In Indonesia-through the Eyes of a Foreigner •A note
Management -problems in any environment could be discussed relative to the particular type of enterprise ;public or private ,foreign or domestic, large or small, manufacturing or Otherwise ,etc. Another would be in terms of management activities; decision making, delegation of authority, organizational structure, decentralization, etc. Lacking space allocation and the depth of research required to discuss management problems in the detail the above would require, the author rather limits discussion to specific; problem heading that wilt often overlap many of the above mentioned distinctive categories. In general sense, a manager in Indonesia faces the same problems as a manager elsewhere: how to effectively accomplish objectives given available resources and operational environment. Having said that, one can immediately go found point out that Indonesian-human and other resources as well as objectives differ from those elsewhere. SQ there will be similiarities and differences and it will be the latter to Which most attentions given in the following discussion. Government influence in management decisions must be taken into account both in market oriented United States and in socialist Russian pattern. This influence brings regulation both in the United States and Indonesia but with a weaker set of institutions in the latter to make the controls unifform1y effective. thus, compared to • the Unite States, managers in Indonesia face a greater degree of uncertainly. There is a tendency in both countries for management to minimize the economic impact of control but through formal procedures the outcomes are predictable in the United States. For Example, American management finds legal loopholes by which taxes can be reduced and they will press the law 'to be limit in minimizing taxation. But in Indonesia, often much more uncertainty is involved with tax assessment more frequently the result of negotiation. Similarly, when official enforcement channels are weak, the degree of effective regulation will vary 'depending upon managements' ingenuity. For managers in Indonesia,. uncertainty has other distinctive aspects that contrast with- th6se faced n many other countries ,business and economic forecasting can be made only with a much wider probability of error. It is more often necessary in Indonesia for management to conduct its own surveys for market analysis, either because location formation may never have been assembled or available information may be too unreliable. Such uncertainties suggest that succesfull Indonesian managers must be ready constantly with a set .of alternative strategies to provide operational flexibility when forecasts prove defective.
Related to uncertainties but somewhat different are the problems associated with accounting practices in Indonesia. How does management live with the multiple set of books often resorted to by businesses in Indonesia? These may be considered important in tax negotiations, but how can they be explain to creditors. Can a manager show the real set of books to his banker ? And, if not how can the banker have the confidence to finance business ? where business equity is held within a family circle, family finance may negate the need for bank finance. But this then can frequently place a limit on entreprise growth.
Given the high levels of inflation experienced in Indonesia in recent years,t he management is faced with other extraordinary accounting decisions. How is the inflation level to be incorporated in depreciation schedules? And What does this mean relative to holding of inventories and levels of debt and accounts receivables? Where the real value of many may change 15 or 20 percent annually, funds for capital replacements most take this into- account ,borrowing will be preferred over lending, while inventories of real resources that can...