PUMping business
Albertus Weldison Nonto | May 09, 2011

Free business advice might sound too good to be true, but a pioneering Dutch NGO is providing just that. Globe Asia looks at how PUM is boosting small businesses in Indonesia.  PUM is a Dutch NGO that specializes in helping business and economic organizations thrive.

Thousands of experts have worked for it since it was founded 70 years ago and the NGO has helped thousands of small and medium enterprises (SMEs) in the process. What’s most remarkable is that it performs the service for free.

PUM’s trade sector coordinator Ben Suidman says the Dutch government aims to provide assistance to SMEs to create jobs and reduce poverty in the countries that need it the most. For him and others at PUM, it is a pleasure to assist SMEs around the world and provide them with technical and expert knowledge in their respective fields.

Ben, for example, is a former top executive from Hunkemöller, a European lingerie chain. When he first started with the company it had more than 300 outlets across the region, but when he left there were more than 500. More than 3,000 applicants visit the PUM head office from around the world each year. This year, there are at least 2400 projects – PUM calls them missions – across the globe.

In his time with PUM, Ben has so far worked with retail and trading companies in Russia and Africa and Saqina.com, an online Indonesian trading company.  “We give more or less the same help to businesses we assist,” he says.  

The strategy

Ines W Handayani, CEO at Saqina, believes that PUM's assistance allowed her to reformulate her company’s business goals and strategies. PUM’s experts shared their knowledge and helped her think about the future of the company in a strategic way. After PUM’s input, the company will now manage soaring demand during the fasting season by improving its management of suppliers.

PUM representatives work like business consultants, starting with a three-day questioning session followed by an assessment before they draw up a five-year business plan. Ines says that Ben, as the PUM expert, helped her dream big but ensured her goals were underscored by sound management.

What the company has gained in terms of strategic planning is invaluable, she says, adding that the financial assistance was crucial to helping the business grow rapidly. However, she does warn that the local context should also be considered as different social and cultural situations warrant different business decisions.

PUM in Indonesia

Sixty PUM projects have operated in West Java over the last there years. Agung Irianto, a local representative for Bandung, says PUM projects in the area are related to SMEs in textiles, milk production and its related industries such as cheese and butter production, as well as retail, hotels and even tourism.

“PUM wants the companies it works with to achieve success, but at the outset its main goal is to change the mind-set and motivation of clients to make their businesses better. This in turn can impact sales positively and help grow brand image. “In terms of changing mind-set and motivation, I would say that 99% of PUM's programs have been successful in this area,” says Agung.

One milk cooperative that previously produced 40 tons per day has increased its production with PUM’s help and has even diversified into producing butter in partnership with a local bakery. The bakery no longer needs to source butter and now saves Rp15 billion a year so both businesses are happy. Quoting company sources, Agung says the bakery is convinced it will become the second-largest producer of butter in the country in terms of volume and quality.

Irfan Affandi, a PUM local representative from Jember, East Java, adds that experts at the NGO prefer to share their experience rather than dictate plans. Condito Agro, a small company in Pasuruan is another PUM success story.  The chrysanthemum seed business faced low productivity and suffered from poor marketing, but after a series of discussions the company sent its laboratory head to the Netherlands to learn tissue technology production.

The move resulted in product failure dropping from 30% to a mere 2% Another milk cooperative in Nongkojajar, Pasuruan, sought PUM’s advice on solving a price disparity between production and selling costs. In this case the buyer, Nestlé, was only willing to pay production costs.

To solve the problem PUM recommended the cooperative sell processed milk directly to consumers to make up for the shortfall. In addition to helping business organizations, PUM has also encouraged the local government in Jember to promote micro-finance programs. There are currently 300 micro-financing institutions in the region and there presence is significantly reducing poverty.

Free advice

PUM experts come free of charge. However, there are some minimum requirements for businesses to be eligible for PUM assistance. They must have been running for more than three years, must generate between $100,000 and $1 million in revenue and have a minimum of 15 employees. PUM services are unique but it is not the only organization of its kind.

The Australian government has Australian Business Volunteers and the British government funds British Executives Overseas, both with similar goals to PUM. “More or less these organizations have the same objective; to help organizations, especially economic organizations, grow and in return help developing countries solve unemployment problems and reduce poverty,” says Ben.

In Indonesia, PUM is assisted by local representatives who help businesses with their PUM applications and identify businesses that could benefit from its assistance. GA          

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