Being Aware of Cultural Differences ​​in Implementing GCG – Part 2

Being Aware of Cultural Differences ​​in Implementing GCG – Part Two
Image by Akeyodia Business Coaching Firm on Unsplash

By Ridwan Zachrie

This is the second part of a series of blogs around the importance of developing Good Corporate Governance (GCG) with Indonesian values for MSMEs in Indonesia.

In this post we’re going to look at how important it is to be aware of cultural differences when implementing GCG and how western values can often fall short if they don’t take this on board.

This might sting a bit, but we don’t always need to look at western concepts and treat them as absolute truths, especially when it comes to somewhere as culturally diverse as Asia. A western-style democratic system, for example, was exported around the world but actually turned out to be ineffective in many cases and often led to chaos because of the lack of cultural understanding and differences in perception.

In my humble opinion, different countries have to adapt and develop concepts arriving from different countries to best suit their own unique cultural identities. With regard to GCG, Indonesian culture leans towards being mainly focused on the MSME sector.

When Asian countries implement ‘democracy’ in their own way, there’s a tendency for western observers to accuse them of not being fully democratic. Why? Because if it’s not rolled out in the same ‘Western Way’ it’s not considered to be intellectually right; it’s certainly not considered to be efficient and it’s definitely just not the best way to do it.

This point isn’t limited to the concept of democracy – it can also apply to GCG, so let’s have a look at some Western failures around GCG.

When global financial corporate giants like Bear Stearns collapsed, the big question was why did this happen?  Bear Stearns was created in 1923 and grew to be one of the world’s most important financial institutions before it folded in the global financial crisis of 2008.

Vanity Fair magazine went in to some detail around the fall of Bear Stearns, who focused on bond trading and were very experienced in developing various investment products that suited specific market profiles and desires.  Nevertheless, the company, which had a legion of high-profile professionals with USD 8-billion in cash reserves had to fight desperately to stay afloat, even requiring a bailout from the United States government of more than USD 30-billion in just a few weeks.

So, what went wrong?

Was it just a matter of careless management or was it because the global economic situation was entering gloomy times?  Could it be true that the financial crisis was caused by the world’s financial industry being complacent and not anticipating the signs of an impending crisis or because laws and regulations were being manipulated?

How should global markets have responded to this?  It’s important here to acknowledge that we must be able to use this sort of momentum to learn from events that occurred and reflect on them by changing bad habits when conducting our own business activities.

Where to start?  As a first step, although we are still waiting for the results of the investigation related to the crisis in the United States, what is actually more important is for us to look within, because as a nation, Indonesia was complacent in its response to the Southeast Asian financial crisis in 1997, as well as other major issues such as the fall of business giants such as Enron, WorldCom, and Arthur Andersen.

Valuable lessons can be learnt when we make mistakes and in understanding those lessons we should be able to grow and be better and become part of a good corporate society (ie. become good corporate citizens) as well as develop skills and understanding to be vigilant and anticipate problem areas in the future.

So far, Indonesia has taken for granted the fact that globalization means open competition involving the entire world business community, which then leads us to an increasingly complex business environment, when a crisis can occur at any time and impact everybody. The Southeast Asian financial crisis, as well as the cases of Enron and Arthur Andersen, for example, should serve as warnings reminding us of the important role and benefits of implementing GCG correctly.

Unfortunately, many companies still do not see GCG as something they need to be worried about, despite many past events clearly showing what can happen if this is ignored or not given the importance it should.  Most still use GCG more as a means of public relations or a promotional tool to claim that their company already has, and implements, good corporate governance; it’s more for show than substance, like compiling beautiful GCG Implementation Reports, to give the impression that they’re also implementing GCG correctly.

The benefits of implementing GCG can be summarized as follows:

First, GCG can assist corporations to build habits to seriously encourage the development of the company while maintaining the soundness of the company and to realize the importance of understanding market situation and the environment in which the company operates properly. In addition, GCG also encourages us to understand and uphold the interests of employees and shareholders.

Second, GCG helps CEOs and professionals to understand challenges and creatively turn challenges into opportunities.

Third, GCG helps company executives to naturally form a strong culture of discipline and to be careful and sustainable in planning.

Some time ago, when the international media reported on the difficult conditions faced by one of the giant automotive companies in America to be able to save themselves from the impact of the financial crisis, the Japanese automotive giant Toyota, as reported by the Asian Wall Street Journal, actually recorded a profit increase of 17-percent.  While many companies were struggling to survive due to higher production costs, Toyota was busy calculating profits from its sales revenue.

Many financial experts believe that the main factor underlying Toyota’s success was its long-term commitment to seeing GCG implementation as a discovery process, which it then carried out for profit.  Long before the GCG trend was voiced by politicians or financial experts, Toyota had started it as a core value written on every employee’s wall.

It would be a shame if the bad experiences that happened to Enron, Worldcom, Arthur Andersen, and Bear Stearns were not enough to make us more aware to immediately review the seriousness of implementing GCG.  If we’re still thinking about the right time to implement GCG or even planning to postpone it, perhaps an even bigger crisis is needed to wake us up.

Stay tuned to Part 3, which will be looking at building and developing your own GCG values.

 

Latest Article
Minister: Longest Elevated Railway on Track for September
Indonesia’s Transportation Minister, Budi Karya Sumadi, said in a statement on Saturday (13/4/24,) that...
Ministry: Eid al-Fitr to Fall on April 10
According to reports from Tempo and Antara News, Indonesia’s Ministry of Religious Affairs has announced...
Minister: Pope Francis to Visit Indonesia in September
Indonesia’s Minister of Religious Affairs, Yaqut Cholil Qoumas, announced on Sunday (31/3/24,) that Pope...
Indonesia Explores Opportunities to Host 2036 Olympics
According to reporting from Tempo, Raja Sapta Oktohari, Chairperson of The National Olympic Committee...
Tax Incentives to Spur Use of Electric Buses
Vietnam’s VNExpress is reporting that Indonesia’s Ministry of Finance recently announced tax incentives...

Andrzej Barski

Director of Seven Stones Indonesia

Andrzej is Co-owner/ Founder and Director of Seven Stones Indonesia. He was born in the UK to Polish parents and has been living in Indonesia for more than 33-years. He is a skilled writer, trainer and marketer with a deep understanding of Indonesia and its many cultures after spending many years travelling across the archipelago from North Sumatra to Irian Jaya.

His experience covers Marketing, Branding, Advertising, Publishing, Real Estate and Training for 5-Star Hotels and Resorts in Bali and Jakarta, which has given him a passion for the customer experience. He’s a published author and a regular contributor to local and regional publications. His interests include conservation, eco-conscious initiatives, spirituality and motorcycles. Andrzej speaks English and Indonesian.

Terje H. Nilsen

Director of Seven Stones Indonesia

Terje is from Norway and has been living in Indonesia for over 20-years. He first came to Indonesia as a child and after earning his degree in Business Administration from the University of Agder in Norway, he moved to Indonesia in 1993, where he has worked in leading positions in education and the fitness/ wellness industries all over Indonesia including Jakarta, Banjarmasin, Medan and Bali.

He was Co-owner and CEO of the Paradise Property Group for 10-years and led the company to great success. He is now Co-owner/ Founder and Director of Seven Stones Indonesia offering market entry services for foreign investors, legal advice, sourcing of investments and in particular real estate investments. He has a soft spot for eco-friendly and socially sustainable projects and investments, while his personal business strengths are in property law, tourism trends, macroeconomics, Indonesian government and regulations. His personal interests are in sport, adventure, history and spiritual experiences.

Terje’s leadership, drive and knowledge are recognised across many industries and his unrivalled network of high level contacts in government and business spans the globe. He believes you do good and do well but always in that order. Terje speaks English, Indonesian and Norwegian.

Contact Our Consultants

[wpforms id=”43785″]

Ridwan Jasin Zachrie

CFO of Seven Stones Indonesia, Jakarta

Ridwan is one of Indonesia’s top executives with a long and illustrious career in the financial world. He holds several professional certifications including being a Certified Business Valuer (CBV) issued by the Australian Academy of Finance and Management; Broker-Dealer Representative (WPPE); and The Directorship Certification for Directors and Commissioners, issued by the Indonesian Institute of Commissioners and Directors.

His experience includes being the Managing Director at one of the top investment banking groups in the region, the Recapital Group, the CFO at State-owned enterprises in fishery industry and the CEO at Tanri Abeng & Son Holding. He’s also been an Independent Commissioner in several Financial Service companies and on the Audit and Risk Committee at Bank BTPN Tbk, Berau Coal Energy Tbk, Aetra Air Jakarta as well as working for Citibank, Bank Mandiri and HSBC. His last position was as CFO at PT Citra Putra Mandiri – OSO Group.

Ridwan has won a number of prestigious awards including the Best CFO Awards 2019 (Institute of Certified Management Accountant Australia-Indonesia); Asia Pacific Young Business Leader awarded by Asia 21 Network New York USA (Tokyo 2008); UK Alumni Business Awards 2008 awarded by the British Council; and The Most Inspiring Human Resources Practitioners’ version of Human Capital Magazine 2010.

He’s a member of the Board of Trustees of the Alumni Association of the Faculty of Law, Trisakti University, Co-Founder of the Paramadina Public Policy Institute and actively writes books, publications and articles in the mass media. He co-authored “Korupsi Mengorupsi Indonesia” in 2009, which helps those with an interest in understanding governance in Indonesia and the critical issue of corruption. Ridwan speaks Indonesian and English.

Per Fredrik Ecker

Managing Director of Seven Stones Indonesia, Jakarta

Per is the Managing Director of the Seven Stones Indonesia (SSI) Jakarta office and has more than 25-years’ experience in Indonesia, China, and Western Europe. He previously worked in senior management positions with Q-Free ASA, Siemens AG, and other companies in the telecom sector. Over the last six years, he has been the Chairman of the Indonesia-Norway Business Council (INBC) and recently become elected to be on the board of EuroCham Indonesia.

His most recent experience is within Intelligent Transport Solutions (ITS), Telecom, and other sectors within the Indonesian market. He is today through his position in SSI and by representing Norway Connect, promoting Nordic and European companies that would like to explore business opportunities in the Indonesian market. He’s also playing an active role to help create the Nordic House concept in Jakarta that will provide an excellent platform for Nordic companies entering Indonesia, where they’ll find a community that can offer support with trusted information and affordable services to enter this market.