6 - Indonesia Case Study IAA-IPB - pdf-1417801908

Agribusiness Incubation:
Good Practice Assessment

and Training Module
IAA-IPB
Incubator for Agribusiness and
Agroindustry – Agricultural University
Bogor, Indonesia
CASE STUDY
Prepared for infoDev by
Agrifood Consulting International
In association with
Economic Transformations Group
Agribusiness Incubation: Good Practice Assessment and Training Module –
Incubator for Agribusiness and Agroindustry Bogor Agricultural University (IAA-IPB)
INCUBATOR FOR AGRIBUSINESS AND AGRODINDUSTRY

AT BOGOR AGRICULTURAL UNIVERSITY (IAA-IPB)
TABLE OF CONTENTS
1 BACKGROUND AND CONTEXT ................................................................................................... 8

1.1 GEOGRAPHIC CONTEXT, PRIMARY SERVICE DOMAIN, AND PRIMARY CUSTOMERS ...... 10
2 TYPE OF INCUBATOR AND STRATEGIC VISION ........................................................................ 11
2.1 STRATEGIC VISION, MISSION, AND TARGETS .................................................................. 11
2.2 INCUBATOR’S DISTINCTIVE FEATURES............................................................................. 11
2.3 Networks and Partnerships ............................................................................................. 12
2.3.1 Inside Sources (within IPB) .................................................................................... 12
2.3.2 Outside Source (outside IPB) ................................................................................. 13
3 APPROACH TO INCUBATION .................................................................................................... 14
3.1 SERVICES PROVIDED ........................................................................................................ 14
3.2 INSTITUTIONAL SET-UP .................................................................................................... 14
3.2.1 Governance............................................................................................................ 15
4 BUSINESS MODEL .................................................................................................................... 17
4.1 OVERVIEW ....................................................................................................................... 17
4.1.1 Capital Assets and Facilities ................................................................................... 18
4.1.2 Cost of Services Provided ...................................................................................... 18
4.1.3 Some Key Lessons from the Incubator Management ........................................... 18
4.2 STAFFING ......................................................................................................................... 19
4.2.1 Leadership ............................................................................................................. 20
5 OUTCOMES AND RESULTS ....................................................................................................... 21
5.1 OUTCOMES AND IMPACTS ACHIEVED ............................................................................. 21
5.1.1 Impacts of the Incubator on Policy and Society at Large ...................................... 22
5.2 GOALS MOVING FORWARD ............................................................................................. 25
5.2.1 Post Graduate Affiliation ....................................................................................... 25
5.2.2 Expansion of Focus ................................................................................................ 25
5.2.3 Management Issues ............................................................................................... 25
6 SUMMARY AND CONCLUSIONS ............................................................................................... 26
6.1 CRITICAL SUCCESS FACTORS ............................................................................................ 26
6.2 LESSONS LEARNED AND IMPLICATIONS FOR AGRIBUSINESS INCUBATORS .................... 26
APPENDIX 1. MISSION PROGRAM – VISIT TO IAA-IPB ............................................................. 28
APPENDIX 2. PERSONS MET...................................................................................................... 29
APPENDIX 3. FUND RAISING FOR THE IAA-IPB......................................................................... 30
APPENDIX 4. SELECTION AND GRADUATION OF INCUBATEES ................................................ 31
APPENDIX 5. BOARD AND STAFF .............................................................................................. 34
Personnel costs ............................................................................................................................ 35
Remuneration system / motivation system ................................................................................ 35
Future need for personnel ........................................................................................................... 35
APPENDIX 6. SALES OF INCUBATEES OVER 2008-2010 ............................................................ 36
APPENDIX 7. SUCCESS STORIES ................................................................................................ 37
APPENDIX 8. LEAFLET OF ERDC AND INCUBATOR IAA-IPB ...................................................... 48
Agrifood Consulting International (ACI) in association with Economic Transformation Group (ETG) 2
ABBREVIATIONS
Acronym Explanation
AABI Asian Association of Business Incubations

AIBI Association of Indonesian Business Incubators
APIN Asia Pacific Incubation Network
BMG Bogor Municipal Government
BULOG National Logistic Agency
CME Coordinating Ministry of Economics
ERDC Entrepreneurship Research and Development Center
IAA Incubator for Agribusiness and Agroindustry
IAA-IPB Incubator for Agribusiness and Agroindustry , Bogor Agricultural University
ICMSME Innovation Center for Micro and SMEs
IPB Bogor Agricultural University
IT Information Technology
LPM Institute for Community Services
LPPM Institute for R&D
MCSME Ministry of Cooperative and Small Medium Enterprises Development
MNE Ministry of National Education
MOA Ministry of Agriculture
MOH Ministry of Health
MOI Ministry of Industry and Trade
MOL Ministry of Labor
SME Small Medium Enterprise
UNDP United Nations Development Programme
PREFACE
This case study is based on a mission conducted by Francesco Goletti and Nguyen Thi Thu of
Agrifood Consulting International (ACI) to Bogor. The mission was facilitated by the generous and
extraordinary talented team of the Incubator for Agribusiness and Agroindustry Agricultural
University of Bogor (IAA-IPB) and including Professor Dr. Hadi K Purwadaria (Senior Advisor and
previous founder and Manager of the IAA-IPB between 1995 and 2008), Mr. Deva P. Almada
(Assistant Manager Program) , and Mr. Asna Jauhari (Assistant Manager Resources).
During the visit to the incubator (February 12-18, 2011), the ACI team had the opportunity of
meeting numerous incubatees and stakeholders, both in Bogor and other localities in West Java.
Professor Hadi and his colleagues organized a mission which was extremely useful. A video team
accompanied the mission between February 13 and February 17 both in Bogor and other
locations in West Java.
The Mission had the opportunity to meet with the senior managers of the IAA-IPB and the related
institutions that govern the incubator, including the Director of the Institute of R&D and the
Rector of the University. The Mission also witnessed the inauguration of the new incubator
building on February 13, 2011.
The mission would like to thank all the incubator staff and in particular Professor Hadi and Mr
Deva P. Almada for their full support and assistance during the entire duration of the mission.
Special thanks go to all the incubatees who have contributed generously with their time and
made the visit a delightful learning experience.
Francesco Goletti
SUMMARY
1. Since 1995, the Incubator for Agribusiness and Agroindustry at the Bogor Agricultural
University (IAA-IPB) has assisted a number of small and medium enterprise (SME) startups to
grow and mature into sustainable enterprises. The incubator is part of the Bogor Agricultural
University, located in West Java, Indonesia.
2. The incubator’s small and dedicated staff has assisted over 80 enterprises, of which 30 have
already graduated. The incubator initial focus was on agribusiness and agroindustry only. More
recently, since 2009, IAA-IPB has started to expand its focus to include handicrafts, IT, textile, and
leather while utilizing the innovation of green technology to the greatest possible extent. This
shift of focus is the result of a request by the Bogor Municipal Government and the perception
that no other institution in Bogor provides similar incubation services. More than 70% of the
incubatees will however remain from the agribusiness/agroindustry sector.
3. The services provided by the incubator include access to office space (for the resident
incubatees), and infrastructure (including meeting and training rooms, processing equipment and
plants, labs), research and technology services, advisory and business development services,
training, networking with business community and financial institutions, facilitated access to
promotional programs such as credit programs at subsidized interest rate.
4. Services are provided on a one to one basis for the entire period from acceptance into the
incubator program until graduation, a period taking about 3 to 4 years. After graduation, the
incubator management keeps relation with many of the graduates and keeps on providing
assistance on a mutually beneficial basis. The most successful graduates are introduced to new
incubatees and provide a role model; successful graduates by enhancing the image of the
incubator also help the incubator promote its activities.
5. The incubator management has been very careful over the years to ensure self-sufficiency
and the capacity of continuing operations. Starting with modest grants from the Ministry of
Cooperatives and SME Development (MCSME) and the Ministry of National Education (MNE), the
incubator has been able to support its own staff and activities. In particular, it has been able to
facilitate access to credit for most of its incubatees, and provided training and advisory services
through its own staff and the faculty of the university. The incubator has been successful in
ensuring a large percentage of its incubatees to perform satisfactorily in credit programs
sponsored by the Government. Compared to most other incubators in Indonesia, IAA-IPB can
boast the performance in terms of incubatees’ participation in credit program and sustainability
of its own operations.
6. Through association with financial institutions, national and international incubators,

universities in Indonesia and overseas, chambers of commerce, banks, local government, and
national programs to develop SME and innovation IAA-IPB has been able to gain visibility and
support for its activities. The IAA-IPB manager was nominated as a reviewer coordinator to
evaluate applications of other incubators’ establishment to access the MNE funding for SME
startups.
7. Located for most of its history (from 1995 to 2010) on various premises of the Bogor
Agricultural University, after a long but successful lobbying, the management of the IAA-IPB has
been able to get funding for a new and more spacious building that can host 14 tenants and a
space for a food processing plant. Moreover, the IAA-IPB has also obtained funds and procured
modern food processing equipment that will be used by incubatees.
8. Institutionally, the incubator is a division of the Entrepreneurship Research and Development

Center (ERDC) which is under the Institute for R&D of the Bogor Agricultural University (IPB). By
regulation of the university, the CEO of the incubator has to be a faculty of the IPB. Day to day
management tasks are carried out by the Assistant Managers of the incubator assisted by a small
support staff consisting of 1 technician. Additional administrative staff is shared with other
divisions of the ERDC. The incubator and the center have considerable latitude in hiring, signing
contracts, fund raising, networking, investing, and initiating programs. Overall supervision and
legal support remain however with the university.
9. Management of the incubator has been collegial, flexible, and independent. For most of its
history (from 1995 to 2008), its leadership has been given by a dedicated and reputed faculty
who was also the founder of the incubator and has retired from the position of CEO in 2008.
Fortunately, he has continued to provide advisory services and guidance to the present
management of the incubator as Senior Advisor.
10. The main criterion for evaluating success adopted by the IAA-IPB is growth of sales. For
incubatees over the first 3 years of their incubation period growth of sales has been about 30%
and for graduates the average growth has been about 10% per year. These averages however
hide considerable variation; successful graduates reach higher growth level. Some of the
companies have matured to medium size (sales per year over $1million). Out of 77 incubatees
since 1995, 38 have graduated, 12 withdrawn from incubator, and 27 are still in the program.
Over the period 2008-2010, sales for a sample of 29 enteprises for which it was possible to obtain
data grew at an average of 14% per year.
11. In 2011, the incubator is at an important crossroad. Having established a reputation within
West Java and Indonesia through the assistance and development of over 70 startup enterprises,
including the growth of successful small and medium enterprises, and having been able to secure
its own larger facilities and equipment that could provide assistance to a much bigger number of
enterprises than in the past, the incubator could be at a beginning of a new page in its history
whereas it will become a very important reference point in Indonesia, regionally in Southeast
Asia, and possibly internationally.
12. The main challenges for the future are both internal and external. Internally, the incubator
and the university will have to agree on a structure that allows the senior management, including
the CEO, to be recruited from outside of the university and be responsible to a Board that provide
true governance functions rather than only advisory functions. In the past, the incubator was
fortunate to have a faculty fully committed and devoted to the incubator. This is a difficult
condition to replicate; moreover, as the incubator expands it will require more specialized and
full time involvement of its CEO than what was the case in the past.
13. Externally, the incubator will need more active support at the policy level including a clear
policy framework for the development of incubation as a key process in the development of SME,
particularly in agribusiness. So far such a clear policy is missing in Indonesia; yet the management
of IAA-IPB and the university itself are actively engaged in formulating a presidential regulation
for the promotion of incubators. This will give the necessary impetus to a stronger support by the
local government to the development of the incubators.
14. Four key critical factors of success could be drawn from the experience of the past 15 years of
IAA-IPB’s experience. First, utmost importance needs to be given to the incubatees, both during
the selection process and during the incubation period in order to ensure that they grow and are
successful. Their success is the success of the incubator itself. One to one interaction with the
incubatees is necessary to understand their problems and special needs, and help them find a
solution.
15. Second, It is critical to ensure that the incubator has the resources necessary to carry out
activities and support its own management and support staff over the long period. Over-
investment in activities and staff, particularly at the beginning of the incubator program is not
likely to be sustainable. The incubator has to prove itself with whatever limited resources it could
master to obtain over a medium term period (at least 3 years).
16. Third, if additional resources are needed, then strategic partnerships and networking need to
be established. In the case of IAA-IPB, access to infrastructure, facilities, and technical services
was obtained through linkages with the university; access to credit for the incubatees through
participation in nation-wide programs to support growth of SME; exposure to international
experiences through training and participation in conferences sponsored by development
partners and international networks; support from local government through collaborative
linkages and networking with the municipality government; support from private sector through
linkages with Chamber of Commerce and financial institutions.
17. Fourth, maintain relations with successful graduates. They will continue to need assistance
from the incubator, and in turn they will be able to assist the incubator by providing a role model
to new incubatees, and represent a source of income for the incubator itself through profit
sharing or equity investment.
1 BACKGROUND AND CONTEXT
18. Since 1963, Bogor Agricultural University (IPB)1 has been participating in several national
development programs to increase farmers' income, and to develop farmer cooperatives and
small and medium enterprises (SMEs) through various units under the coordination of the
Institute for Community Services (LPM) at IPB. IPB programs in community services cover
training, technology transfer, and consultancy in management in cooperation with various
government ministries and agencies2, private sector, and international institutions.
19. On August 3, 1994 IPB established the Incubator Centre for Agribusiness and Agroindustry
(IAA-IPB). The founding of IAA-IPB marked a new era in providing services for SMEs in an
integrated program for a three year incubation period. Operations of IAA-IPB started in 1995.
20. Prior to 1994, IPB had been conducting a lot of training for SMEs and individual
entrepreneurs; however the results of this training in terms of growing and self sufficient SMEs
had been very limited. When the United Nations Development Programme (UNDP) introduced to
Indonesia the concept of incubating startup SMEs, the Ministry of Cooperatives and SME
Development (MCSME) offered small seed money for a period of three years to any institution
who would be willing to establish business and technology incubator. Four institutions agreed to
implement the incubator: IPB, BPPT–Serpong (Agency for Technology Assessment and
Development), UNS– University in Solo, and ITS–University in Surabaya. IPB was the only one to
focus on agribusiness and agroindustry.
21. IPB incubator was first named Incubator for Agribusiness and Agroindustry (IAA-IPB), and was
founded as a unit under IPB. In a later development, it became one of the centers under the
Institute for Research and Development (R&D) at IPB. In 2005, the incubator became a division
under the Entrepreneurship Research and Development Center (ERDC). In 2008, the Bogor
Municipal Government (BMG) pushed for expanding the focus of the incubator beyond
agriculture/agribusiness/agroindustry and to include other types of SMEs such as those involved
in handicraft, leather, and IT. An additional idea closely related to the original focus on
agribusiness is to develop SMEs using innovations in “green energy” technology.
22. The incubator belongs to a center (the ERDC) under a state university (the IPB). Its facilities
are located both at the main campus of the university at Darmaga (about 123 km from Bogor) and
at the old campus in Bogor. Facilities include offices, with incubatees space, and sharing of other
IPB facilities such as a food processing plant, workshops, and laboratories.
1
General information on the incubator could be obtained on the English version of the website at
http://www.inkubatoripb.com/index-e.php?nama=Home (English)
2
Such as the Ministry of National Education (MOE), Ministry of Agriculture (MOA), Ministry of Cooperative
and Small Medium Enterprises Development (MCSME), Ministry of Industry and Trade (MOI), Ministry of
Labor (MOL), Ministry of Health (MOH), National Logistic Agency (BULOG) and National Coordination
Agency for Family Planning.
3
In spite of the short geographic distance, the traffic make the road extremely congested and the short
distance might take up to 1 hour.
23. In February 2011, the new incubator facility at Darmaga has been inaugurated: it is a new
building with a pilot plant and space for 14 resident incubatees (tenants). New equipment to
be installed in the pilot plant has already been procured with funding by the central government.
24. In the process of initial start up, UNDP and MCSME only planned to set up three incubators in
Indonesia (BPPT, UNS, and ITS). They organized a three-month training program in the Silicon
Valley of the US for six persons (two persons per institution) who would be the key incubator
management staff of the startup incubators. After the trainees’ return to Indonesia, the three
incubators were established.
25. Interestingly, while MCSME prepared the initial budget for the three proposed incubators it
found out that BPPT as an executive body of the government had already his own annual budget.
That made possible for an additional institution to participate in the incubator program. It was
thus that IPB entered into the incubator program of MCSME. However, IPB had to learn
everything by itself since it had missed the initial opportunity to participate in the USA training.
26. MCSME continued to support the incubators development in Indonesia by funding seed
money for a three year period to each incubator (1994-1996). About 15 incubators were funded
during this period.
27. In 1995, ten incubators from all over Indonesia set up the AIBI (Association of Indonesian
Business Incubators) in Solo. The 10 founders included the (i) first four incubators, (ii) IKOPIN and
UNPAD, two universities in Bandung, (iii) UNMER, a university in Malang, and (iv) three more
private incubators. IPB was the only incubator focused on agribusiness and agroindustry, others
are in general business or manufacturing even though they may have few agribusiness incubatees
at the later stage.
28. In 1997, the Ministry of National Education (MNE) launched a program to start up incubators
in the universities all over Indonesia following the MCSME model of providing only small seed
money for a period of three year per incubator. At this time IPB was nominated reviewer
coordinator and was assisted by UNS and ITS incubators to evaluate proposals from new
incubators and monitor program implementation. The two incubators UNS and ITS dropped out
of the MNE program around 2000 due to changes in management. IPB remained the only
incubator to carry out the reviewer position for the MNE incubator program until 2007.
29. In 2000, MCSME introduced a special credit scheme for incubatees and provided funds for 10
incubators. Even though limited in size, the scheme provided considerable help to the
incubatees. The fund amounted to 5,000 – 10, 000 USD per incubatees, and was limited to 10
incubatees per incubator. After eight years evaluation of the scheme, IPB came out as the top
performer with incubatees returning 87% of the credit, while in other incubators performance
ranged from total failure to only 60% success.
30. In 2009, the Coordinating Ministry of Economics (CME) founded the Innovation Center for
Micro and SMEs (ICMSME) which provided funds to incubators on a competitive basis. This
program only ran during 2009 -2010; in 2011, the whole budget was taken by BPPT. It will be
interesting to monitor the development of the BPPT incubator after getting a big national budget
in 2011.
31. In the same year of 2009, IPB incubator helped in reviving the AIBI through a national
convention in Bogor. AIBI had been dormant since 1996 due to the death of its President. From
1998 to 2009, the manager of BPPT incubator assumed the position of the AIBI President but with
very few activities. Currently, AIBI has joined international incubator associations such as Asia
Pacific Incubation Network (APIN) and Asian Association of Business Incubation (AABI).
1.1 GEOGRAPHIC CONTEXT, PRIMARY SERVICE DOMAIN, AND PRIMARY CUSTOMERS
32. Bogor Municipality is part of West Java. The municipality has a rapidly growing (2.8%)
population of 4.2 million over an area of almost 300,000 ha. The budget of Bogor Municipality
Government (BMG) amounts to 1.9 trillion Indonesian Rupiah (IDR) equivalent to about 0.2 billion
USD, the second highest in West Java. The GDP of Bogor Municipality is 51.8 trillion IDR (fourth in
West Java) with a growth rate of 6.04%.
33. According to the official BMG data (see www.bogorkab.go.id) there existed 35,147 micro and
SMEs of which 1,291 small enterprises with 17,452 workers. Dinas Perindustrian, Perdagangan
dan Koperasi (Office of Industry, Trade and Cooperatives) has been long supporting SMEs by
providing training, and access to market and business loan. However, the training is often not
targeting the specific needs of the SMEs and usually is not followed up by a mentoring program.
Business loans are small: 20 to 50 million IDR (2200 to 5500 USD) per SME.
34. Almost 70% of SMEs in Bogor have asset below 200 million IDR (about 22,000 USD). For most
enterprises sale volume is below 100 million IDR. SMEs in Bogor were reported to have limited
market information, access to technology, access to working capital, and knowledge about
distribution chain.
35. The primary service domain of the IAA-IPB consists of agribusiness and agroindustry SMEs;
secondary service domain include handicraft, leather, and IT SMEs. Primary customers are the
university (IPB) graduates and SMEs with 2-3 year experience. The geographic boundary of the
incubator includes Bogor and West Java.
36. Limited budget has always been a constraint to provide good incubation for both resident
and non-resident incubatees. In spite of networking by the incubator’s management with the
regional government, the support of regional government to the incubator so far has been very
modest, partly because of a lack of clear policy from the central government. Currently, the IPB
incubator is involved in a national team together with AIBI, coordinated by CME, to prepare a
presidential regulation for national incubator development. This policy formulation and approval
might however take 1-2 years.
2 TYPE OF INCUBATOR AND STRATEGIC VISION
2.1 STRATEGIC VISION, MISSION, AND TARGETS
37. The vision of the incubator is: Creating strong, independent, and growing SMEs. This vision
has remained the same since the beginning of the incubator in 1995.
38. The mission statement of the incubator is: providing incubation services to help the growth
of startup small scale enterprises in agribusiness and agroindustry into strong and independent
enterprises ready to scale up to medium scale.
39. Recently the strategic focus has slightly changed from handling only agribusiness and
agroindustry SMEs, to include handicraft, leather, and IT SMEs. This was in response to the
interest of Bogor Municipality. The Municipality indicated that not only SMEs in the
agroindustry/agribusiness sector but also SMEs in other sectors need incubating services,
currently not provided by any other organization in the area.
40. The strategic mission of the incubator in the next 5 years is to have a strong management
team, to use new facilities (building and equipment) effectively, to improve IT facilities to support
incubatees, to be able to provide better remuneration to incubator staff and to help
implementing the forthcoming president’s regulation on incubator development.
41. The vision for the next 10 years is that the incubator could proudly stand up with other
international incubators.
2.2 INCUBATOR’S DISTINCTIVE FEATURES
42. The four distinguishing features of the Incubator are:

(i) Focus in agribusiness and agroindustry4
(ii) Good networking with central government including active involvement of its staff and
management in policy formulation related to national incubator development
(iii) Making investment in successful graduates so as to obtain income from profit sharing
(iv) Developing a post graduate program that can continue on assisting successful graduates
43. The incubators four primary strengths include:

(i) Self sufficiency to allow surviving with a minimum operating budget
(ii) Access to pilot plant, labs, and workshops of the university to support technology
services for the incubatees
(iii) Role model for other emerging incubators
(iv) Dedicated management team
44. Its primary weaknesses include:

(i) Limited space for incubatees
(ii) Manager is part timer since he has to be a faculty staff
(iii) Limited support from regional government
4
Also initiate green technology program for incubatees.
(iv) Limited financial resources for incubator operations
45. The management proposes to augment its existing strengths and overcome its weaknesses
by:
(i) Convincing the university to add more spaces for the resident incubatees
(ii) Convincing policy makers to guide the regional government in supporting the incubator
(iii) Strengthening the capacity of the assistant managers who are full time staff
(iv) Starting implementing policy to draw more contribution from the incubatees since the
initial incubation period
46. The lessons that can be taken away from the way in which the incubator has built up its
strengths or compensated for its weaknesses since its founding and which might have value to
other emerging incubators include:
(i) Incubator must have a dedicated, full time, and capable management team
(ii) Incubator should develop good networking with stakeholders such as policy makers,
financial institutions, and markets
(iii) The management must be confident in the ability to deliver successful incubatees
2.3 Networks and Partnerships
47. The four network relationships or partnerships most important to the success of the
incubator have been:
Relationships and Benefits

Partnerships
(i) Policy makers Conducive environment for the incubator operation
Fixed assets (land)
Support through government programs related to incubators and
SME development
(ii) Financial institutions Loans for incubatees
(iii) University Access to pilot plant, equipment, and labs
Access to technical expertise and research
(iv) International incubator Opportunity to strengthen the capacity building, including

organizations knowledge and skill of the management team
48. The incubator has chosen to source competencies both inside and outside IPB, the university
that hosts the incubator.
2.3.1 Inside Sources (within IPB)
49. The competencies sources within IPB cover specific competencies that the management
team does not have. These include specific technologies and economics. The incubator also
builds on the network of the staff of the university. For example, in the assistance to essential oil
incubatees, the incubator builds on the fact that there is an IPB staff who holds the position of
Secretary General for the Association of Essential Oil Industry. Such IPB staff is recruited by the
incubator as training and program consultant.
2.3.2 Outside Source (outside IPB)
50. Outsourcing is related to competencies that do not belong to IPB; for example graphics
design.
51. A partnership is considered productive and useful if it could support the incubator and
incubatees with program funding; provide opportunities to strengthen the capability of the
incubator and incubatees, and to promote the incubator and incubatees.
52. The incubator chose networks or partners who are or may be interested in SME development
through incubation system. If during their first meeting, the potential network and partner
express no interest, the incubator does not contact them again. So far, the incubator does not
contact partner that could be competitor. At one point, the incubator invited a resource person
for training from Swiss Contact, but that was when the institution had decided to limit the
operation in Indonesia.
53. The key lesson learned is that developing strategic partnership to institutions who have the
capability to support the incubator is essential to the life and success of an incubator.
54. The incubator does not directly involve in strengthening the farmer groups. However, the
agribusiness and agroindustry incubatees either are the business units of the farmer groups (see
fresh vegetable success story in APPENDIX 7) or own farmer groups that supply their raw material
(see essential oil and handicraft success stories in APPENDIX 7). Thus, strengthening the
incubatees is indirectly strengthening the farmer groups. Often, the credit going to the
incubatees is used by the incubatees to invest in the farmer groups’ operations.
55. The incubator does not involve in negotiation between the incubatees and the suppliers. The
incubator rather helps the incubatees set up contract with buyers such as the contract between
the fresh vegetable incubatee with supermarket, and fast food chain restaurant.
3 APPROACH TO INCUBATION
3.1 SERVICES PROVIDED
56. The core services provided by the incubator to the incubatees include:
1. Office space and utilities for resident incubatees, at a very moderate rental cost.
2. Other office facilities, such as meeting and training rooms at no charge.
3. Free consultation for technology development, management improvement, and
marketing plan.
4. Free training, business meetings, and workshops.
5. Access to processing plant and labs, with moderate charge on service basis5.
6. Free consultation for writing business plans required in credit application.
7. Facilitation in credit application. In particular, the incubator helps incubatees in
looking for specific credit schemes with low interest from government programs.
Size of this finance varies according to the type of business, but most incubatees
have been able to get loans of at least Rp 100 million (about US$11,000)
57. In addition to the core services, the incubator provides other services such as facilitation of
attendance to international internships and exhibitions. Services have been provided according
to the changing needs of each incubatee.
58. The approach of the incubator to service provision has been inspired by the idea that service
charges should be applied with caution, particularly in the initial stages of a highly risk sector such
as agribusiness. The incubator agrees about the need of standard charges for space and utilities,
but charges for consulting services should either be very low or free in the view of the incubator
management. Equipment and lab analysis charges should be on a service basis. A la carte basis is
more appropriate for equipment and lab analysis since these services are not used regularly.
Events such as training and business meeting are appropriate to be charged on a service basis.
Regular services should be charged as part of a standard package.
3.2 INSTITUTIONAL SET-UP
59. The incubator exists as Division of Business Incubator which is part of the ERDC
(Entrepreneurship R&D Center) under the Institute of R&D under the Agricultural University
Bogor (IPB).
60. The research center (ERDC), the Institute of R&D (LPPM) and the university (IPB) each provide
a positive environment for the incubator. The research center provides inter-disciplinary research
and community services that complement the commercial focus of the incubator. The Institute
with its 17 research centers is a source of multidisciplinary expertise available to the incubatees.
The university, with all the specialized departments is a source of research and specialized
knowledge that could be developed and commercialized.
61. The university also provides legal protection (eg liability insurance) to the incubator.
62. The Center three divisions (training, research, and incubator) work in complementary to each
other. The training division support entrepreneurs in the general area of entrepreneurship and
5
The service fees go to the plant and labs not to the incubator.
more specifically in Corporate Social Responsibility (CSR) and Business Development Services
(BDS).
63. The Center is 100% self-sufficient: the only support from the university is through the
facilities that it occupies and the appointment of a part-time faculty as CEO. The Center can hire
staff, sign contract (even though they need to be approved by the Director of the Institute of
R&D), and can make investment. The Center reports to the Director of the Institute for R&D. The
remunerations of the staff of the Center are under direct control of the Center.
64. Currently the Center plan to expand into a Regional Center for Entrepreneurship in
association with the District of Bogor Government. The incubator plan is to have 30
incubatees/year over the next 5 years.
65. Perhaps one of the main limitations is the statutory regulation that the CEO of the Incubator
must be a Faculty of IPB. This is supposed to be in order to have more control and closed linkage
with the university. But there is an inherent conflict of interest between the duties of a faculty
interested in research and a faculty interested in business development. In fact, the skills for
business development and the skills for academic research are not necessarily the same. The IAA-
IPB was quite lucky that since its beginning and up until recently the CEO was a faculty deeply
committed to the success of the incubator and who took the development of the incubator
almost as a personal mission. This situation is however not easily replicable in the future.
Moreover, as the incubator expands, a full time CEO will be required.
66. The incubator tries to remedy to the institutional constraint of having a CEO as a faculty by
appointing assistant managers from the private sector. Effectively, the assistant managers are the
day to day managers and the ones that inform the CEO and advise him/her.
3.2.1 Governance
67. The Board of the incubator is mostly an advisory body rather than a board with strategy
setting, auditing, and decisions about the CEO.
68. The board of the incubator functions as advisory group to the incubator. The incubator
benefits from the board in terms of help in broadening its network. The board includes Bogor
Municipal and District Government, Bogor Chamber of Commerce, Rector of IPB, and banks. The
background of the board member is as follows:
i. Chair of Bogor Chamber of Commerce: businessman for real estate developer
ii. Bogor regional officers: various backgrounds mostly economics
iii. Bank officers: economics and business management
iv. Rector of IPB: green house engineer
69. Since the CEO has to be a faculty staff by the university regulation, the CEO has permanent
salary for his position as the faculty staff. For his work in the incubator, he is compensated on the
basis of programs or projects found by him for the incubator: fee for finding the project, and
remuneration for time spent in the project. Note that the incubator has been self sufficient since
2000, thus the projects it gained were sufficient for its sustainability.
70. The CEO is expected to allocate his time for the incubator out of teaching and research, and
to link his research or other position such as adviser and assessor – if any – for the benefit of the
incubator. There has been no dismissal of CEO so far. The first CEO stayed from 1995 – 2008, he is
also the founder of the incubator. The second one is relatively new and holds the current position
from 2008.
4 BUSINESS MODEL
4.1 OVERVIEW
71. The business model of the incubator is based on three stages of the incubation process:
(i) Early incubation: mentoring creative ideas, assisting in evaluation of market prospect,
developing early business plan, defining and outsourcing technology need.
(ii) Incubation: helping start production, consultation and revising business plan; providing
facilitation for financial resources and market network.
(iii) Post graduation program: consultation and revising business plan; providing facilitation for
financial resources and market network for new products and new technology
implementation.
72. In addition to government and development partners funding, the incubator supports its
operation through other external programs such as design of agribusiness terminals, preparing
manuals of packaging house, writing bank lending models for SME, etc.), and investment in
successful graduates; and internal sources derived from space rental.
73. Space rental provide Rp. 300,000/40m2 per month (to be increased to Rp. 500,000/50m2 per
month in 2011)
74. So far no charges for consultation, trainings and workshops have been applied; however the
incubator did not cover travel cost of incubatees. Starting 2011, small charges will be imposed for
these services but the amount is not yet decided.
75. The incubator has been self sufficient since 2000. Primary sources of funding in the last three
years include:
(i) Competitive based projects related to SMEs: fluctuations dependent on successful proposals
and implementation of project.
(ii) Grants for incubation program: declining from Rp. 330 millions in 2009, to Rp. 150 millions in
2010, and Rp. 100 millions in 2011 (1 USD = Rp. 9000). Note there was no grant in 2000–
2008.
76. The proportion of earned income and subsidies is not fixed. In 2008 the incubator received
no grant, in 2009 the ratio between project/grant was 1/6, in 2010 project/grant was 5/3, in 2011
not yet known. Break even for operating expenses is Rp 100 millions/year (about USD 10,000).
77. Primary expenses in last three years include:

i. Salary for 2 permanent staff.
ii. Remuneration for part time staff involved in the projects.
iii. Travel for permanent staff.
iv. Building and facility maintenance.
4.1.1 Capital Assets and Facilities
78. The incubator owns the following assets used in the delivery of services to incubatees:
i. Offices and spaces for resident incubatees.
ii. Own food processing equipment (since 2011) and access to food processing
equipment in pilot plant of the university (since inception).
iii. Own wooden toy workshop and access to workshops for manufacturing
machinery in the university.
iv. Access to laboratories for analysis in the university.
79. The land where the incubator is located belongs to the university (IPB). From 1995 to 2011,
the incubator was provided an old building and access to pilot plants and labs of the university.
The cost of new food processing equipment purchased in 2010 amounts to Rp. 5.5 billion (about
$611,000) and the new building costs around Rp. 2 billion (about $222,000). Office equipment
only costs Rp. 30 million, accumulated over 1995-2005.
80. In order to raise the capital for investment in fixed assets and equipment the incubator has
been waiting for 15 years. Raising this type of capital has been very difficult.
81. In the future, the incubator will need vehicles for visits to non-resident incubatees. So far the
incubator has been using private cars belonging to the manager and management team.
82. The major lesson for the incubator is that even with the great difficulty of raising capital for
investment in fixed assets (new building) and equipment, the operations could continue albeit at
a modest level. The networking with institutions that could share their assets with the
incubator was essential.
4.1.2 Cost of Services Provided
83. The variable costs per incubatee per year fluctuated between Rp. 0.75 and 1.5 million ($83
and 163). The cost covers for about 50 % training expenses, 30 % consultation using outsourcing
experts and or travel expenses in case of non-resident incubatees, and 20 % facilitation to
financial resource institutions.
84. The fluctuation in the cost depends on the funding the incubator could access in any fiscal
year. Whenever access to more funding was secured then more activities and costs could be
funded.
85. In Indonesia, other incubators may handle agribusiness and agroindustry but not as a major
focus. A couple of agri-incubators emerged 10 years ago, but they are not in operations now,
possibly due to weak management such as incubator in the University of Jember, East Java, and
in the University of Mataram, West Nusa Tenggara.
4.1.3 Some Key Lessons from the Incubator Management
i. Maximize the effectiveness of your cost.
ii. Do not invest too much into public relations events (such as SME competition etc.)
to promote your incubator.
iii. Focus on spending that makes the incubatees successful. If you have successful
incubatees, they will promote your incubator to the level that you will have a
number of applications over your capacity.
4.2 STAFFING
86. . The core members of the management team are listed in the following table.
Table 1 Core management Team at IAA-IPB Incubator, Background, Services Provided

No Position in Name Business Training Providing Services
Management Team background (Education) to SMEs In
Background
1 Manager (Head, division Muslich Community services MS in Agroindustrial Facilitation in
of Business Incubator) to SMEs Technology Halal application
to the authorized
institution
technology
consultation
2 Assistant Manager for Deva Primadia Eleven years working MS in Postharvest Program
Program Almada as full time staff in Technology implementation,
the incubator marketing
including E-
market, Business
Plan writing,
3 Assistant Manager for Asna Jauhari Free lance BS in Socio Business Plan
Resources consultant economics writing, budgeting
consultation,
outsourcing for
financial
institution
4 Senior Adviser Hadi K. Former manager PhD in Food Process Overall services,
Purwadaria 1995 - 2008 Engineering networking to
other
stakeholders
5 Technician Hikmat Technology Vocational Technology
implementation in engineering implementation,
SMEs education building and
facility
maintenance
Supporting Staff from Shinta More than 10 years MS in Business Accounting,
ERDC Wulansari in SME training Management management
consultation,
internal event
organizer
Note: Technical secretariat and finance are supported by the ERDC staff
87. The management staff describes the incubator’s management style of the core team as
collegial, flexible, and independent. The core team discusses tasks and problems among
themselves and with the incubatees; each person has a job description, and programs are
implemented in an integrated manner; and the management staff takes full initiative while in the
field, but discusses later with other team members.
88. The primary competences contained in the management team include: (i) agricultural
processing; (ii) economics: and (iii) entrepreneurship development. The competences are both
the outcome of formal education and practical experience.
89. Part of the management team has been working together for over 10 years; the rest of the
team joined in the last 3 years. The former incubator manager (Prof. Hadi K. Purwadaria)
recruited one assistant manager by advertisement and job interview, then trained him from basic
tasks. The current manager was appointed in 2008 by the university taking into account his track
record in service to SMEs. The other assistant manager was recruited through a series of
encounters where he had been a collaborating partner of the incubator program.
90. The core management staff has only local (Indonesia) marketing experience. The staff to
client ratio is 5 (one staff to 5 incubatees. The services provided by the staff are indicated in Table
1.
4.2.1 Leadership
91. Strong leadership has been critical to the incubator success in four areas: 1) making critical
decisions such as budget allocation on priority programs, and broadening the incubation focus
from agricultural sector to embrace other sectors : IT, handicraft, and leather SMEs, 2) providing
direction to the management team, 3) lobbying university policy makers frequently and
considering that they are changing every five year while the incubator continues, 4) providing a
figure on which incubatees could rely upon.
92. The IAA-IPB incubator has been lucky to have a continuity of leadership for most of its history
(1995-2008). Since 2008 a new manager has been selected and momentum is building around the
new manager. The previous manager still provides guidance as Senior Advisor.
93. In the words of the current management team, leadership within the incubator is described
as follows: leading and directing a management team while you are listening to them, caring for
the staff welfare in the limit of your budget, facilitating access of the staff to training (education),
lightening up the management team frustration while hiding your own frustration, and once in a
while evaluating their performances in an open forum.
94. The incubator has followed a few methods to develop leadership among incubatees,
including:
(i) Prove the incubator has wide network in business meeting for the incubatees by
inviting stakeholders beneficial to them
(ii) Be reliable in promises and services
(iii) Solve the incubatees’ problems
(iv) Manage the internal conflict : among resident incubatees, between resident
incubatees and their workers
(v) Indicate that incubator is improving in knowledge and resources
95. The key lessons learned about leadership by the incubator’s management team are two:
(i) Do not make promises of services that you cannot offer.

(ii) Define clearly your overall incubation program. Start simply based on resources
you have, improve later, however make efforts to improve as quick as possible.
5 OUTCOMES AND RESULTS

5.1 OUTCOMES AND IMPACTS ACHIEVED
96. The incubator measures the result of its own work with one simple metric: increase of
incubatees’ sales volume.
97. Creation of jobs is not considered a reliable parameter by the incubator management since it
varies a lot with the type of business. For example, handicraft and shoes jobs will increase with
sale volume; however jobs in essential oil and fresh vegetable might not increase with sales.
98. The incubator has helped to startup an accumulated number of 77 new businesses, of which
27 are still under incubation and 38 have graduated, and 12 withdrawn. Over time the following
table indicates the number of resident incubators, non-resident, graduates, and withdrawn.
No. of Incubatee
No. of Incubatees - from Withdrawn
Incubatees - Non Total No. of New Previous from
Resident Resident Incubatees incubatees years Graduates Incubator
1995-2000 5 15 20 20 - 10 2
2000-2005 7 20 27 19 8 13 5
2005-2010 5 22 27 18 9 15 3
2010-2011 2 25 27 18 9 - 2
99. For a sample of 29 enterprise for which it was possible to collect information, the
performance in terms of sales is illustrated in the following table. Agroindustry and agribusiness
enterprises perform quite well with an average sale growth of over 20% and compare favorably
with the average growth of 18% over different sectors.
Table 2 Total Sales of Sample of Incubatees between 2008 and 2009 (Rs. Million)
No. of Sector 2008 Sales (Rs. 2009 Sales (Rs. 2010 Sales (Rs. Average
Companies Million) Million) Million) Growth 2008-
2010 (%)
8 Agribusiness 2,265 2,705 3,185 20%
11 Agroindustry 18,145 21,805 26,315 23%
5 Handicraft 3,750 4,290 5,740 27%
Leather and
23%
3 Textile Industry 2,450 2,860 3,600
2 IT 14,180 15,200 16,780 9%
29 TOTAL 40,790 46,860 55,620 18%
Note: The details of each firm in the sample are available in APPENDIX 6.
100. In terms of average size, agribusiness enterprises are relatively small with sales less than
$100,0000 per year and IT and agroindustry are larger size.
Table 3 Average Sales of Sample of Incubatees between 2008 and 2009 (US $)
Sector Average 2008 Average 2009 Average 2010 Average Growth

Sales (US$) Sales (US$) Sales (US$) 2008-2010 (%)
Agribusiness 31,458 37,569 44,236 20%

Agroindustry 183,283 220,253 265,808 23%
Handicraft 83,333 95,333 127,556 27%
Leather and Textile
23%
Industry 90,741 105,926 133,333
IT 787,778 844,444 932,222 9%
TOTAL 1,176,593 1,303,526 1,503,155 14%
Note: The details of each firm in the sample are available in APPENDIX 6.
101. The effect on famers’ income can be measured in some cases. One hypothesis is that by
increasing the incubatees sale volume, the income of farmers also increases. For example, the
vetiver farmers income increased from Rp 2500/kg to Rp 3000/kg over the past 3 years. The fresh
vegetable farmers have learned the packaging so not all the packaging is done in the cooperative
packaging house. Part of it is done by the farmers, thus they gain higher income. In the case of
handicrafts using a fiber called mendong, farmers realize an income several times higher than the
alternative paddy production.
5.1.1 Impacts of the Incubator on Policy and Society at Large
102. In addition to the direct impact on company’s sales and farmers’ income, there are other
impacts of the incubator on policy and society at large.
103. The incubator was involved in the founding of the Innovation Center for Micro and SMEs
a national body under the Office of the Coordinating Minister for Economics. Presently, the
incubator is involved in drafting the president regulation on the incubator development.
104. The incubator experience had an impact on academic programs and curricula. The
previous manager of the incubator (Professor Hadi K. Purwadaria) was appointed to initiate a
freshmen course titled “Introduction to Entrepreneurship,” partly in recognition of the fact that
he had managed the incubator for a long time. He was the coordinator of the course for two
years in 2006-2007, and then handed the course to other colleagues. In early 2011, three
modules were developed and will be discussed for adoption: Technopreneurship for semester 4-
6, Internship in Entrepreneurship for field practices of students in semester 7, and
Entrepreneurship Topics for Final Project in semester 8.
105. Impact on incubator program development in Indonesia. Since 1997, the Directorate
General for Higher Education has offered and funded the incubator program, and the senior
management of IAA-IPB has been involved in developing, evaluating, and monitoring the program
for all universities in Indonesia.
106. Impact on skills has been limited. The skills of staff involved in the companies supported
by the incubator varies from low to high skills, but on average the skills of the staff are low to
medium. A sample from the 5 case studies is presented in the following table:
No. Incubatees/ Graduates Skill Full time/seasonal

1 Tricoco, Bu Aprisusi Mostly Low, Full time 2 shifts
Marketing and engineer : high Seasonal the 3rd shift
skill
2 Pulus Wangi, Pak Ede Distiller operators : Medium Seasonal
Kadarusman skill
3 Handicraft, Pak Endang Low to medium skill Full time base on no of
Kurniawan pieces done
4 Pacet Segar Fresh Low skill, Full time
vegetables, Pak Unang
Marketing medium skill
Badrutamam
5 Hikmah Shoes, Pak Yana Low to medium Full time
Supriyatna
107. Impact on direct and indirect labor is difficult to ascertain. For the five case studies the
impact is presented in the following table.
No. Incubatees/ Graduates Direct Labor Indirect Labor

1 Tricoco, Bu Aprisusi 32 full time, 2 shifts 35 seasonal for the third
shift
2 Pulus Wangi, Pak Ede 15 seasonal 100 vetifer farmers
Kadarusman
3 Handicraft, Pak Endang 60 full time 160 mendong farmers
Kurniawan
4 Pacet Segar Fresh 12 full time 100 vegetable farmers
vegetables, Pak Unang
Badrutamam
5 Hikmah Shoes, Pak Yana 40 full time
Supriyatna
5.2 GOALS MOVING FORWARD
5.2.1 Post Graduate Affiliation
108. Graduates continue to be associated with the incubator even after graduation. They are
expanding and they need the incubator services for new products, new technology, and new
marketing systems. The relation is also reciprocal. The incubator needs graduates for investment
and to show examples to startup incubatees.
109. The graduates have not yet formed any informal or formal business association to help
themselves and fellow graduates. However, the incubator management is interested and thinking
actively to promote this idea of forming an association of graduates.
110. In some cases, graduates have attempted to associate with each other through clusters,
mergers, shared distribution channels or supply chains. The two vetiver incubatees have
established a vetiver farmer association where one has the position of chairman and the other
the position of vice-chairman. The association includes 5,000 farmers cultivating vetiver in Garut
over 1,700 ha.
111. Closer relation with successful graduate should be continue and encouraged to ensure
more visibility and a source of funds for the incubator.
5.2.2 Expansion of Focus
112. Even though the main focus of the incubator will remain agribusiness, the IAA-IPB will
also incubate startup enterprises in the field of IT, textile, leather, and handicrafts. This is
response to a request by the Bogor Municipal Government. Whether the expansion of focus will
dilute the comparative advantage of the incubator or will strengthen it through the acquisition of
new skills and synergies remains to be seen.
5.2.3 Management Issues
113. As 2011 starts, the incubator is well positioned. It has a history of 15 years of experience
with an acquired reputation and visibility in Indonesia and increasing abroad. It has acquired a
new building capable of hosting 14 tenants and has its own modern and new food processing
equipment and plant. With adequate human resources, it could capitalize on the past
achievements and experience and embark on a rapid growth of the number of incubatees. One
critical factor seems to be the availability of full time human resources such as a CEO who is
capable, committed, and motivated. Such a CEO will be employed full time and respond to the
Board of the incubator. Apart from his basic salary, his incentives could come from participation
in the success of the incubatees through various mechanisms such as profit sharing (already
experienced in the past by the incubator) and equity sharing.
6 SUMMARY AND CONCLUSIONS

6.1 CRITICAL SUCCESS FACTORS
114. Four key critical factors of success could be drawn from the experience of the past 15
years of IAA-IPB’s experience. First, utmost importance needs to be given to the incubatees, both
during the selection process and during the incubation period in order to ensure that they grow
and are successful. Their success is the success of the incubator itself. One to one interaction with
the incubatees is necessary to understand their problems and special needs, and help them find a
solution.
115. Second, ensure that the incubator has the resources necessary to carry out activities and
support its own management and support staff over the long period. Over-investment in
activities and staff, particularly at the beginning of the incubator program is not likely to be
sustainable. The incubator has to prove itself with whatever limited resources it could master to
obtain over a medium term period (at least 3 years).
116. Third, if additional resources are needed, then strategic partnerships and networking
need to be established. In the case of IAA-IPB, access to infrastructure, facilities, and technical
services was obtained through linkages with the university; access to credit for the incubatees
through participation in nation-wide programs to support growth of SME; exposure to
international experiences through training and participation in conferences sponsored by
development partners and international networks; support from local government through
collaborative linkages and networking with the municipality government; support from private
sector through linkages with Chamber of Commerce and financial institutions.
117. Fourth, maintain relations with successful graduates. They will continue to need
assistance from the incubator, and in turn they will be able to assist the incubator by providing a
role model to new incubatees, and represent a source of income for the incubator itself through
profit sharing or equity investment.
6.2 LESSONS LEARNED AND IMPLICATIONS FOR AGRIBUSINESS INCUBATORS
118. The major lesson learned from the experience of IAA-IPB is to put the incubatees’
success at the center stage. All the effort of the management and staff of the incubator is
warranted and justified if the startup enterprises become sustainable businesses that could
mature from micro/small size to medium and even large size.
119. Even though there will be failures among the startup and some graduates will not be able
to move much beyond the small size, it would be enough for the success of the incubator to
have a small number of highly successful startup becoming medium enterprises.
120. In the case of agribusiness sector, the IAA-IPB has filled a gap that current programs of
the government or academia were not fulfilling: the incubation stage support to firms that more
than other sectors are subject to a number of risks arising not only from the market and finance,
but also from climate and nature.
The final less is that the incubator should not stop its support of incubatees immediately after
graduation. Post-graduation activities are import. A process of selection of successful graduate
should be established and post-graduation incubation could also continue. That will have benefits
not only for the graduates, but also for the incubator in terms of visibility and profitability.
APPENDIX 1. MISSION PROGRAM – VISIT TO IAA-IPB
Date Activities Incubator Staff

Sunday, 13 Feb
12.00 Pick up at airport Hadi K. Purwadaria
Travel to Hotel Santika Bogor
Overall Briefing
Monday, 14 Feb
09.00 Pick up at Hotel Santika Deva P. Almada, Asna Jauhari
09.00 – 10.00 Travel to Institute for R & D (LPPM) IPB Darmaga
Meeting with Director LPPM IPB, Director LPPM
10.00 – 12.00 Incubator Management Team Deva P Almada, Asna Jauhari,
Visit New Incubator Building Hadi K Purwadaria
Lunch
12.00 – 13.00 Visit Food Incubatee (Success Story 1) Aprisusi
13.00 – 14.00 Inauguration new Incubator Facilities Rector University
14:00 – 15:00 Meeting Rector IPB
15.00 – 16.00 Travel from Darmaga to Hotel Santika
18.30 – 20.00 Dinner Incubator Staff
Tuesday, 15 Feb
07.00 Pick up at Hotel Santika Hadi K Purwadaria, Deva P
07.00 – 11.00 Travel to Garut Almada
11.00 – 13.00 Visit Vetiver Essential Oil Incubatee (Success Ede Kadarusman
Story 2)
13.00 – 14.00 Lunch
14.00 – 16.00 Visit Vetiver Essential Oil Incubatee (Success Abdullah Rasadi
Story 2)
16.00 – 18.00 Travel to Tasikmalaya
Stay overnight
Wednesday, 16 Feb
08.00 – 10.00 Visit Agricultural based handicraft incubatee Endang Kurniawan
(Success Story 3)
10.00 – 14.30 Travel to Pacet, Cianjur
Lunch on the way
14.30 – 16.30 Visit Fresh Vegetable Incubatee (Success Story 4) Unang Badrutamam
Travel to Hotel Santika Bogor
16.30 – 18.30
Thursday, 17 Feb
08.00 – 10.00 Discussion Management Team Incubator Staff
Visit Facility at Campus IPB Bogor
10.00 – 12.00 Meeting with Incubatees (Natural Honey, Design Ade Kamadibrata, Andri Dwi
Graphics, Green Community NGO) Sasono, Cepi Al Hakim
12.00 – 13.00 Lunch
13.00 – 16.00 Visit Baby Shoes Incubatee (Success Story 5) Yana Supriyatna / Susi
15.00 – 16.00 Travel to Hotel Santika Bogor
16.00 – 18.00 Debriefing at Incubator Office in Bogor Hadi K Purwadaria, Deva P
Almada
Friday, 18 Feb
09.00 – 11.00 Travel to Airport Deva P Almada
13.00 Departure
APPENDIX 2. PERSONS MET
Name Organization Position Contacts Contact Email

Telephone
Hadi K. IAA-IPB Senior +62 812 957 9098 [email protected]
Purwadaria Advisor
Deva P. Almada IAA-IPB Assistant +62 812 835 6282 [email protected]
Manager -
Program
Asna Jauhari IAA-IPB Assistant +62 812 926 6335 [email protected]
Manager -
Resources
Herry IPB Rector +62 811112213 [email protected]
Suhardiyanto
Ronny Rachman LPPM/IPB Deputy +62 812 990 6662 [email protected]
Noor Director
Pramono D ERDC Director +62 811116853 [email protected]

Fewidarto
Aprisusi Tricoco CEO +62 812 818 5096 [email protected]
Ede Pulus Wangi CEO +62 812 239 7892 [email protected]
Kadarusman / [email protected]
+62 817 229 598
Ahmad Nur
Abdullah Rasadi Sinar Wangi CEO +62 852 2253 7445 [email protected]
Endang Chahyaty Kraft CEO +62 813 2310 7257 [email protected]
Kurniawan
Unang Pusaka Tani / CEO +62 812 992 8765 [email protected]

Badrutamam Pacet Segar
Yana Supriyatna Hikmah Shoes CEO +62 818 109 445 [email protected]
Ade Madu Odeng CEO +62 815 825 7894 -
Kamadibrata
Andri Dwi Intramedia CEO +62 813 1400 4755 [email protected]

Sasono
Cepi Al Hakim Green CEO +62 857 8232 729 [email protected]
Comm.NGO
APPENDIX 3. FUND RAISING FOR THE IAA-IPB
121. The original funding sources of the incubator where from two ministries:
 1994 – 1996 : Ministry of Cooperatives and SMEs (MCSME)

 1997 – 1999 : Ministry of National Education (MNE)
122. The conditions/requirements that the original funding sources imposed on the incubator
focused on the number of recruited incubatees per year. MCSME imposed 25 per year and MNE 3
per year. The requirement of MCSME was not reasonable since the amount of the provided
funding was only sufficient for 5 incubatees. The requirement of MNE was appropriate for the
amount of the provided funding.
123. Since 2000, the incubator has been looking for funding from various sources: programs
from the government related to SME development in general (non-incubator and incubator),
private parties, fees from the financial institutions providing credit scheme to incubatees6, and
return on investment in successful graduates.
124. In order to secure this funding, the incubator management has engaged in networking
and other activities such as trying to be a national leading role model, lobbying the government
officers, conducting business meeting periodically with financial institutions to secure credit
scheme for the incubatees.
125. The IAA-IPB’s experience in fund raising provides some lessons for other incubators. In
the initial stages of activities, emerging incubators should develop a network and conduct
business meetings periodically with financial institutions to promote their incubatees. Then, the
incubator managers should try to lobby the government to sponsor and get access to specific
programs for incubation of SME. Finally, the incubator should become a role model so that the
incubator is recognized by all stakeholders and its growth and support is facilitated.
126. According to the management of the incubator, one should not expect too much from
financial institutions. In our experiences, the management fee gained will be around 2 % of the
amount of the credit, and it is of course already big enough to consider that the interest for the
specific credit scheme only 6-7 %.
6
In IAA-IPB’s experience, the management fee gained was around 2 % of the credit amount. This was
already a large percentage of the total interest of 6-7% for the specific credit scheme.
APPENDIX 4. SELECTION AND GRADUATION OF INCUBATEES
Selection of Incubatees
127. The incubator selects incubatees among startups and 2-3 years experienced enterprises.
Priority is given to university graduates (particularly IPB graduates); however the incubator also
recruits exceptionally motivated candidates who are not higher education graduates.
128. Over the past three years, the incubator received between 20 and 30 applications/year
and selected about 7-8 incubatees/year (including both resident and non-resident incubatees).
There are no different classes of incubatees (about resident and non-resident). Each incubatee is
treated on a one-to-one relationship.
129. Currently, the incubator handles an accumulation of 2 residents and 25 non-resident

incubatees. The reason for the low number of residents was the plan of moving up to a new
building. The plan was formulated in 2009 and the building has been recently inaugurated (in fact
during the visit of the InfoDev mission in February 2011).
130. Recruitment procedure includes several steps as follows: 1. Application from candidates,
2. Filling up incubator questionnaire, 3. Writing short business plan, 4. Interview, Writing full
business plan assisted by incubator staff. 5. Evaluation of the full business plan based on the five
Cs (Credibility, Capacity, Capability, Condition, Collateral), 6. Site Visit for non-resident
candidates, 7. Acceptance. Each step provides a filter of the candidates.
131. The five C’s are criteria applied in the final selection of incubatees. During the early
recruitment steps, not all the criteria might be satisfied; in this case the incubator’s management
exercises some flexibility. However all five criteria apply in the final stage of the recruitment.
132. The five C’s include:

 Credibility from former experiences in business (former loan if any), market prospect of
their products
 Capacity of production they plan
 Capability of knowledge, skill, and motivation
 Condition of resources they own
 Collateral in broad terms : asset they own for the business
133. Weeding out non-performers is taken to provide the limited spaces to progressive and
successful incubatees. Incubatees are evaluated twice in their first year (at 6 months after their
initiation in the incubator and at 12th month), and annually afterwards. Criteria for non-
performing incubatees at the first six month : no production in three consecutive months, at the
12th month : no continuous production in the last three months, annually: no sale increase in a
year. Reapply for weeding out non-performers on the first six month, second six month, and then
every year.
134. The incubator is well aware that selection of incubatees determines the success of the
program; thus great care and resources are devoted to this activity.
135. During the first ten years, at any time the incubator was serving an accumulation of
around 10, increasing to 20 consisting of the first, second, third year incubatees, and graduates
(because the incubator has post graduate program).
Motivation of Incubatees to Join IAA-IPB
136. The main motivations of enterprises to join the incubator at Bogor are:
1. Access to credit
2. Access to technology
3. Access to office facilities
4. Access to infrastructure (plant facilities, labs)
5. More credibility with suppliers
6. Access to business development services (business plan, advisory services)
7. Access to training and capacity building (workshops, business meetings, etc.)
137. Incubatee who were residents of the incubator proved to be more successful on average
than non-residents. Even though the incubator management made an effort to provide one-to-
one advisory services and promote all incubatees equally, perhaps the presence on campus of
the resident incubatees gave them more opportunities to access information, advise and
visibility.
Graduation of Incubatees
138. Since 2005, the IAA-IPB incubator has graduated about 30 enterprises. The graduation
takes about 3-4 years and is based on increase of production and sale volume. Over the past 3
years, there have been 2-3 graduates per year. In addition to the increase in production and sale
volume, another criteria for graduation is smooth payback of the loans they might have obtained.
Income in the first year of operations varies greatly and similarly at the time of graduation; it is
specific to the operations of each incubatees. The criteria for increase in production and sale
volume is a minimum of 50%/year for startup enterprises and a minimum of 10%/year for
enterprises with 2-3 year experience. The criteria of number of employees is not considered very
relevant by the IAA-IPB management as some types of enterprises might be labor intensive and
other more capital intensive.
139. Exports of graduates are few. Some incubatees have exported their products, mostly
through exporters in Jakarta. Only two graduates have experience in direct exports.
140. One lesson about criteria for graduation: tough criteria will make the incubator
performance look low but loose criteria may result in situation in which graduates will not be able
to survive after leaving the incubator.
141. The incubator includes the successful graduates in further training, business meetings
and credit schemes if they are still expanding their business to diversify products and new
technology implementation.
Success and Failure of Graduates
142. About 70% of the incubator’s graduates are still in business 2 years after graduation. The
most important factors that determine the business success or failures of graduate are:
 Motivation
 Persistency
 Availability of loan for extending the business
 Financial management
143. The lessons learned about how best to assure graduate success:
 Select highly motivated incubatees.

 Products with prospect market flourish fast, regardless the market target (low or high
income people)
 Access to technology and financial institution is a must.
 Development of appropriate marketing and distribution strategy, specific for each
product.
APPENDIX 5. BOARD AND STAFF
The board comprises the Rector of IPB; the Mayor, BMG; the Chair of Bogor Chamber of
Commerce; and the Secretary General of Indonesian Association of Retail Enterprises.
The board functions include

 setting up the policy of the incutabator together with the Advisory Committee, Head of
R&D Center for Entrepreneurship IPB, and the incubator manager
 support the development of incubator in the university plan and in the BMG plan
 provide expertise from senior practitioners
 provide link to incubatee candidates
 inform the product market trend
 establish networking with prospect buyers
Advisory Committee
1. Head of Institute of Research and Development (LPPM), IPB: advice on the strategy plan of
incubator from the university perspective, report to the Rector the incubator development
2. Head of Office of Trade and Industries, BMG advice on the strategy plan of incubator from the
BMG perspective, report to the Mayor the incubator development
2. Deputy for Assessment of Entrepreneurship, Ministery of Cooperatives and SMEs advice the
incubator about the central government policy, provide link to the government executive
ministries
3. Director of Innovation Center for MSMEs (Micro, Small and Medium Enterprises) advice on the
programs in line with the strategy of the institute so the incubator could gain most benefit
Bogor Staff
Manager : Ir Muslich MS
Assitance Manager/Program : Ir Deva Primadia Almada MSi
Assitance Manager/Resources : : Drs Asna Jauhari
Senior Program Officer : Prof Dr Hadi K Purwadaria
Job Description
Position Job Description

Manager 1. Manage and responsible for the whole operation of the
incubator.
2. Networking with the resources institutions and the other
incubators nationally and internationally.
3. Set up strategy policies with the assistant managers
internally, and with the Board & Advisory Committee, and Head
of R&D for Entrepreneurship.
Assitance Manager/Program 1. Design and run the consultancy pattern for each incubatee
based on their own needs.
2. Conduct recruitment for new incubatees.
3. Marketing and promoting the incubator to the incubatee
candidates and to prospective buyers.
Assitance Manager/Resources 1. Develop proposal for funding sponsor.
2. Maintain the available resources and look for new ones to

support the incubator operation.
3. Manage the cash income and outcome flow.
Senior Program Officer 1. Support the management based on the lessons learned from
IAA-IPB.
2. Initiate ideas to obtain funding and assist management in
developing proposals for funding sponsor.
Personnel costs
Manager : Rp 4 000 000/manmonth

Assitance Manager/Program : Rp 2 000 000/manmonth
Assitance Manager/Finance : Rp 2 000 000/manmonth
Salary of senior program officer is charged to the university and not directly to the incubator.
Remuneration system / motivation system
Bonus one person month salary per person per year (this is a common pattern in Indonesian
salary system as long as the person fully attend the job in the related year).
10 % out of annual net income will be distributed to the manager and assistant managers based
on their respective performances.
Future need for personnel
Assistant managers will be added accordingly to the increase of the number of incubatees and
projects. In the assumptions for cash flow (Annex 3), the new assistant manager is added one
person in the year 3 to 5, and another one in the year 6 to 10.
APPENDIX 6. SALES OF INCUBATEES OVER 2008-2010
No Sector Incubatee Sector-Product 2008 Sales (Rs. 2009 Sales 2010 Sales Average Growth
Million) (Rs. Million) (Rs. Million) 2008-2010 (%)
1 Agribusiness Unang Badrutamam- Fresh vegetables packaging and
1,000 1,200 1,300 15%
Pusaka Tani processing
2 Agribusiness Michael Winarno-MBrio Ganoderma mushroom, and food
500 600 750 25%
analysis laboratory
3 Agribusiness Triyatno Fresh mushroom 400 480 600 25%
4 Agribusiness Abdul Halim-Pusaka Karya Fresh vegetables packaging and
100 120 150 25%
processing
5 Agribusiness Miftahuddin Cut flower plantlet from tissue
80 100 125 28%
culture
6 Agribusiness Muh.Aidil-Jamur Rizki Fresh mushroom 90 100 120 17%
7 Agribusiness Lilis-Pusaka Tirta Fresh vegetables packaging and
75 80 100 17%
processing
8 Agribusiness Ai Syarifah- Shimeji Fresh vegetables packaging and
20 25 40 50%
Mushroom processing
9 Agroindustry Aprisusi-Graha Agri Nata de coco and jelly drink
12,000 15,000 18,000 25%
Industri
10 Agroindustry Ede Kadarusman-Pulus Vetiver essential oil
2,550 2,700 3,600 21%
Wangi
11 Agroindustry Abdullah Rasadi-Sinar Vetiver essential oil
1,000 1,100 1,250 13%
Wangi
12 Agroindustry Mashudi-Citra Pangan Nata de coco and jelly drink
800 1,000 1,100 19%
Mandiri
13 Agroindustry Giar/Ika-Anofood Prima Meat and Fish Products
500 550 625 13%
Nusantara
14 Agroindustry Dewi Miftah-Priangan sari Snack foods
450 480 600 17%
15 Agroindustry Ani Chalid – Brownies Cakes and brownies

360 400 450 13%
Bogor
16 Agroindustry Cahyo/Novi-Favourite Taro and cassava chips 180 200 240 17%
17 Agroindustry Ade Kamadibrata-Madu Natural honey
150 165 200 17%
Odeng
18 Agroindustry Mee mee-Cendol de Traditional dessert
75 120 150 50%
keraton
19 Agroindustry Rudi Zaenudin-Berekah Snack foods
80 90 100 13%
Asih
20 Handicraft Endang Kurniawan- Mendong mattresses and
3,200 3,600 4,800 25%
Chahyaty Craft handicraft
21 Handicraft Hamzah-Hanjaya Hariqi Lether jacket and handicraft 350 450 650 43%
22 Handicraft Ani Purwowirawati- Recycle material handicraft and
100 120 150 25%
Rafylla’s art and florist artificial flowers
23 Handicraft Ubaedillah-Exotic pot Wooden handicraft 50 60 80 30%
24 Handicraft Agung Sutrisno-Kayu Wooden waste educational toys
50 60 60 10%
Kurnia Agung
25 Leather and Yana Supriyatna-Hikmah Baby shoes industry
1,400 1,560 1,800 14%
Textile Industry Shoes
26 Leather and M Nasir – Elna Shoes Shoes industry
800 1,000 1,400 38%
Textile Industry
27 Leather and Yetti Tarwin-Camelia Confection and bag industry
250 300 400 30%
Textile Industry
28 IT Muzakkir-Zoom Accelera Computer assembling and
14,000 15,000 16,500 9%
software
29 IT Andri Dwi Sasono- Graphic design and digital
180 200 280 28%
Intramedia printing
TOTAL (IDR million) 40,790 46,860 55,620 18%
AVERAGE (IDR million) 1,407 1,616 1,918 18%
Average (US $) 156,284 179,540 213,103 18%
Max (US $) 1,555,556 1,666,667 2,000,000 14%
Min (UA $) 2,222 2,778 4,444 50%
APPENDIX 7. SUCCESS STORIES
Introduction
144. The 5 success stories below are representative of the variety of activities that IAA-IPB has
been doing over the years. There are 3 stories directly related to agribusiness (nata de coco,
essential oil, and fresh vegetables), 1 story related to handicraft (but with a strong linkage to
farmer products), and 1 story unrelated to non agribusiness (the baby shoes story) that however
shows the evolution of the IAA-IPB towards a more general concept of incubator (the Bogor TBI
or Technology Business Incubator) which expands the traditional basis of agribusiness to include
other SMEs in IT, leather, textile, and handicrafts.
Tricoco, Ms. Aprisusi, Nata de Coco
146. Ms. Aprisusi, originally from Sumatra, has shown an extraordinary strength of character
over the past 10 years: through persistency and business acumen and with the support of the
IAA-IPB she has created a company from scratch that is rapidly moving towards mid size.
147. As a graduate of IPB from the Technology Industry Department she had learned about
food processing. She decided to start a business with drinks based on nata de coco. The
processing of this product is not difficult. The difficult (or at least not easy to imitate) part is the
fermentation of the nata de coco which she in fact could master. With this idea, in 1999 she
became an incubatee at IAA-IPB. She did not possess any assets, not even a motorcycle to move
around. She was far from her native Sumatra and even her family did not approve her of
embarking on a risk business (her parents were government employees). Through the IAA-IPB
she got some seed money of Rp. 11.5 million (about $1200) to buy a second hand pick up.
148. She decided to register her brand name

(Tricoco) in 2003, but it took her up to 2007 to
get the name registered (because of
bureaucratic delays).
149. Currently she employs a staff of 32, of

which 50% are women and working in 2 shifts.
She gets her main raw material (coconut) from
West Java through a Jakarta wholesaler. Other
inputs such as sugar, plastic cups (different size,
but mostly 2 sizes one for adults and one for
children), and carton boxes come all from Jakarta.
150. Interestingly, in order to assure that fermentation is done properly, she has two sites in
her production, one site for fermentation and one site for processing. Most of the machinery is
made in Indonesia, with the exception of some imported machinery (from Germany) to make
automatic labeling for expiration date. So far, she did not have any serious problem with
machinery. She has hired an engineer who is able to take care of maintenance and repair.
151. Her products come in different sizes, but mostly in two size: a cup for
adult and a cup for children. The products could be consumed over 1 year
(expiration date) from the time of production.
152. She initially started distribution with small retailers; later she used a
distributor and now exports to Java, Sumatra, and Sulawesi. Indirectly she
also exports to other countries by providing raw material to another
company.
153. One might think that being a businesswoman has some

disadvantages. However in the view of Ms. Susi there is a very important
advantage of being a businesswoman in Indonesia and that is that supplier
trust women more than men.
154. The incubator played an important role to help her at the beginning
when she was a nobody with no assets and no connections. The incubator facilitated her to get
the seed money, to host her initial production on the facilities of the incubator, and introduce her
to suppliers. To be a resident incubatee was very good because she could have a space to start
her production (initially only 100 m2), and technology consultants who could advice her.
155. The incubator also took an equity interest in her business with a small percentage of her
profit sharing. From an initially surface of 100 m2, she later moved to a location of 200 m2 and
later 250 m2. Currently she has invested in buying land around Bogor to expand her factory. She is
also thinking to expand her business in new lines such a mineral water and solid jelly from sea
weeds.
156. She would also like to open a small minimart that could be used to study which new
products are good in the market. If good in the market then she will produce those products. She
is also trying to explore linkages with supermarkets now.
157. The current sales are Rs 1.8 billion/month

(about USD 200,000). This is a remarkable
achievement for somebody who started in 1999
producing manually one cup of nata de coco at a
time, then 2 cups (manually), then 1 mechanical
line (of 8 cups) later shifting to 2, 4, and now 8
mechanical lines. She has already purchase the
equipment which soon will be installed to expand
her production lines from the current 8 to 16.
158. The most important help she obtained from the incubator:
 Initial trust behind her that provided her with a support and building of her confidence.
 Facilitated initial access to bank credit. Now every bank very happy to offer credit, but at
the earlier stages nobody wanted to give her any money.
159. The incubator itself is very proud of this graduate and keeps close relation with her. One
part of the profit of Tricoco are flowing back to the incubator. The incubator also introduces
Aprisusi to new incubatees to show where they could arrive.
160. E-marketing which started in early 2011 had caused a lot of phone call requesting sample
of Tricoco product. In fear of not be able to meet the additional consumer demand, Ms Aprisusi
requested to be temporarily withdrawn from the e-market list of IAA-IPB, until the company
increase again its production capacity.
Pulus Wangi, Pak Ede Kadarusman, Vetiver Essential Oil

161. Mr. Ede is a farmer, currently heading a vetiver farmer cooperative in Garut, a hilly area
of West Java famous for the cultivation of vetiver and vegetables. Mr. Ede
is also the Chairman of the Vetiver Farmer Association including 5,000
farmers and cultivating 1,700 ha with vetiver. Together with his son who is
a 29-year old graduate in Business Management he has developed a
company that is selling about 5 million IDR/year or about 550 thousand
USD.
162. The main use of vetiver in Garut is for essential oil. However, other
uses include aromatherapy and Mr. Ede and his son have started to
consider a number of applications such as handicrafts (like bags, frames,
vases, pots), fertilizer, medicinal, and even vetiver-coffee! His main
products are listed in the following table:
Product Remark
Standard distilled vetiver 250 kg/month
Premium distilled vetiver By order
Vetiver plantlets 14.000 plantlets/week
Vetiver drinks Vetiver coffee, Vetiver tea, vetiver bandrek (local drink)
Handicrafts for waste vetiver roots Pot for plants, basket, photo frame, particle board.
Vetiver by products For spa and aromatherapy
163. Since 2009, when he joined the IAA-IPB, production has

increased from 2000 kg/year to 3,000 kg/year of essential oil. This
was possible partly through facilitated access to credit, partly
through better linkages with buyers, and partly through
efficiencies gained in the use of new distillation equipment.
164. His involvement with the IPB started in 2007 but he

became an incubatee in 2009. The main contributions of the
incubator to his business have been:
 Access to technology (designed by the incubator)

 Access to capital
 Facilitated marketing (direct selling to foreign buyers)
165. He has already obtained a Rs. 250 million loan at 6% interest through IAA-IPB and has
almost finished to pay (only 2 months left) and want to apply for a new loan.
166. About 50% of his raw materials come from his own production and 50% from production
of about 100 farmers organized as farmer groups.
167. Incentive for farmers to cultivate vetiver. Yield per ha is 10-14 tons/ha. Farmer benefit is
50% of value of production. On an hectare basis, the value of production is an average of
$3700/ha. Thus, a farmer who owns one ha will have a net income $1850/year, while a paddy
famer in comparison only get $650/year for two time harvest.
168. Both Mr. Ede and his son attend vetiver training
conducted by the association, private sectors, and
universities. To promote the company, Mr. Ede and his son
attend exhibitions such as Inacraft (2009, Jakarta), Dubai
Global Village (2009, UEA), Jakarta International Expo
(2010), Design Competition High Level Quality by Germany
for essential oil (2010, West Java), SMEs Expo (2010,
Jakarta). They are also active member of the Indonesian
Essential Oil Association, West Javanese Essential Distillery
Association, Samarang Creative Community, and Association to improve SMEs, and of course, IPB
Incubator.
169. The company has been awarded The Best Walkabout

Project from Indonesian Telecommunication Co in 2006,
Progressive SMEs from Garut District in 2008, The Best Design
Competition High Level Quality by Lupafak Germany in 2010,
and The Best Technopreneurship from Garut District in 2010.
170. Mr. Ede plans to expand production to 5,000 kg/year

by 2014. This will be achieved through expansion of cultivated area, investment in new distilleries
(now he has 3 distilleries but needs 2 more for a total of 5). Different from traditional essential
oil producers, he does not use wood or charcoal as fuel for the distillation process. In fact he is
using a combination of solar energy and energy from recycled lubricant oil rather than diesel on
the basis of both economic cost and environmental considerations.
171. The market for vetiver is still big and there is a large gap to fill, not only for perfume but
also for aromatherapy. Together with his son he is thinking to engage in new services such as
eco-tourism and edu-tourism. Eco-tourism is targeted to people who want to observe the
beautiful scenery of vetiver fields in cool mountainous areas, while having interactive discussion
with the vetiver farmers and distillers. His company can also provide lodging for overnight
staying. Edu-tourism is targeted to students and people who want to learn the history, cultivation
system, distillation, and handicraft processing.
172. In order to expand, the company will have make

considerable investment in accumulating stock of
essential oil to ensure timely and regular delivery to the
client and overcome fluctuations due to various climatic
conditions. Moreover, new technologies both in
production and processing will allow to obtain higher
yield per ha and higher yield of oil per kg of vetiver.
173. While the key customers are currently the perfumery industry and the hotel and tourism
industry (for spa, aromatherapy and ecotourism services), a potential customer could be the
pharmaceutical industry (for some therapeutic property of vetiver) and the cosmetic industry.
174. The company is in the process of certifying its production as organic and engaging in a
“zero-waste program” to support green and environmentally friendly production.
Cahyaty Craft, Pak Endang Kurniawan, Handicrafts

175. Mr. Endang is an extremely dynamic man who started as a micro enterprise producing
handicrafts and has been able to identify one line of products that is now producing in larger
scale and selling to various regions of Indonesia and abroad. His company produces several
handicrafts, but the main and most successful one consist of a portable mat made with a
combination of a natural fiber (mendong) and synthetic.
176. The mats combine natural fiber (mendong)

coming from village production organized by the
company and artificial fibers. The company has its own
designs and a designer among its staff. Mr. Endang
engages about 160 farmers and procured about 40
tons/month.
177. Benefits of mendong to farmers can be

obtained from following information. Cycle of
production 3 years. Each year two harvest. First
harvest 8.4 ton/ha. Second harvest 11.2 ton/ha. In one year about 20 ton/ha. Costs Rs 200
million/13 ha for 3 years. Revenue about Rs. 70 million/year/ha. That would represent more than
$7,200 benefit/year/ha considerable above what farmers could do with paddy or most other
crop.
178. The work is broadly specializes by function and gender:

women work on weaving with a traditional loom and men cut and
stitch using a sewing machine.
179. Currently, the company exports directly to Brunei and

Malaysia; it exports to Japan through export; and in the past it
exported also to Germany. Current sales of mat only are about 8,000
pieces per month, each piece about Rs. 45,000 (in USD about
$40,000/month).
180. His encounter with the IAA-IPB dates back to 1996 when he
attended his first training with the incubator and attended course in
accounting, entrepreneurship, and motivation.
181. At the same time that he encountered the incubator, Mr.

Endang started the mat business. Through the facilitation of IAA-IPB
he obtained an initial small credit of Rs 37 million/year and kept on
using and expanding the credit over time. For example, in 2004 he
obtained Rs. 375 million /year. Given his success in business, he does not have problem with
access to credit: the banks are now keeping on offering him money to borrow. The money from
bank is expensive (14.5% interest) however; as a result he prefers to get credit through the
programs for which the incubator can facilitate access to credit at an interest rate of 6%. At
present, he obtained Rs 250 million credit that he can pay back in three years by the IAA-IPB
facilitation.
182. Recently, in early 2011, he attended training from the incubator in e-marketing but so far
no new business has resulted through e-marketing.
183. The main reasons in the past for getting in touch with the incubator were:
1. Advice and networking to expand market

2. Facilitate access to low interest-rate credit
184. In addition to handicrafts Mr. Endang is running a small construction material shop;
handicrafts however still represents 70% of his revenue.
185. He has ambitious plans over the next 5 years. He

intends to build a factory where all the production units are
under one roof. Currently, some production units are at the
village level and some at in the city. He also wants to have a
compound with services that could provide a tourist attraction
(say agro- and industrial-tourism) where he could show the
making of handicrafts, promote exchange between artisans and
tourists. The third activity would be an educational tourism
implying children from school to visit his premise and learn
about how to make handicrafts. Mr. Endang has already bought
the land to realize this three-pronged strategy (handicrafts-
tourism-education).
186. His workers can get more than the minimum wage of
Rs. 700,000/month. In fact a good worker in his factory can get
Rs. 60,000/day.
Pacet Segar Fresh Vegetables, Pak Unang Badrutamam

187. Mr. Unang is a vegetable farmer located in the hilly areas (1000 meters altitude) of
Cianjur in West Java and provides a variety of fresh vegetables to Jakarta. Among his produce are
fresh lettuce, cucumbers, tomatoes, onion, pak choy, carrot, baby green bean, celery, cherry
tomatoes, and leafy vegetables.
188. His sales provide
sufficient supplies for 10
outlets in Jakarta. Every
days from the packhouse
he ships 2 truck full of
fresh vegetables, 2 times
per day. Each trip takes 3
hours. Each truck
transports between 500kg to 1 ton, 7 days/week. Only 2 days per year he does not ship produce
to Jakarta, during major religious holiday.
189. Only a small part of the produce he sells comes from his
own land (2 ha); most of the produces is sources from 10
farmer groups representing a total of 100 farmers. All together
they cultivate about 60 ha of vegetables.
190. Mr. Unang’s first contact with the IAA-IPB was in 1996
but he became an incubatee only in 1999. He found the
incubator useful to his business particularly in terms of training
(eg packging) and facilitated access to credit. In fact, the incubator facilitated him to obtain an
initial credit of Rs. 35 million which later increased to Rs. 150 million in 1999. And another Rs 150
million in 2010.
191. The incubator also facilitated his participation in the training of 20 persons in Japan in the
management of fresh vegetables. He spent 2 months for this training.
192. In 1996 he started contacts with supermarket (facilitated by the incubator) with
deliveries of 2 trucks/day.
193. Supply to McDonald started in 2000 and lasted up to

2006. However it was later discontinued because of stricter
policy requirements by McDonald. The fast food company
required to move production to an industrial area and
adherence to good manufacturing practices (GMP). He did
not have difficulty with adherence to GMP, but the move to
an industrial area would have represented an investment
that he could not afford.
194. At about the same time, he became supplier for Wendy and is currently continuing to be
a Wendy supplier. According to Mr. Unang Wendy is more flexible than McDonalds; moreover he
can make 20% more profit, and benefit from a variable price in the contract (differently from
McDonald which uses fixed prices).
195. In addition to his own small packinghouse, he uses the government cooperative building
as packinghouse. Total volume of cooperative is on average 15-20 tons/day. Advantage of being
part of a cooperative: negotiation with supermarket and higher negotiated price (20% higher).
Each member of the coop supplies directly to the supermarket, but the price is negotiated
collectively.
196. He is currently planning to build 2 screen/plastic

house of 1,500 m2 for a cost of Rs 35 million. He intends to
avoid pesticides and wants to be a certified organic farmer
and dealer of fresh vegetables, a plan that might be possible
to implement in his area which is relatively high-altitude and
less exposed to pests.
197. His company won a National Award for Agricultural

SME innovation.
198. Another plan is to invest with a group of like-minded people in a retailing cooperative.
That investment will require considerable investment but he believes that the expected benefits
will be high.
199. His total sales in 2010 were 1.3 billion up from Rs. 700 million in 2006. His direct costs are
about 20% of sales and his margins about 30%
200. He plans to increase the size of his business through the development of organic
production and retailing.
201. He is currently writing new business plan, using GMP of McDonald, will need capital of
Rs. 6-10 billion.
Hikmah Baby Shoes, Pak Yana Supriyatna

202. Differently from the previous stories, Hikmah is
not an agribusiness. The reason is mentioned here is to
show how the approach of the IAA-IPB has been effective
even for different types of businesses and promises well
in terms of the current strategy of expanding the focus of
the incubator.
203. The owner of Hikmah Baby Shoes, Mr. Yana

Supriyatna, is currently a non resident incubate at the
IAA-IPB.
204. The baby shoe business was started in 1998 by the father of Pak Yana and Pak Yana
joined the company in 2000. Since he beginning Pak Yana effectively had to take over since his
father got gravely ill and died. His first coming to the business was quite difficult. When he
inherited the business from his father, his father has left a debt of Rs 300 million (money
borrowed in order to get treatment for cancer). He had to sell the house and start again from
scratch.
205. He went to the incubator in 2005 for training in management, marketing, and
administration. In 2009, the incubator facilitated a credit of Rs. 100 million for 2 years at 7%
interest.
206. Competition has

increased since the early
2000 due to the inflow of
cheap products from China.
His company cannot
compete on price with
China, so need to compete
on quality.
All production is manual.
The key stage where quality
should be improved is in
stitching.
207. E-marketing not yet successful in getting orders

(just started though in 2011).
208. Why choosing IAA-IPB since it is outside of your

field? Because:
 IPB cared
 IPB is concerned about SME development
 He got in touch with IPB through the Bank
209. Now he has full health insurance for his family and life insurance; health and education
insurance for the children
210. Difficulty in finding skilled workers. It takes 3-6 months to train a new staff.
APPENDIX 8. LEAFLET OF ERDC AND INCUBATOR IAA-IPB

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Agribusiness Incubation:

Good Practice Assessment

Agrifood Consulting International

INCUBATOR FOR AGRIBUSINESS AND AGRODINDUSTRY

1 BACKGROUND AND CONTEXT ................................................................................................... 8

AABI Asian Association of Business Incubations

6. Through association with financial institutions, national and international incubators,

8. Institutionally, the incubator is a division of the Entrepreneurship Research and Development

1 BACKGROUND AND CONTEXT

1.1 GEOGRAPHIC CONTEXT, PRIMARY SERVICE DOMAIN, AND PRIMARY CUSTOMERS

2 TYPE OF INCUBATOR AND STRATEGIC VISION

2.1 STRATEGIC VISION, MISSION, AND TARGETS

2.2 INCUBATOR’S DISTINCTIVE FEATURES

42. The four distinguishing features of the Incubator are:

43. The incubators four primary strengths include:

44. Its primary weaknesses include:

(iv) Limited financial resources for incubator operations

2.3 Networks and Partnerships

Relationships and Benefits

(iv) International incubator Opportunity to strengthen the capacity building, including

2.3.1 Inside Sources (within IPB)

2.3.2 Outside Source (outside IPB)

3.2 INSTITUTIONAL SET-UP

77. Primary expenses in last three years include:

4.1.1 Capital Assets and Facilities

4.1.2 Cost of Services Provided

4.1.3 Some Key Lessons from the Incubator Management

i. Maximize the effectiveness of your cost.

Table 1 Core management Team at IAA-IPB Incubator, Background, Services Provided

(i) Do not make promises of services that you cannot offer.

5 OUTCOMES AND RESULTS

Sector Average 2008 Average 2009 Average 2010 Average Growth

Agribusiness 31,458 37,569 44,236 20%

5.1.1 Impacts of the Incubator on Policy and Society at Large

No. Incubatees/ Graduates Skill Full time/seasonal

No. Incubatees/ Graduates Direct Labor Indirect Labor

5.2 GOALS MOVING FORWARD

5.2.1 Post Graduate Affiliation

5.2.2 Expansion of Focus

5.2.3 Management Issues

6 SUMMARY AND CONCLUSIONS

6.2 LESSONS LEARNED AND IMPLICATIONS FOR AGRIBUSINESS INCUBATORS

APPENDIX 1. MISSION PROGRAM – VISIT TO IAA-IPB

Date Activities Incubator Staff

APPENDIX 2. PERSONS MET

Name Organization Position Contacts Contact Email

Pramono D ERDC Director +62 811116853 [email protected]

Unang Pusaka Tani / CEO +62 812 992 8765 [email protected]

Andri Dwi Intramedia CEO +62 813 1400 4755 [email protected]

APPENDIX 3. FUND RAISING FOR THE IAA-IPB

 1994 – 1996 : Ministry of Cooperatives and SMEs (MCSME)

APPENDIX 4. SELECTION AND GRADUATION OF INCUBATEES

129. Currently, the incubator handles an accumulation of 2 residents and 25 non-resident

132. The five C’s include:

Motivation of Incubatees to Join IAA-IPB

Success and Failure of Graduates

 Select highly motivated incubatees.

APPENDIX 5. BOARD AND STAFF

The board functions include