155 CHAPTER 5 DEVELOPING SUSTAINABLE ENTREPRENEURS: A WAY FORWARD 5.0 Introduction 5.1 Factors to Develop Sustainable Entrepreneurs 5.2 Conclusion and way forward 156 5.0 INTRODUCTION This report highlights the importance of coordination and nurturing activities by government agencies, as well as their roles and responsibilities in ensuring the effective outcome of the activities. The primary actions, among others, relate to creating awareness on business opportunities, improve the supply of raw materials, developing appropriate technologies, enhancing on packaging and branding, improving funds availability, introducing SME university among the locals and, creating umbrella companies and cooperatives for better marketing channels of the local products. The study strongly recommends cooperatives as the way to run Sarawak’s Bumiputera business that falls in the category of micro, small and medium-sized enterprises. The roles of the government agencies need to be identified and coordinated to address the needs for skills training and development. Master trainers (mentors), and mentor-mentee programmes should be put in place, and government agencies are to assist in the promotion and commercialisation of both products and services. The inception of infrastructure development, ICT and R&D should be led by related government agencies in Sarawak and this includes participation from institutions of higher learning. The entrepreneurs themselves must be creative in ideas, optimistic, dynamic in thinking and action, equipped with knowledge and business skills, and ready to face challenges and risks. Problems pertaining to business must be dealt with efficiently in order to keep their business competitive, sustained and resilient to the unpredictable economic situation. Hence, a smart partnership is needed between the government, the private sector and entrepreneur communities to work together to develop and market the local products of Sarawak to a global market. This chapter is intended to briefly summarise some of the factors that will be important in developing successful entrepreneurs in the relevant clusters. The factors are explained in the next section. 157 5.1 FACTORS TO DEVELOP SUSTAINABLE ENTREPRENEURS Triple Helix (Government – Industry – Universities) 1. With smart Public Private Partnership (PPP), not only the industry will able to provide job opportunities at every level of the value chain (farming, plantation, transportation and processing), it will also be able to enhance economic activities in the rural areas. Hence, a smart partnership between the State Government, the private sector and the universities is pertinent for better livelihood and for socio-economic development as well as to increase entrepreneurial activities among the communities. This vision can only succeed if the private sector and the government build a capacity platform, while universities undertake the necessary research and development. The roles of the government are to; take on a supportive role rather than being direct player in • each industry, organise the industry, • develop agricultural extension, • acted as general promoter of the industry, and • set up a State research committee. • The roles of universities are to; undertake fundamental and applied research, • assist in technology scale up, • coordinate research through the state wide committee, • produce graduates who went into industry, and • conduct product, marketing, and entrepreneurial skill • development courses. The benefits of this approach will be: Coordinated research and development. • Effective farmers’ organisations. • Effective producer and marketer organisations. • A unified industry approach. • A research levy to assist industry growth. • Successful implementation of participatory action research. • A summary of this model adapted to Sarawak is shown in Figure 5.0 below Figure 5.0 : A summary of Potential Government-Farmer-University Nexus in Sarawak 158 With the involvement of the universities, many research and innovations can be done to improve entrepreneurial activities of our communities. Our local universities have invented numerous number of machineries that benefit our manufacturing sector. Some creations and inventions are for green economy development, renewable energy and for healthier lifestyle. “Going banana” is one example of green invention that creates wealth from waste which can be capitalised by our local entrepreneurs. Every part of a banana tree can be processed into viably commercial products. The “going banana” process is illustrated in Figure 5.1 and further explained in BOX 5.0. With research and development undertaken at the university level, our local resources can be turned into high value niche products. Another example, the is cassava-based product. The value chain and the potential of cassava-related industry are shown in BOX 5.1. BOX 5.2 shares the experience of Tasmania, where the government, the public and the university work together to develop the essential oil industry in Tasmania. Figure 5.1 : Going Banana. 159 BOX 5.1 Value change and cassava – based production Value change of cassava industry Various cassava – based production Source: Model Baru Ekonomi Luar Bandar 2011. Kementerian Kemajuan Luar Bandar dan Wilayah Malaysia BOX 5.0 Creating wealth from waste: “Going Bananas” Handmade paper is becoming a major component of cottage industry in Malaysia promoting community development through income generation activities providing directly as well as indirectly employment opportunities through new skill development. The basic raw material (banana trunk) is available in abundance and banana trunks from the farms are no longer agricultural wastes. Papers and products from banana would change the level of degradation of natural forest timbers and reduce on the current use of non-biodegradable plastic polythene papers providing a unique and reliable starting that would impact a positive commercial industrial demand for an environmentally safer source of raw material. The banana trunk is chopped into small pieces and cooked using soda ash (soaked in the water for 5 to 6 weeks to rot) and later cleaned under running water washing away the lignin and leaving behind the fibres. The fibres then beaten to pulp and dispersed into water in a vat. A sheet of paper is formed by dipping a mould deckle into the vat.The ‘mould’ is a rectangular wooden frame over which a screen stretches.The deckle, which fits around the mould, forms a raised edge preventing pulp from running off the mould during sheet forming. As the mould and deckle are raised out of vat, the water drains through the screen setting a layer of interlaced fibres on the mould and a wet sheet of paper is made. HANDMADE PAPER INTO CRAFT & SUSTAINABLE PRODUCT This handmade made paper later can be developed into several sustainable products. As to fulfil/realize the process (purpose), product designer play an important role as a mediator to translate the handmade paper into products such as lampshade, souvenir box, space partition, food packaging, paper bag and many more. Product designer will apply their creativity and innovative thinking (problem solving) as well as their model making skill in developing and translating their ideas into crafts and sustainable products. Source: School of Arts, Universiti Sains Malaysia 160 BOX 5.2 Lessons from the Farmer-Government-University Nexus in Tasmania Tasmania, an island in the southern tip of Australia, developed new rural industries by focusing on the synergies of a close relationship between Government, farmers and universities. The three parties sat down and discussed possible new start-up industries for the state. This unique relationship has successfully led to the establishment of lavender, Kunzea Ambigua, Mentha Piperita (peppermint), Tasmania Lanceolata, Boronia Megastema, and blackcurrant as successful essential oil crops, opium poppy (Papaver somniferum) for medical use, and pyrethrum as a natural insecticide. In addition, fresh Asian vegetables have been developed for the Australian market, and wasabi is exported to Japan. The relationship has also been responsible for developing herbal teas, herbal tourism, aromatherapy products, wine, native herbs and spices, and new crops. An outline of this special relationship in the Tasmanian essential oil industry is shown below. 2. Changing the domicile outlook of people in Sarawak One of the greatest hindrances to developing new entrepreneurs is their domicile outlook. Many rural people accept their existence and present livelihood as fate and are poorly motivated to change. This is the fundamental block preventing the creation of new entrepreneurs. Lack of ideas, education, and skills lead to a narrow mindset where a general feeling of powerlessness exists. This is further compounded by a general lack of resources, and a lack of access to markets. This leads to a general malaise and lack of will to do any new activity that may present risks to the self-esteem. This is one of the reasons of a growing rural unemployment or other economic activity. Nurturing future entrepreneurs must take into account peoples’ domicile outlook before standard entrepreneurship development programmes are introduced into the community Source: http://pkkmsarawak.blogspot.com 161 3. Logistic, Marketing and Promotion To assist in the sustainability and quality maintenance of the products, a well-developed logistics system must be made available. These efforts must cover, firstly, the local market, and progressively expand into regional and international markets. In the case of marketing, the number of sales outlets must be increased, together with the creation of effective websites. In order for the above to succeed, effective marketing policies and logistics systems need to be put in place. Assistance in terms of advertisement and promotion is required from government agencies, particularly in getting market information and training on how to promote and market in a more effective manner. In addition, special training programmes on how to use the internet to promote and advertise products are direly needed. 4. Capacity building The niche of Sarawak itself is its diversity of cultures and its rainforest. The dominant Bumiputera ethnic group in Sarawak is the Dayak, which comprises of the Iban (Sea Dayak) and the Bidayuh (Land Dayak). Many of the Dayak people, especially in the rural areas, are living in longhouses. The longhouse is the centre of communal life in Sarawak. There are about 4,500 longhouses in Sarawak. Some of the longhouses can accommodate up to 100 households in separate units of compartments all under one roof. Leveraging on this setting, the SME university concept is very practical to implement in order to build up skill competencies and capacities of the longhouse dwellers without much support from the government. The action priorities are to build the skills competencies and capacities of entrepreneurs. This must be reflected in any entrepreneurial education produced through the SME university. These include both entrepreneurial and technical skills and competencies as shown in Figure 5.2. Any cluster of F&B, handicrafts and homestay is only as good as the individuals within 162 it, so building these competencies are of paramount importance. One important factor in enterprise success is the ability of a firm to change its capabilities, applications of its capabilities, or develop new capabilities when needed. The ability to redeploy capabilities is paramount to opportunity exploitation. To enhance dynamic capabilities of Sarawak enterprises, education and training programmes must be relooked and enhanced. Please refer to Appendix A2.3 on training for the homestay sector. Figure 5.2 : The basic skills and competencies required by entrepreneurs. 5. Finding Champions To build the capacity of the longhouse dwellers, champions should be identified, tapped and developed. Then, these champions will reach out to their community for knowledge sharing and skills development. For example, if there is one longhouse resident whose potentials can be developed to lead all the longhouse dwellers in craft-making or food product innovations, it is convenient for him/her to organise the intact community.The champion will have better understanding with the locals and he/she also knows the niche and strength of the village/kampong. Thus, it will be easier for the champion and communities to work together to develop their own local products/homestays. This champion does not have to waste time going around a scattered area disseminating information to train his/her fellow longhouse inhabitants. The champions can be honed to lead the longhouse and other Sarawak communities’ development and welfare for them to become self-reliant. For instance, they can together put up a cooperative of their own so that they will not have to rely on outside sources for loans, support and welfares. 163 The former head of the Australian Rural Industries Research and Development Corporation (RIRDC) who was the author of “Thirty Australian Champions” stated that all new rural industries in Australia were started by champions and not by large corporations or government. Value on the Australian land is being created through the diversity of activities. Neighbouring farmers tend to complement rather than compete with each other. Farmers’ associations are very important in disseminating information, and local universities play and important extension role in the community. The key here is that researchers and government agencies may have certain ideas for developing Sarawak, but if these views are not shared and embraced by local entrepreneurs, chances are new products, start-ups and industries will never emerge. It is the entrepreneur who should put all these things together and creates a new enterprise. Thus, the whole focus of any initiative should be to find and nurture champions. Excellent Bumiputera Entrepreneur Award 2013, Sarawak Source : http://www.theborneopost.com/2013/11/15/consider-property- devt-taib-advises-bumi-entrepreneurs/#ixzz2olkchF00 6. Business models It is not just sufficient to achieve new business start-ups to create a sustainable cluster. Each new business must have a novel and effective business model. Creating the right business model is the core of any strategy. The business model is an enabling platform for any company to launch its product and develop a market. Consequently, the SME university programme and other entrepreneurship education must focus on assisting new entrepreneurs understand the importance of creating and developing appropriate business models. Business models assist in enabling new pivots of value in a market or in achieving new forms of organisation that will facilitate business activities. Where product is on small-scale and fragmented in a situation where no micro-SMEs will be able to take advantage of the market opportunity by themselves, the formation of a cooperative with a common shared brand is useful for building up bargaining power. Figure 5.3 : The business model template 164 The above business model template can assist new entrepreneurs configure their new business effectively. Entrepreneurs can soundly identify what the opportunity they wish to exploit as the foundation of what they intend to do. From any identified opportunity, the entrepreneur can determine his/her vision and objectives about what he/she wishes to achieve. Then he/she can go on to identify and configure the necessary resources, networks, technologies, customers, and capabilities he/she needs and who will be the key stakeholders. He/she can define what he/she key activities will be and then identify the channels and revenue streams he/she requires to make the business viable. This requires developing a value proposition and determining the fixed and variable costs of what is to be done. Finally, strategies can be identified. It must be recognised that strategy is not something that can be determine and solidified before entering any market. Strategy should be seen more as something that needs review and refining as a business goes along its journey (see Figure 5.4). Therefore the concept of understanding that strategy is something flexible should be an important aspect of entrepreneurial education. Strategy is about trial and error, trying different things until one finds out what works and does not work. It is an effectuation process that involves experimenting with all aspects of the business model. Figure 5.4 : Strategy is an incremental journey 7. Channels of Distribution and Clusters To create a successful cluster and develop niches for the various enterprises within the cluster, the channels of distribution are vitally important. Basically, the more channels of distribution are available to exploit, the less risk there is for market failure. Multiple channels of distribution also enhance the potential for higher sales volume from the developing cluster. Any cluster development with many start-ups must maximizes the potential channels of distribution available, and the agencies have a major role to facilitate this, especially in organising road shows and other special sales events. The octopus diagram in Figure 5.5. below depicts the Thailand OTOP channel of distribution, which can be replicated by Sarawak. A multi-faceted programme with different levels and strategies to facilitate the viability and exposure of products that Sarawak enterprises produce must be developed. Figure 5.5 : Distribution channel strategy 165 8. Appropriate technology One of the misconceptions about new start-ups is that new costly technology is often required. As a consequence, we believe that developing new entrepreneurs is more difficult than it really is. However, this can be a great misconception. Thinking of simpler ways to do things is a way of lowering capital requirements and carving out a niche for an SME start-up. Too many companies are ambitious, spending lots of money on plant and equipment, when some ingenious thinking could enable the building of the same equipment on a more appropriate scale. Traditional frying vs. vacuum fry machine technology The meaning of the word technology is doing something in a new way. This is all to it. There is really nothing complex, just the act of thinking simplistically in order to solve many technology problems. With creative thinking many entrepreneurs can enter new businesses through developing their own plant and equipment at a fraction of the cost it would be to purchase a full plant from an equipment supplier. However, when reaching certain levels of production and expansion of production, a better technology is needed to increase the capacity of production at a wider scale. For example, the Pertubuhan Peladang Kawasan (PPK) Paya in Perlis provides a vacuum fry machine and modern machineries to support the production of crisps in the local communities.These modern machines are placed at the PPK Paya for the use of local entrepreneurs to produce a variety of agro-based crisps such as pineapples, tapioca, banana, mushrooms, jackfruits, papaya and apples. The crisps produced by participants (entrepreneurs) from PPK Paya have reached local and international markets. IADA of Samarahan can serve the same function to develop the local communities in crisps and beverage productions. BOX 5.3 The Emergence of a Cluster - The Australian Aboriginal Art Example One example of a successful cluster developed in the 1960s is the Aboriginal dot painting. Dot paintings represent secret rituals and ideas of the Aboriginal people from the “Dreamtime”. These drawings used to be painted on rocks but started being painted on canvass by a small group of painters in the Northern Territory, through the encouragement of Rex Batterbee, an Australian painter. An example of an aboriginal dot painting and a dot art artist Some of these paintings found their way to exhibitions in Melbourne, Sydney, Brisbane, Perth and Adelaide and one of the designs found its way onto the Australian One Dollar note in 1966. Over time Aboriginal dot paintings grew in popularity and began to become a collector’s item. Art dealers soon travelled to community centres in inland Australia to purchase and trade them. Today the Aboriginal dot painting “industry” is centred around a number of cooperatives producing them in Central Australia and worth more than AUD 1 Billion per annum in sales with some individual paintings being sold for more than AUD $500,000. 166 Products of Pertubuhan Peladang Kawasan (PPK) Paya, Perlis. 9. Changing Production Protocols – HALALGAP In the late 1990s, the European supermarket chains and major supplier in the European Union introduced EurepGAP to set the standard for farm management and protocols for the food market. The EurepGAP is a private sector body comprising of retailers, farmers, and relevant people from the service side of agriculture, in what is espoused as a partnership of agricultural producers and retailers for the setting of voluntary standards for the certification of agricultural products. Good Agricultural Practice (GAP) originated around a decade ago by European retailers and standard bodies. It started when consumers developed a concern for safety issues, environmental and labour standards along the supply chain. This led to the EUROGAP protocol that concerns with risk assessment, risk management, and risk contamination of food. It incorporates Good Manufacturing Practice (GMP) and Hazard Analysis and Critical Control Points (HACCP) protocols. Figure 5.6 : EurepGAP Principles The GAP is basically a number of agreed principles set in agreed and certifiable terms applying to farm production processes that result in safe and healthy food and non-food agricultural products.These principles take into account economic, social and environmental sustainability, as well as social and community cultural practices, with the objective of developing natural resources. However, these principles set out a framework of understanding production issues from a sustainability viewpoint. It comprises planning, reviewing, monitoring, and record-keeping for each stage of the production process. This framework should provide farmers with the ability 167 to identify problems and issues and modify practices, according to changes in conditions. With the establishment of Tanjung Manis Halal Hub (TMHH), Sarawak could use its incumbency to develop itself as the premier producer of Halal products. TMHH can take advantage by pushing the boundaries of the competition to new paradigms through widening the concept of GAP to include all the aspects of Halal and Toyyib under a new HALALGAP certification. This would not only create a new protocol but become integrated into branding as well. This provides the potential scenario that; 1. creates wildly successful differentiation, 2. makes customers “adore” Sarawak products, and 3. makes Sarawak’s initiatives difficult to imitate. 5.2 WAY FORWARD The spirit of entrepreneurship is alive and well in Sarawak. But this entrepreneurship is not the same that traditional textbooks describe. Entrepreneurship throughout Sarawak has more to do with life and wellbeing, than seeking to develop high growth SMEs. To think of entrepreneurship like that and try and achieve this frame upon Sarawak society at this time would lead to only some spasmodic successes. There is a need to redefine the concept of entrepreneurship as the narrative of life rather than see it only in terms of business activity. This is not saying that Sarawak is without its high growth entrepreneur success stories. In Sarawak, one needs to look both at the individual and community at the same time, and recognise the inter-relative importance. In many cases success will come from strong individuals who become champions, but the success of building any naturally growing 168 sustainable cluster will depend upon the community following. The SME university, coupled with personal mentoring are seen as important drivers to reach the communities. Programmes extending out into the community must follow community frames and narratives to be successful. Definitions of success need to accommodate the special situation within Sarawak. Market fragmentation, small markets and the vast distances some entrepreneurs live from major population centres are handicaps Sarawakians face. The special geographical and logistical issues facing Sarawak also have to be considered, with Sarawakian solutions utilised. The first stage of entrepreneurship development in Sarawak should be focused on creating diversity of activity across a growing number of micro-SMEs and consider this a major success if achieved. The success of this recommended programme will be the extent to which the principles of enterprise are absorbed into the community narrative. It will be the new gerai selling rolled ice cream or sushi along the Sungai Sarawak, the bead crafts people selling their products at the market, and the new homestay ventures with exciting adventure opportunities for visitors will signify success. Sarawak must find success on the terms of what Sarawak is today, and not wishful thinking, trying to conform to national expectations. A specifically tailored Sarawak approach has the greatest chance of succeeding. There are many examples of success throughout the ASEAN region. All these successes have something in common.They have their own unique driving forces, each region adopting a unique approach to entrepreneurial development. The drivers of success already exist in Sarawak.They are the existing champions within the homestay sector, the champions in the food production and processing sectors, and those trying to establish Sarawak handicrafts on the international market. There are signs of indigenous appropriate technology on the ground here in Sarawak and certainly successful business models utilising unique branding paradigms. “The spirit of entrepreneurship is alive and well in Sarawak” 169