I SPECIAL FEATURE I

ENTREPRENEURIAL
GOVERNMENT

When Gorontalo was still part of North Sulawesi province, the reqency administration could only
earn Rp7.5 billion ($815,000) in 2000 from local taxes. Five years after Gorontalo became the
32nd province of Indonesia under the leadership of former businessman Fadel Muhammad, that
fiqure had multiplied by more than six times to Rp46 billion in 2006. BY ISHAK RAFICK
Bureaucrats, according to University of Fadel Muhammad, former businessman
Indone sia economist Rhenald Kasali, are and co-founder of the Bukaka Group who was
inclin ed to spend as mu ch money as po elected as the first governor of Goron ralo in
ssible in orde r to obtain a bigger budget the 2001, is among the few bureau
follow ing year.
In contrast, entrepreneurs are concer ned
88 GlobeAsia I MA Y 2007
with how to manage their budgets efficiently
crars in the country who act like an entre
to obtain greater output or revenue.
eneur. pro duce could be quickly transported to the
In 2002, a few market or sea pon so that it would not be left:
onths after he was officially installed, the decaying in production centers. Third, co end
nistry of Home Affairs channeled central Coronralo's dependency on North Sulawesi
vernment funds worth Rp35 billion as sran for air trans por r.
p capit al to develop the new province. "Anyone visiting Coronralo no long er has co go through Manado
\X!hile other (the North Sulawesi capital)," brags the
vernors might have used the funds to build governo r. who admits to being a workaholic
w offices for themselves or other provincial with an 1' hour daily schedule.
titu tions, Fadel used the money to build an "Anyone visiting Coronralo no long er has co go through Manado
port, sea port and roads. "W ithout these (the North Sulawesi capital)," brags the
cilities, the new province will never grow," governo r. who admits to being a workaholic
said. with an 1' hour daily schedule.
He had three "Anyone visiting Coronralo no long er has co go through Manado
jectives. First was to resolve the severe lack (the North Sulawesi capital)," brags the
intrastruc governo r. who admits to being a workaholic
ture facilities in Coronralo, Second was to help ensure that agriculture with an 1' hour daily schedule.
pro duce could be quickly transported to It was only later rhat rnonev was allocated to develop a local
market or sea pon so that it would not be left: legisbti\·c council building on a sloping hill,
decaying in production centers. Third, co and a governor's office atOp the hill with a
Coronralo's dependency on North Sulawesi com
for air trans por r. It was only later rhat rnonev was allocated to develop a local
ture facilities in Coronralo, Second was to help ensure that agriculture legisbti\·c council building on a sloping hill,
pro duce could be quickly transported to and a governor's office atOp the hill with a
market or sea pon so that it would not be left: com
decaying in production centers. Third, co It was only later rhat rnonev was allocated to develop a local
Coronralo's dependency on North Sulawesi legisbti\·c council building on a sloping hill,
for air trans por r. and a governor's office atOp the hill with a
ture facilities in Coronralo, Second was to help ensure that agriculture com
-nanding view of the sea, lake, bay and almost every part of the 12,445 sq krn province. Now, Fadel has also built a cubcrnarorial reside nce in
from ofthe main rootball field,
In contrast to his backgrou nd as an engineer and his years of experience deve loping heavy industries at Bukaka, Fadel has been focusing on the
agriculture sector as the basis for develop ing the local eco nomy.
H is am bitio n is to turn G o romalo into what he calls an "agropolitan province," which essentially means that the agricul ture and fishery
sectors will become the province's economic backb one, with corn production as an emry point.
"Agropolitan is the most feasible altern ative lfl developing Gorontalo," asserts Fadel, po inting out the facts that the province has a sizable stock
of arable land, and that most of its people are farmers - concentraring mainly on corn pr oduction - wh ile h um an resources in other eco no m
icsccto rsarevcry lim itedandski llsa nd educa tion levels are low.
NO EASY TASK The 54-year old Fadel realized from the start that it would not be easy to carry out his plan . Arn in Mootalu, an econom ist
and local lawmaker, says th at the people ini tially doubted the governor's concepts, but as they too k note of how seriou s he was abo ut
implementing his plan, suPPOrt started to flow in .
"Fadel won a landslide victory (With 81% ofvotes) for a second term in the 2006 election. This clearly shows that the people support him," says
Amin. Fadel is, inciden tally, honored in the Indonesian Record Museum as the governor with the biggest share of votes.
Ahmad Pakaya, regent of Coronralo (both the province and a regency within it share the same name) until 2006, remai ns one of Fadel's strongest
critics.
But, says Stalin Samad, an em ployee at the local airport, "the presence of such an influent ial oppo nent has onl y made Fadel's star shine even
brighter because his policies are clearly intended to improve the welfare of the people, particu larly farmers and sma ll bu sin essm en ,".
Stalin says the differences between the governor and the former regent are in
structive. Ahmad, a retired senior army officer, was fond of developing "presti gious" projects such as the Plaza shop ping mall (which remains
vacant), an Eiffel-sryle tower, and a zoo (which is still flnding tro uble in locating animals) that together cost the local budget aro und Rp7
billion .
In contrast, Fadel's policies have been focused on developing human resource capacity, improving the education sector and people's welfare, says
local economist Manto Rahmalo.
Fadel has freed poor people from education fees and hospital bills. The number of public healrhcarc ce nte rs has increased from 33 units in 200
1 to 52 in 2006, plus extra mobile healthcare service and doctors,
The Gorontalo provincial administra tion claims tha t the number of people living in poverty has drastically declined from 72% in 2001 to 26%
last year.
THREE PILLARS Chairman of the Goron ralo chapter of the In donesian Chamber of Commerce and Industry (Kadin), Rusli Habibic,
riculum is intended to serve the human resources needs of big cities, so it's not surprising that schoolleavers have no inter est in the agriculture,
fishery and animal husbandry sectors.
"Even those who could not gradu ate from junior high school are no longer willing to corne down to the paddy fields, I didn't want this to
happen in G orontalo," he says. "So I changed the curriculum so that the crop lands and the sea could be properly developed for our welfare."
The results, aside from the greater budget for the administration, include impressive economic growth of 7.06% in 2006, the highest in the coun
ny.

Fishery output jumped to 43,000 tons in 2005 from 19,000 tons in 2001. The ad "Fadel's policies have m inistration claims

tha t fishermen's income has been focused on more than tripled from an average Rp282,000 per developing

human month to Rp987,000. In just one initiative in this resource sector, the ad ministration has launched a program

capacity, improving that provides capital and other facilities to help the education sector and

people's welfare," fish ermen increase out- put. Fadel has been even Manto Rahmalo. more aggressive in the
agriculture sector, deplo ying new technologies to saysrhreepillarshavcbeenpu tin placeb y Fad el
boost agricultural output and quality. He th at will influ en ce th e fu ture develop m ent of
mobilizes regems, mayors, district heads Gorontalo.
and village heads to assist farmers. These are the acceleration of human
In the past, corn production had been resource development via ed uca tion , turn
in the range of two to three tons per hec ing Gorontalo into an agropolitan province
tare. \X/ith the introduction of better based initially on corn production, and de
q uality seeds im ported from Makassar in veloping the fishery sector in coastal areas,
South Sulawesi, omput doubled to between which also functions as a showcase for the
four and five tons per hectare. tourism sector.
O utput was then pushed even higher, "Fadel has worked hard for all of these,"
to between five and six tons per hectare, by says Rusli, who is also president ofconstruc
using seeds resulting from the blending of tion firm PT Cahaya Mandiri Persada.
the M akassar and local seeds. Fadel understands that education plays
Last year, the local administration in a key role in the develo pment of his pro
troduced the use of a new nutrition agent vince. His first move was to revise the edu
developed by an alumni of the Bogor cation curriculum in the province. "I asked
Agriculture Institute. Umar H asan Sapurra, education experts to design a regio nal-based
and prod uction is claimed to have increased curriculum. \'V'e are the first (province) to
to 10.9 tons per hectare, witho ut the use of do this,"
fert ilizer. He explains that the national cur
Gorontalo's corn production has now
MAY 2007 I GlobeAsia 89
 reached 560 ,000 tons, a 400% jump from the level four years ago. "I'm still no t satisfied because the production level in China
can reach 17 tons per hectare, while the qu ality or its soil is no different ro G oronralos ," says the gove rnor.
Despite higher production, prices have not been under pressure, but instead have moved upward as quality improves and
thro ugh the wor k of a logistics agellLY set up by the administration that operates a prIce buffer system.
The average price of corn in the past was about Rp:100 per kg, but this has now surged to between Rp1.400 -Rp1,700 per
kg. "If the price of corn Ialls below the targeted floor price, the agency will purchase the co rn from farmers. T his prevents
traders and spec ulato rs [rom mam pu laring pr ices," says Fadel.
Does this means he's against the market mechanism? "I'm responsible for improving the weifIre of farmers 1Il Coronralo,
not letting them become the easy prey of speculators and traders," he respo nd s.
"Under the current conditions, I don't believe in free m ark et mechan ism s.Throu gh the buffer system, the government
can intervene," he argues.

90 GlobeAsia I MAY 2007

I SPECIAL FEATURE I

UTING FOR MARKETS Fadel has also been active Ir1 looking for overseas markets. Last year, for instance, the
nor signed Mol.ls with Japan and South Korea to export Gorontalo products.
Japan now absorbs around 36 1l-h of Coronralo's agriculrure exports, South Korea 34.55()lo,
the rem ainder goes to Hong Kong, India, the Philippines, Taiwan and Malaysia.
Corn farmers claim they are now enjoying better lives. "People in my village have been buying
nd motorcycles with cash. T hey have plenty or money after their harvests," says Muchrar Baabura, head ofParis village in
nralo regency.
A sim ilar accounr is given by corn exporter Leonard Yokorn, whose WIfe is the local
bishi car dealer. "Since the beginning of this year, my wife has man aged to sell about 20 cars per month. Some of them
rs) have even swapped their corn for cars. We accepted ir."
Fadel has also set up the Goromalo International Maize Information Center (GIM lC), the
's second center for information and technology on corn after on e in Brazil.
he Rp 15 billion facility sits on a five
hectare block of land in Bone Bolango regency. Fadel hopes that people from various parts of the co untry and the world will one day come to Gorontalo to learn everyth

T he administration hopes that these steps will help to boost production levels from the current 4.74 tons per hectare ro 12 tons per hectare or about
SL'( rons per hectare of high quality nee.
T he administration hopes that these steps will help to boost production levels from the current 4.74 tons per hectare ro 12 tons per hectare or about
SL'( rons per hectare of high quality nee.
Another area for future development is biodiesel. T he adrmnistranon has launched a campaign for people to get involved in planung jarhropa. a
tropical plant that can be used as raw material for bioluel prod ucuon.
Another area for future development is biodiesel. T he adrmnistranon has launched a campaign for people to get involved in planung jarhropa. a
tropical plant that can be used as raw material for bioluel prod ucuon.
Another area for future development is biodiesel. T he adrmnistranon has launched a campaign for people to get involved in planung jarhropa. a
tropical plant that can be used as raw material for bioluel prod ucuon.
Another area for future development is biodiesel. T he adrmnistranon has launched a campaign for people to get involved in planung jarhropa. a
tropical plant that can be used as raw material for bioluel prod ucuon.
In February, the administration signed an MoU with Singapore-based firm Clean Fuel to develop a biofuel manufacturing plant In Bone Bolango
regency with total investment of arou nd Rp 1.7 trillion. The plant will have a production capacity of 300 mi llion liters per year.
In February, the administration signed an MoU with Singapore-based firm Clean Fuel to develop a biofuel manufacturing plant In Bone Bolango
regency with total investment of arou nd Rp 1.7 trillion. The plant will have a production capacity of 300 mi llion liters per year.
In February, the administration signed an MoU with Singapore-based firm Clean Fuel to develop a biofuel manufacturing plant In Bone Bolango
regency with total investment of arou nd Rp 1.7 trillion. The plant will have a production capacity of 300 mi llion liters per year.
In February, the administration signed an MoU with Singapore-based firm Clean Fuel to develop a biofuel manufacturing plant In Bone Bolango
regency with total investment of arou nd Rp 1.7 trillion. The plant will have a production capacity of 300 mi llion liters per year.
Not everyone is happy with what is happening in Coronralo. Corn exporrer Leonard Yckom, for instance, complains about the lack of infrastructure
faciliries. "The Coronralo sea POrt is roo small. It must be further expanded so that exportS can be accelerated," he says.
Not everyone is happy with what is happening in Coronralo. Corn exporrer Leonard Yckom, for instance, complains about the lack of infrastructure
faciliries. "The Coronralo sea POrt is roo small. It must be further expanded so that exportS can be accelerated," he says.
Not everyone is happy with what is happening in Coronralo. Corn exporrer Leonard Yckom, for instance, complains about the lack of infrastructure
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 shortage of po\\"er are oth er problems. Brown outs are regular. and on ly a relatively small road lrnks jalaludin Airport and the
provincial capital. :-'!anv be lieve tha t th eir eng inee r gO\'erno r wi ll also fix those problems when the time comes. GA
Poor roads and a shortage of po\\"er are oth er problems. Brown outs are regular. and on ly a relatively small road lrnks jalaludin Airport and the
provincial capital. :-'!anv be lieve tha t th eir eng inee r gO\'erno r wi ll also fix those problems when the time comes. GA
Poor roads and a shortage of po\\"er are oth er problems. Brown outs are regular. and on ly a relatively small road lrnks jalaludin Airport and the
provincial capital. :-'!anv be lieve tha t th eir eng inee r gO\'erno r wi ll also fix those problems when the time comes. GA
Poor roads and a shortage of po\\"er are oth er problems. Brown outs are regular. and on ly a relatively small road lrnks jalaludin Airport and the
provincial capital. :-'!anv be lieve tha t th eir eng inee r gO\'erno r wi ll also fix those problems when the time comes. GA
After his success in increasing corn production, Fadel now wants to turn Gorontalo into the center for hybrid rice production in the country, He
 wants Gorontalo to contribute 200,000 tons ro the
2 million ron national rice reserves.
It's an ambiuous target. Gorontalo now prod uces 130,350 tons ofrice per year, wh ile consum ption In the province, with some 1 million people. IS
about 128,250 tons, giving an excess of only
about 2, 100 tons.
"\XTe'll expand our paddy fields (from 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 adopt hybrid technology
and improve infrastructure. particularly irriga
tion systems."
add Muhammad still cut an imp ressive figure as he sat dow n for a breakfast interview with ClobeAsia. The governor of Goron ralo Province
isoften in the news and is now held up as example of how entrepre neurial government can transform a poor backward region into one of
Indonesia's fastest growing economic areas.

rr
The straight talking former business
their provinces. He says rhar rhe Regional man and min ister as usual gets to the po int
Autonomy Law which unleashed economic on the hurdles he faces in developing his
dynamism in Indonesia's far flung regions is province. A former industrialist, he is now
structurally flawed and that unless changes widely acclaimed as a successful agriculturist
are made, the central government will con having dramatically increased corn produc
tinue to pull the strings. tion and improved the fisheries sector ill his
"All the authority to conceptualize the province.
law was in the cenrral government and in Despite his success, he acknowledges
facr the govern ment in Jakarta was reluctant that the odds are still Stacked against provin
to push the law," he no tes. "For instance the cialleaders in the latitude they have to run
implementing regulations to support the

=---"--,,---------""'"'---------------
M AY 2 0 0 7 I GlobcAsia 91
 law have not been issued but we
governors are now pushing hard for them."
Another problem facing regional
governments is that the central govern ment
has not marched develop ment in the
provinces with political power. In many
sectors, including agriculture and telecom
munications 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 government and he says that
Jakarta tends to use a one system fits all
approach to managing the provinces. "That is
wrong because each region has
92 GlobeAsia I MA Y 2 0 07
produ ct growth last year was a stirling 7.3% as compared to the nationa] GOP growth of 5.6%
different needs and we have to implement
regulations accord ingly. The bureaucrats in
Jakarta are stillstuck in the old mindset .1IlJ
they need to change with the time."
Not one to
Fal :~i has
pushed ahead
implementing his programs nonetheless.
"To overcome the problems, I have to be pro-
active and use my connections in the central
government to push through my programs."
T he results
of his efforts have been impressive and other
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.
national economv,
national economv,
"It the gO\'ernmem does this, the countrv 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 entire country,' he says.
Despite grow ing criticism of President Susilo
Bambang Yudhoyono, Fadel adds that he
continues to support the president because if
the govern ment fails, the country could
fracture.
"It the gO\'ernmem does this, the countrv 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 entire country,' he says.
Despite grow ing criticism of President Susilo
Bambang Yudhoyono, Fadel adds that he
continues to support the president because if
the govern ment fails, the country could
fracture.
"It the gO\'ernmem does this, the countrv 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 entire country,' he says.
Despite grow ing criticism of President Susilo
Bambang Yudhoyono, Fadel adds that he
continues to support the president because if
the govern ment fails, the country could
fracture.
"It the gO\'ernmem does this, the countrv 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 entire country,' he says.
Despite grow ing criticism of President Susilo
Bambang Yudhoyono, Fadel adds that he
continues to support the president because if
the govern ment fails, the country could
fracture.
 "'\{le are in a critical period today because we have a large country. !ndone sia is still susceptible ro
population and some critical problems to Balkanization and the only way to prevent it is
tackle but only a limited budget to run the to have strong economic grov.'th in the
country. !ndone sia is still susceptible ro regions." GA
Balkanization and the only way to prevent it is "'\{le are in a critical period today because we have a large
to have strong economic grov.'th in the population and some critical problems to
regions." GA tackle but only a limited budget to run the
"'\{le are in a critical period today because we have a large country. !ndone sia is still susceptible ro
population and some critical problems to Balkanization and the only way to prevent it is
tackle but only a limited budget to run the to have strong economic grov.'th in the
regions." GA
"We need ro adopt entrepreneurial thinking within government," he notes. \Vhen I was starting out on my programs I searched the
internet for information and infact contacted
the Kennedy School of Government and
communicated with the dean to learn more. W
hat I have done is not new and the programs
have been intro duced in many other
countries."
\Vhat he has done is introduce corpo rate culture into local bureaucracy where performance is rewarded. H is best perform ing staff, for
example, receive remuneration in terms of
bonuses that is 300% higher than their salary.
"I am not a common man," he notes." 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 investments to improve the region's woeful infrasrruc rure by getting rid of regulations that were deemed
unfriendly to business. He wants ro continue
to improve the agricultural and fisheries
sectors as these are the biggest job creators
and is also urging Jakarta to devote more
resources ro these two sectors. H e adds that
Indonesia needs more ent repreneurs 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."
I SPECIAL
FEATURE I