour Organization (ILO), around 20% of Indonesian youth between the ages of 15-24 are unemployed. While on average youth unemployment is around two-to-three times higher than that experienced by adults, Indonesian youth are unemployed at a rate 5.5 times that of the national adult population.
In addition, less than one percent of Indonesians are entrepreneurs, while experts say the figure needs to be around two percent in order to create employment opportunities and boost the economy.
While the reason for such figures is not straightforward, critics point to a common cause.
“I would say that one of the reasons that there are not a large number of entrepreneurs in Indonesia is because of the education system,” said Mr. Gardiner. “There’s not a lot of thinking out of the box, and that is reinforced by an education system…that feeds students information which they regurgitate for national exams.”
It is a view shared by Tendy Gunawan, National Program Coordinator for Youth Employment, ILO.
“The current methodology is not encouraging students to start their own entities,” he said. He also cited the poor quality of teachers, and a lack of adequate teacher training, as a further reason that many youths are not motivated to stay in school and make the transition to formal employment.
While around 95 percent of Indonesian children are enrolled in elementary school, 68 percent attend middle school, and just 46 percent high school. Furthermore, Mr. Gunawan said roughly 50 percent of the 4.8 million unemployed youth in Indonesia are elementary school dropouts.
Despite Mr. Gunawan’s criticisms of the education system, he sees hope in the Indonesian government’s efforts to improve the sector.
In 2006, just 10 percent of the national budget went into education. The rate has since more than doubled, with Rp331.8 trillion allocated for the 2013 financial year.
The Indonesian government, with the assistance of an $80,000 (US) loan from the Asian Development Bank, is also nearing the end of a five-year a Vocational Education Strengthening Project, which includes a commitment to bolster and support SMKs.
For Mr. Gunawan, this is an important development.
“One of our projects found that combining entrepreneurial training with vocational training is very effective in getting people to start their own enterprises,” Mr. Gunawan said.
He emphasized the importance of starting entrepreneurial education at a young age, so that even those who are forced to leave school for family or economic reasons have the skills to enter into formal employment.
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Nanang Siswanti is one PJI alumni who has made the most of his opportunities. Originally from Madiun in East Java, he left his small, family-owned farm for Bogor Agricultural University (IPB) in 2000, having received a scholarship from the International Community Activity Center (ICAC). He is now head of marketing for the food production and distribution company Sierad Produce, and has plans to eventually start his own business.
Although studying forestry, Mr. Siswanti was initially attracted to learning about entrepreneurship in a pilot PJI program run out of Jakarta.
“Most of the participants in the ICAC program were not from economic and marketing backgrounds, so we were eager to join [PJI] because we wanted to learn new things,” he said.
Realizing that PJI was only available to scholarship students at that time, Mr. Siswanti, along with a group of friends, established Century – an extra-curricular program at IPB providing entrepreneurship training to interested students. The organization is still running, and Mr. Siswanti returns on occasion to provide guidance and share his experience.
He also regularly assists individual PJI programs, and was on the judging panel at last year’s Asia Pacific Junior Company of the Year competition – an event which brings together the best business ideas from Junior Achievement participants throughout the region.
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While PJI receives practical support from a number of successful alumni, it is primarily large corporations who provide funding for the programs.
According to Mr. Gardiner, each company’s contribution is relatively small – around $25-40,000 (US) – meaning the organization does not have to rely on one or two major donors for its survival.
For the 2011/12 financial year, PJI’s net budget was $390,000 (US), with the bulk of the money being directed towards salaries and educational materials.
Mr. Gardiner also sees volunteering as an important element of the organization’s projects.
“When we first began in Indonesia in 2006 there were only a few companies that volunteered,” said Mr. Gardiner. “Now, there is a huge emphasis in Indonesia…on engaging staff directly with corporate social responsibility initiatives.
“So a very important part of a program is getting the volunteers to work with the students.”
He cited one example involving Caterpillar, where students from nearby schools visit a factory in East Java and are mentored by local workers.
“Our objective is to expose young people to the idea that they could be welders, fitters and turners, that they could acquire these skills rather than be [employed] in the informal sector,” said Mr. Gardiner.
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Back at SMKN 8, Sukma is clear about what he wants to get out of the Student Company program.
“I want to make cultural products,” he said, before explaining his idea of manufacturing a new type of wayang lantern.
“Teamwork is number one, and leadership, to make our student company the best.”
The Siren 