UNDERSTANDING INTERACTION AMONG STAKEHODLERS IN DEVELOPING

RATTAN INDUSTRY IN CIREBON REGENCY

Asngadi

Tadulako University, Palu

Contact:

Abstract

The research aimed to 1) identifying the actors strategy (academic, business and government) in developing the SME cluster of rattan industry of Cirebon Regency, 2) identifying the interaction model among actors in the SME cluster development of rattan industry in Cirebon Regency.

Paradigm used is non mainstream, with phenomenological analysis of Schutz. Data analysis done by Nvivo 11.

Analysis results showed that the interaction and strategy of the actors including the upgrading skill, appropriate technology, capacity building, model maker training, human resources regeneration, rattan cooperative strengthening, SME market facilitation, raw material strengthening.

Keywords: cluster, rattan, interaction, strategy, actor

INTRODUCTION

Today CirebonRegency is the largest rattan industry in Indonesia, which 80% is export oriented.(FT Link Consultant – SHK Kaltim, May, 2005). The growth of rattan SMEs cluster started its activity in 1970’s, against the fact that the region lack the needed material (Sriwarno and Iman, 2009). Tabel 1 lists the areas from which Cirebon Regency rattan industry relies on for rattan material:

Table 1
Material Suppliers for Cirebon Regency’ Rattan Industry

No / Types / Supplier Area
1 / Manau / Sulawesi
2 / Semambu / Sulawesi
3 / Tohiti / Sulawesi
4 / Kubu / Kalimantan, Sumatera
5 / Jawit / Kalimantan
6 / Lacak / Kalimantan, Sumatera
7 / Slimit / Aceh
8 / Sarang Buaya / Kalimantan, Sulawesi
9 / CL / Kalimantan, Sumatera, Jawa

Source : The Cirebon Regency’s Office of Industry and Trade, 2014

The massive rattan industry development in Cirebon Regency has made rattan furniture determined as Region’s Industrial Core Competence since 2011 (Cirebon Regency’s Office of Industry, 2014). The number of business unitsby 2013 has been 1.331 (Cirebon Regency’s Office of Industry, 2014).

There is a seemingly difference between rattan industrial cluster in Cirebon Regency and that in India. Rattan industrial clusters in India have traditionally grown and development in rattan-producing areas. The result ofSmith’study (1997) shows that people in Assam (India) has long had tradition of developing rattan industry in rattan-producing areas.

The growth of rattan industry in Cirebon Regency also play part in considerably absorbing work-force. This role puts rattan industry as a important factor for high employment in this region.

This growth is further made possible by government regulation of three ministers in 2011 prohibiting the export of rattan material. An informan of the research confirm this growth :

“Nowadays there’s always people asking permitconcerning a new rattan business within a month (Suyatno, kabid Industri Dinas Perindustrian Kabupaten Cirebon, 7 Nop 2014).

The growh in unit number is accompanied by growth in management capacity, with implication on increasing added values to products exported to abroad. Even though regulation against raw rattan export has been effective since 2011, added values of rattan product have well developed.

This growth has attracted attention, especially as the region is not producing rattan raw material. Thus the growth is not only in quality, but also in quantity. The increasing number of businesses has been grouped themselves in certain spaces that Cirebon Regency’s Office of Industry terms as clusters. All of this was started by only one cluster in Tegalwangi village, which in times inspires other areas until 11 areas. (Cirebon Regency’s Office of Industry or Trade, 2014).

Nowadays the number of rattan furniture export in Cirebon Regency amounts to 1.200 containers a month to the US, Europe, and other Asian countries, and much less to domestic market. To meet this export capacity, rattan raw material needed amounts to around 6000-7000 tons per month (eachcontainer contains 5-6 tonsof rattan raw material). (Cirebon Regency’s Office of Industryand Trade, 2015). This achievement in export capacity as a matter of fact is surprisingly under industrial capacity as confirmed by an informant:

“....Actually, the present condition is still under the best year of 2015, the time when Cirebon’s rattan meubel export reached 3.000 containersa month. (interview with H. Sumarca, Head of Cirebon Regency’s Indonesian meubel and handicraft Industry Association (Asmindo) Nov. 7th, 2014) ”

Comparing to other regions, helps accentuate the phenomenal condition in terms of business number in Cirebon Regency. In 2013, for example, Middle Sulawesi province, as the largest rattan raw material producer, only has 37 rattan-related businesses including rotan polish, core, pitrit dan furniture (interviewwith Yuslam, Chief of Palu’s SMEs Industry, 2015), while it produces 60 percent of national rattan raw material (viva new, 2009; Central Sulawesi’s Office of Forestry, 2012, Sulteng Post, Dec. 8th , 2014).

This incompatible condition privides a base to explore neumenonbehind phenomenon in Cirebon Regency. It is even so as the case in Cirebon Regency does not warrant the equal success in other regions in Indonesia (Irawati,2006).

The development of rattan cluster in Cirebon regency requires a reseach on cluster development within Indonesian context, that would be a great beneficial as Indonesia wholly has 25.000 clusters (Sandee dan Wengel, 2002), while not all of them manage themselves to succeed as those in Cirebon Regency (Irawati, 2006).

Specifically, The present research intends to identify key success factors in developing rattan SMEs cluster in Cirebon Regency; and to design development model of rattan SMEs clusters.

THE DEVELOPMENT OF SMEs CLUSTERS

Since Porter has introduced cluster concept in 1990 and 1998, cluster concept and other collaboration forms have been associated with the attempt to uplift competitiveness. As optimism atmosphere in developing countries got thicker around exported-SMEs, cluster was one model enables SMEs develop and be competitive (Schmitz dan Nadvi, 1999).

Cluster is an interesting object in many researches, for instance Schmitz dan Nadvi (1999) presented various researches and researchers exploring the roles of clusters. They include New Mainstream Economics (Krugman, 1991), Business Economics (Porter, 1990), Regional Science (Scott, 1996) and Innovation Studies (Braczyk, Cooke and Heidenreich, 1998).

Cluster enables for flexible specialisation and innovative environment (Newlands, 2003, Perry, 2005). Efficiency and effectiveness based interaction and relation among business in a certain area might lead to specialization. Its development might trigger the emergence of new cluster and the presence of public institution to provide necessary support (Perry, 2005).

The early clustersin Indonesia were still imperfect ( palm sugar cluster). The relationship between business units were commonly informal (Burger, Kameo, Sandee, 2002). In developing economics, clusters only focus on local resources processesing (Perry, 2005). If it is the case, nonsustainable resources undermine the clusters’ sustainability (Perry, 2005). Cluster developments inIndonesia have been determined by SMEs’ dynamism (Hill, 2002, Perry 2005).

Wijland’s research 1999 (Perry, 2005) revealed that reliance bambooSMEs in Middle Javaon workers’ skills have contributed to slow cluster growth, which in turn led to marginal source of income.

Many governments in different countries have attempted to drive the cluster development (Davis, Creutzberg, Arthur, 2009). Cluster approach is politically important as it serves as a vital economic center lending support to the region. In a wider concept, cluster reflects government management system in NIS-National Innovation System implementation (OECD 1999, 2002). In policy terms, government support to clusters is represented in cluster-based policies (OECD 2008).

Even thought at early stage cluster was made exclusively in technology-based businesses,nowadays it develops in other sectors. The main point in cluster development is linkagemaking between business units, universities, supporting industries, and others. In creative industry, scholars and practitioners might team up to find ideas and innovation.

At early stage cluster development was oriented to corporateagglomeration relying on local competitive advantage, in a perfect formdalam bentuk yang lebih sempurna, cluster emphasizes value chain that supports operational process. Success story related to SMEs cluster is represented by Silicon Valleys and Route 128 where SMEs grew around MITcampus area in US ( Juoro, 2011).

The advantages of cluster offset weaknesses SMEs often face in their nascent life. Those advantages include chances to learn that might increase corporate capability (Caniëls and Romijn, 2005; Siqueira and Cosh, 2008, Forsman, 2009) as economic performance of a firm is the result of continuous learning process ( Forsman, 2009), opportunities to improve knowledge, access to new markets, lower cost of production and R&D (Glaister and Buckley, 1996; Karaev, et al. 2007). In terms of tangible and intangible, tangibleadvantages include profits, improving market share and sustaining competitive advantage, while intangible advantages include learning and developing competencies (Simonin, 1997; Forsman, 2009). Agglomeration also offer other benefits, such as economies of scale, knowledge spillovers, human capital formation through informal learning and technology transfer. (Caniëls and Romijn 2003; Forsman, 2009).

Withineconomical-politics framework, SMEs contribute to national development by absorbing work-force and exploiting local resources (Kristiyanti, 2011). Clustering is condidered as the best strategy for SMEs to be successful in a certain industry( Forsman, 2009).

Forsman (2009) found that clustering might drive innovation. Mostinput knowledge innovation came from the businesses themselves, and only 7 percent originated from public such asuniversity, research organizationor government laboratories (Pavitt, 1984, Forsman (2009). In certain areas, collaboration among cluster members produces production network with production in most efficient way as its main objective.

In order to have a sound base for SME viability, clustering approach might come handy (Kristiyanti, 2011). Clustering approach might take the form of relationship in upstream to downstream activities, between main activity and supporting activities, raw material supply and marketing outlet, or interaction with established firms nearby all of which would accelerate dynamism within the cluster (Kristiyanti, 2011).

Small enterprises in a large number would not be able to move economy a head as long as they cluster themselves. Working on its own, each small business focuses on its subsistence needs. In order to have competitiveness, clustering strategy for SMEs might pave the way forbroad base economic growth (Kristiyanti, 2011).

Beside promising benefits, handicaps are common among clusters. Media based businessclusterin Canada suffered from several handicaps (Davis, Creutzberg, Arthur, 2009). They include:

  1. Accurately understanding the nature of innovation processes in media industries and assessing the actual competitive significance of pervasive product innovation in these industries
  2. Facilitating the linkages, spillovers, and externalities that are believed to be of strategic significance in the media cluster
  3. Factoring in the screen-based media cluster’s numerous trans-local external linkages
  4. Innovation policy measures for labor and small firms in creative industries
  5. Identifying cluster-specific implications of actual or potential policy measures for innovation in an industry in which policy influences are widespread.

RESEARCH METHOD

Qualitative Research Paradigm

Research paradigm generally falls within two categories, that is positivismand post positivism (Creswell, 1994; Guba and Lincoln,1994; Myers,2009). They have different patters and approaches in revealing scientific truth.

The present research applies postpositivism paradigm based on several considerations. First, the object of the study, rattan SMEs clustering in Cirebon Regency, is an unique phenomenon, where the fact that it has not had rattan resource since a long time a go does not prevent it from being national rattan furniture cluster. While regions rich with rattan raw material such as the provinces of Middle Sulawesi and Middle Kalimantan, do not have rattan furniture cluster as prospective as that in Cirebon Regency.

Phenomenology in Research

To arrive at objectives the research intends to achieve, phenomenology is considered as appropriate analytical tool. Phenomenology is a description about the data of direct experience, through which the researcher can make attempt to understand instead of explaining the symptoms ( Hall dan Lindzey, 1993)

Understanding a phenomenon with phenomenology as an analytical tool offer many benefits to many parties such as therapist, teacher, health personel and policy maker (Creswell, 2007). Based on this, thephenomenologyis the right tool for the research of rattan SMEs cluster development in Cirebon Regency. Phenomenological research on rattan SMEs cluster would provide many benefits to policy maker as to how develop a competitive SMEs cluster.

The research also intends to have an “essense” from cluster development. Withthe “essence” on hand, “duplication” is possible in many other regions, thus contributing to the implementation of rattan cluster development by decision-makers. Experiences encountered in Cirebon Regency can be constructed as “essense” to development of rattan SMEs cluster in Indonesia.

Research Setting

Setting in this research is Cirebon Regency. This region that has been long recognized as national rattan cluster is the research analytical object. Specifically, the observed several phenomena noteworthy of mentioning are as follows :

-Cirebon regency does not have a history as rattan producer, thus rattan industrial growth in the region is not due to local rattan resources, as rattan raw material is brought in from outside.

-Cirebon regency now has become the producer of rattan furniture and absord the largest the work-forcecompared to other industries.

RESULTS

The preliminary study done at SME cluster of rattan industry showed several variables which determine the success of SME cluster development of rattan industry in Cirebon, that is socio-historical valued of products, SME industrialization, and sustainability process (Asngadi, 2017). The data analysis results done by using Nvivo 11 produced themes and sub themes showed the keys success development of SME cluster of rattan industry in Cirebon regency, that can be explained as follows:

Figure 1. mind map

Mind map above showed the relationship various themes and sub themes become the determinant for the SME cluster development success of rattan industry in Cirebon regency.

Synergy of 3 actors (government, business, and academics) is considered as important to create competitiveness, where the regulation, incentive, and various policy is the government area. While the government element in collaboration of double helix (business world and university) make the reciprocal relationship pattern of the 3 actors as triple helix essence (Etzkowitz, 1997).

Interactions among the actors make synergy in UKM cluster development in Cirebon regency can be in the various forms, can be stated in diagram below.

Figure 2. Interaction area among actors in Rattan cluster development

DISCUSSION

Collaboration is appropriate term to describe the three entities ie academic, business, and government (ABG) in the cluster development role. The discussion is begun by looking at the role of each actor, then continued by explaining the collaboration aspect. Software Nvivo 11 help to reveal the collaboration partern through comparison diagram.

Strategy and actor role

Triple helix concept emphasis to the important of the 3 (three) actors in strengthen the development of business. In context of SME cluster development of the rattan furniture in Cirebon regency, each has role:

Academic

  1. Identification program of new entrepreneur by local campus
  2. Human resources strengthening at cluster through design and invention development collaboration
  3. Institutional development of rattan design community through making of master kit of the product design by the higher education and involving executor from the design community
  4. Technical aid for the design development toward international scale industry
  5. Human resources provision in the accompaniment of rattan industry development planning
  6. Upgrading startup of rattan business to higher level through development and exhibition

Business

  1. Big factory become the host for SME to grow. Maklun pattern is one of development forms toward internationally growing SME
  2. Provision of production facilities for SME that ready to grow to higher level
  3. Big industry administration provision (borrow a flag) for SME which begin to export
  4. Implementation of coopetition concept, as the form to build and develop the smaller SME.

Government

  1. Funding for SME in increasing new entrepreneurs. Especially for SME which do not enter rattan cluster yet.
  2. Exhibition fund allocation for SME upgrading at national and international market
  3. Determination of rattan tourism area as effort to build creative village formation and rattan product branding
  4. Political will of government toward rattan industry through determined rattan as core competency of local industry
  5. Backward integration, done through communication with government of raw material producers (Kalimantan, Sulawesi, Sumatera)

Interaction among actors

Interaction among actors in triple helix has meaning how ABG component make synergy to build cluster. As cluster which grow with local superiority base (plait), actors role can not be seen at initial development. As existing factor, the local wisdom become the governmental decision base in determining rattan as selected alternative to be developed become cluster. Based on the superior product selection, then stakeholder cooperate in the collaboration form of cluster development, that is :

Academic business (AB)

  1. Relationship of academic development, through practice in company. Students apprentice at rattan industry
  2. Work visit as a relationship between higher education and business
  3. Various collaborative training done together by campus and government that have benefits for business world.

Academic-Government (AG)

Findings at rattan cluster in Cirebon regency showed the relationship between academic and government. The relationship between campus and government in the SME development occurred since long time. Bandung Institute of Technology (ITB) in 1970 intervened the rattan SME in Cirebon. Various cooperation between higher educations and governments:

  1. Upgrading skill. Introduction process of furniture since long time done by Bandung Institute of Technology (ITB). Upgrading skill process from plaiting skill of Tegalwangi society to industry through furniture product introduction.
  2. Appropriate technology introduction (shavings, gas regulator, steam). Revolution process become focus during collaborative accompaniment between campus and local government of West Java.
  3. Capacity building. Capacity strengthening continuity is directed to prepare SME that able to increase their class. Higher educations have knowledge, then the knowledge sharing is facilitated by government throug funding.

Effort to build “expectation” of Tegalwangi community as rattan center in 1970s by Bandung Institute of Technology (ITB), inline with the thing done in Tourism Village of Kebon Agung at Bantul Yogyakarta (Kuncoro, 2016).