I SPECIAL FEATURE I

ENTREPRENEURIAL GOVERNMENT

When Gorontalo was still part of North Sulawesi prov ince, t he reqency administration
could only earn Rp7.5 billion ($815,0 0 0) 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
Bureaucrat s,
accord ing
to University of Indone
sia economist Rhenald
Kasali, are inclin ed to
spend as mu ch money as
possible in orde r to obtain a
bigger bud get the follow
ing year.
In contrast, entrepreneurs are co ncer
ned with how to manage their budgets
efficiently to o btain greater output or
revenue.
Fade l Muhammad, former bu sinessman
and co-founde r of th e Bukaka Group who
was elected as the first governor of Goron
ralo in 2001 , is among the few bureau
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MA Y 2007

crars in the country who act like an ent re

pren eur.
In 2002, a few months after he was
officially installed, th e M inistry of H om e
Affairs cha nneled cent ral government
fu nds worth Rp35 billion as sran -up
capit al to develop the new pro vince.
\X!hile other govern ors might have
used the fu nds to build new offices for
th em selves or oth er provinci al institu
tion s, Fadel used the mon ey to build an
airpo rt, sea port and road s. "W ithout th ese
1cilities, the new p rovince will never grow,"
he said .
H e had three obj ectives. 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 th e
market or sea pon so th at it would not be left:
decaying in productio n cente rs. T hird, co
end Coron ralo's dependency o n N orth
Sulawesi for air trans por r.
"Anyone visiting Coro nralo no long
er has co go through Man ad o (the No rth
Sulawesi capital)," brags the governo r. who
ad m its to being a workaholic with an 1'
hour daily sched ule.
It was only later rhat rno nev was
allocated to develop a local legisbti\c
cou ncil building o n 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

structive. A h ma d , a retired senio r army

almost eve ry part of the 12,44 5 sq krn

officer, was fond of develo p ing "presti

g ious" pro jects such as the Plaza sho p
ping m all (w hich rem ain s vaca nt) , an
Eiffel-sryle tow er, an d a zoo (wh ich is st ill
flnd ing tro uble in locating animals) t ha t
togethe r cost t he local budge t aro und Rp 7

province. Now,

Fadel has also bui lt a

cubcrnarorial reside nce in fro m 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 in d ustries at Bukaka, Fadel has
been focu sin g o n th e agricultu re sector as
th e basis for d evelop ing th e local eco nomy.
H is am bitio n is to turn G o romalo into
what he cal ls an "ag ro politan p rovin ce,"
wh ich essent ially me an s that the ag ricul
ture an d fishery secto rs will become the
province 's eco no m ic backb one, w ith co rn
p rod uctio n as an em ry poin t.
"Ag rop olitan is th e m ost feasible
altern ative lfl devel o ping G oro nta lo,"
asserts Fadel, po inting o ut the facts
that the province has a sizable stock of
arable lan d , and tha t m ost of its peop le are
farmers - con centrari ng m ain ly on corn
pr oduction - wh ile h um an reso ur ces in other
eco no m icsccto rsarevcry lim itedandski llsa nd
ed uca tion levels are low.

NO EASY TASK
Th e 54-year old Fadel realized from the
star t th at it wo u ld not be easy to car ry o ut
h is plan . Arn in Mootalu, an econom ist and
local lawm aker, says th at th e people ini t ially
d oub ted the govern or 's concepts, bu t as
th ey too k no te of how seriou s h e was abo ut
implement ing h is plan , su PPOrt sta rted to
flow in .
"Fa de l wo n a landslide victo ry (With
81 % o f vo tes) for a seco n d term in th e 20 06
elect io n . This clearly shows th at the peop le
support hi m ," says Amin. Fadel is, inciden
tally, h on o red in the Ind on esian Reco rd
M useu m as t he governor with the b iggest

billion .
In contrast, Fadel's policies have bee n

riculum is intende d to serve the human

resources need s of b ig citie s, so it's not
sur prising th at scho olleavers h ave no inter
est in th e agr icu lture, fishery and ani m al
hu sbandry sectors.
"Even th ose who could not gradu
ate from junior high schoo l are no lo n ger
w illing to co rne down to the paddy fields, I
didn't want thi s to happen in G orontalo ," h e

focuse d o n de velop ing h uman reso urce

capacity, imp rovin g th e ed uc at io n sector
and p eop le's welfare, says local econom ist
Ma nto Rahmalo.
Fade l has freed po o r people fro m
ed ucati o n fees and hospital b ills. T he
n um ber of p ub lic healrhcarc cente rs has

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
d eveloped for o u r we lfare."

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

2006, plus extra mobi le hea lt hca re servic e
and doctors,
T he
G oro nt alo
provin cial
ad m in istra
tion claims tha t th e
numb er
of
people

Fishery o ut p ut jumped to 43 ,00 0 tons

in 2005 fro m 19,0 00 to ns in 20 0 1. The ad
m inistration claims tha t
fishermen's in come has
more than trip led fro m an
ave rage Rp282,00 0 per
mont h to Rp 987 ,000. In
just o ne in itiative in this
sect o r, th e ad min istration
has laun ched a p rogram
that p rovides cap ital an d
ot her facilitie s to help
fish ermen in crease o ut-

living in pover ty has

d rastically d eclined from
72 % in 20 01 to 26 % last
year.

THREE PILLARS
C ha irman of the Go ron
ralo cha p ter of th e In

T he results, aside fro m th e grea te r

b udget fo r the ad m inistration, include
impressive economi c grow th of 7 .06% in
20 06, th e highest in th e co u n ny.

"Fadel's policies have

been focused on
developing human
resource
capacity, improving
the education sector
and people's welfare,"
Manto Rahmalo.

donesian C ham ber o f

Co m me rce and In d ustry
(Ka d in), Ru sli H a bibic,
saysrhreepillarshavcbeen pu tin placeb y Fad el
th at w ill influ en ce th e fu ture develop m ent of
Go ro ntalo.
T hese are the accele ratio n of h um an
resource development via ed uca tion , turn
ing G orontalo into an ag ropolita n province
based in itially o n co rn production, an d d e
velop ing th e fishery sector in coa stal areas,
wh ich also fun ctio ns as a showcase for the

share of votes.
Ahmad Pakaya, regent of Coro nralo
(bo th th e provin ce and a regency with in it
sha re th e same name) until 2006, remai ns
o ne of Fadel's stro nges t critics.

tourism sector.
"Fa de l has worked h ard for all of these,"
says Rusli, who is also presiden t o f co nstru c

But , says Stalin Sam ad , an em ployee at

th e local airport, "the presen ce 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 nde d to im prove the welfare

tio n firm PT Cahaya Man di ri Persad a.

Fadel u nd erstand s th at ed uca tio n 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 rovi nce. " I asked

of the people, particu larly farmers and sma ll

bu sin essm en ,".
Stalin says th e differences between the

ed uca tion experts to de sign a regio nal-based

curriculum . \'V'e are the first (p rovince) to
do this,"

gove rno r an d th e forme r regent are in

H e explai ns that th e natio nal cur

p ut.
Fadel has been even
m ore agg ressive in the
agric u lture sector, deplo

ying new tech nol ogies to

boost agr icultu ral o ut p ut an d qual ity. H e
m ob ilizes regem s, m ayo rs, d istri ct head s
and village h ead s to assist farmers.
In the past , corn production h ad been
in the range of two to three to ns per h ec
tare. \X/ith th e int rod uction of better
q uality seeds im ported from Makassar in
So u th Sulawesi, omput dou bled to between
fou r an d five to ns per hect are.
O ut p ut was then push ed eve n 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 Bogo r
Agricu lture Institute. U m ar H asan Sapurra,
an d prod uct io n is claim ed to have in creased
to 10 .9 tons per h ectare, wi tho ut the use of
fert ilizer.
Go ro nta lo's corn p roduction has now

MA Y 2 0 0 7

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I SPECIAL FEATURE

reached 560 ,000 ton s, a 400% ju m p fro m

th e 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 alit y or its so il is no different ro
G oronralos ," says th e gove rnor.
Desp ite high er produ ction , pri ces have
not been under pressure, but instead have
m oved up ward as quali ty improves an d
thro ugh the wor k of a logistics agellLY set up
by th e ad m inistratio n 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 p rice 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 trad ers and spec u lato rs [rom
mam pu laring pr ices," says Fad el.
Does thi s m eans he's agains t the
m arket mech an ism ? "I'm respo n sible fo r
im p roving th e weifI re o f farm ers 1Il
C oro n ralo, not letting them become the
easy prey of spec ulato rs and traders," he
respo nd s.
"Under the cur ren t co nd itions, I do n't
believe in free m ark et mechan ism s.Th rou gh
th e bu ffer system, the gove rn me nt can
interven e," he argu es.

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SCOUTING FOR MARKETS

Fadel has also been active Ir1 looking for
overseas markets. Last year, for instanc e,
the governor signe d Mol.ls with Jap an
an d So ut h Kor ea to export Gorontalo
products.
Jap an now abso rbs around 36 1l-h of
Coron ralo's agricu lru re expo rts, Sou th
Korea 34.55()lo, wh ile th e rem ainder goes
to Hong Kong , India, th e Philipp ines,
Taiwan and Mal aysia.
C o rn farme rs claim th ey are now
en joying be tter lives. " Peop le in m y village
have been bu yin g TVs and motor cycles
w ith cash. T hey have plenty o r m on ey
afte r their h arvests," says Muchrar Baabura,
head of Paris village in Goronralo regen cy.
A sim ilar accounr is given by corn
expo rter Leonard Yokorn, w hose WIfe is
th e local Mi tsubi sh i car dealer. "Since th e
begin n ing o f thi s yea r, m y w ife has
man aged to sell abo ut 20 cars per month .
So m e of th em (bu yers) have even swapp ed
the ir co rn for cars. We acce p ted ir."
Fadel has also set up th e G or omalo
Internation al Mai ze Information C ent er
(GIM l C), the world 's seco nd cen ter for
in fo rm atio n an d tech n o logy on co rn after
on e in Brazil.
T he Rp 15 billion facility sits on a fi ve

hectare b loc k of land in Bone Bolan go

regen cy. Fad el hopes that peop le from
vario us parts of the co untry and the worl d
w ill on e day com e to Gorontalo to learn
everythi ng about co m.
After his success in incre asing corn
prod ucti on, Fadel now wa nts to tu rn
Go ro n talo into the cent er for hybrid rice
pro du ction in the co un try, H e wa n ts
Go ron talo to contribute 200,000 tons ro
th e 2 m illion ron national rice reserves.
It's an am biuo us target. Goro ntalo now
prod uces 130,350 to ns of rice per year, wh ile
consu m ption In the provinc e, w ith some
1 m illion peo ple. IS abo ut 128 ,250 tons,
giving an excess of o nly about 2, 100 to ns.
"\ XTe'll expa n d our pad d y fields (fro m
the existing 25 ,000-30 .000 hectares)," says
Fadel. " But rlus is not eno ug h. What
is more important IS to develop the hu
man resources capacity through training so
tha t we can ado pt hybrid technology and
im pro ve infrastr ucture. particu larly irriga
tion systems."
T he ad m in istration ho pes that these
steps will help to boost prod uction 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 tu re development is
biodiesel. T he adrm nistra non has laun ch ed
a cam pa 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 uc uon .
In February, the ad m in istrati on signed
an MoU with Singapore-based firm Cl ean
Fuel to develop a biofu el m anu fact uring
plant In Bon e Bolan go regen cy with total
in vestment of arou nd Rp 1.7 trillion. The
plant will have a production capac ity of 300
mi llion liters per year.
N o t everyone is happ y with what is
happening in C oro n ralo. Corn expo rrer
Leo nard Yckom, for instance, com plains
abo u t th e lack of infr astruc ture faciliries.
"Th e Coronralo sea POrt is roo sm all. It
must be further expande d so th at exportS
can be accelerated," he says.
Poor road s and a sho rtag e of po\\"er are
oth er pro blems. Brown outs are regular. an d
on ly a relatively sm all road lrnks jalaludin
Airport an d the prov incial capital. :-'!anv be
lieve tha t th eir eng inee r gO\'erno r wi ll also fix
th ose p roblems when the tim e comes. GA

rr

add Muh ammad still cut

an imp ressive figure as he
sat dow n for a breakfast
int erview 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 ho w ent repre
neur ial gove rn me n t can transfo rm a poo r
backward region int o o ne of Ind on esia's
fastest growing eco no m ic areas.

T he straigh t talking form er business

m an and min ister as usu al gets to the po int
o n the hurd les he faces in developing his
provin ce. A forme r ind ustr ialist, he is now
widely acclaimed as a successful agricu lturist
having d ram atically increased corn pro d uc
tion and im proved th e fisheries secto r ill his
provin ce.
D espite his success, he acknowledges
that the od ds are still Stacked against provin
cialleaders in the latitude th ey have to run

the ir provinces. H e says rhar rhe Region al

Autonomy Law w hich unleashed eco no m ic
dyn ami sm in Indo nesia's far flung region s is
str uctura lly flawed a nd th at unless cha nges
are made, the cent ral govern ment will co n
tin ue to pull th e strings.
"All the autho rity to co ncep tua lize the
law was in the cenr ral govern me nt and in
facr th e govern ment in Jakart a was reluctant
to push the law," he no tes. "Fo r instance the
impl ementing regulations to su ppo rt th e

M AY 2 0 0 7

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91

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I SPECIAL FEATURE

I
produ ct growt h last year was a stirling 7.3 %
as compared to the nation a] GO P growth
of 5.6%
"We need ro adopt entrep reneurial
thin king with in government," he notes.
\Vhen I was starti ng out on my programs
I searched the int ernet for information
and infact cont acted the Kenn edy Schoo l
of Govern me nt and comm un icated with
the dean to learn more. W hat I have done
is not new and the programs have been
intro duced in m any oth er count ries."
\Vhat he has don e is introd uce corpo
rate culture into local bur eaucracy whe re
perform ance is rewarded. H is best perform
ing staff, for example, receive remuneration
in term s of bonuses tha t is 300% higher
than their salary.
"I am not a com mo n man," he not es."
If I do some som ething, I have to do with
excellent per form ance. JUSt doi ng thin gs so,
so is not my style."
Fadel is now courting investm ents to
im prove th e region's woeful infrasrruc
rure by getting rid of regulations that were
deeme d unfriendly to bu siness. H e 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 In do nesia 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
governme nts 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 governm em 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 th e central govern ment and he says
that Jakarta tends to use a on e system fits
all approac h to man aging the provinces.
"T hat is wro ng because each region has
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GlobeAsia I

MA Y 2 0 07

different needs and we have to im plement

regulations accord ingly. The bureaucrats in
Jakarta are still stuck in the old m indset .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 an d use
my conne ctions 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. Ov er the past six years,
he has increased Corontalo's budget from
Rp407 billion and a turnover of Rp 300
billion ro a bu dget of Rp407 billion and
a turnover of Rp3.2 trillion . Domestic

national econo mv,

"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. D espi te grow
ing criticism of President Susilo Bamb ang
Yud hoyono , Fadel adds th at he cont inues to
support the president because if the govern
me nt fails, the count ry could fractur e.
"'\{le are in a critical period today
because we have a large popu lation and
som e critical problems to tackle but only a
limited budget to run the count ry. ! ndon e
sia is still susceptible ro Balkan ization an d
the only way to prevent it is to have strong
econom ic grov.'th in the regions." GA