Indonesian-German Technical Cooperation PACA A Participatory Planning & Action Tool for Regional Economic Development: First experiences from Indonesia WiRAM Sector Network - Bangkok, 10. December 2003

Purpose of this meeting Illustrate the PACA concept in the context of RED Make the PACA experiences transparent & obtain recommendations & ideas for possible adjustments Identify cooperation opportunities regarding the PACA exercises in SN-countries Present a brief overview of conducted & intended PACA activities

Sukoharjo Location of

….. on the way to become a learning and communicating region

RED’s Goal: Increasing Regional Competitiveness Competitive advantage of nation Competitive advantage of region Competitive advantage of location

Endowment with natural resources Key Determinants of Competitiveness Economic Policy Decentralization Good Governance Telecommunication, roads, etc. economic factors political factors infrastructure Business Environment Private Sector Services Labor Force resource base regional competitiveness

What is ? “PACA” (Participator Appraisal of Competitive Advantage) is an action-oriented and participatory planning tool suitable for Cluster Development and LED Initiatives bringing together all major economic actors of a locality stimulating motivation for joint LED activities focusing on genuine economic competitiveness emphasizing a demand-driven approach

Examples of previous PACA Exercises Level of economic develop- ment Mafra, Brazil São Bento do Sul, Brazil Jaraguá do Sul, Brazil Brusque, Brazil Blumenau, Brazil Kabokweni, South Africa Queenstown, South Africa Kundasale, Sri Lanka Lampang, Thailand Korat, Thailand Chiang Rai, Thailand Novi Kneževac, Serbia Hazyview, South Africa Size of local economy October 2003: 3 Districts in Indonesia

Specific features of PACA Very limited fact-finding effort Strict action-orientation Limited involvement of external consultants Strong involvement of private sector, emphasis on business-driven LED Looking at opportunities for quick, visible results, not at big issues and bottlenecks The main assets are motivated stakeholders

What has happened so far ? PACA Facilitator Training in Solo (25-29 Aug. 2003)  23 participants from 9 districts / 4 provinces  First time in Indonesia  Training of Tools/Methods  Practical Training of Interviews/ Mini-workshop  Practical Application in a Ceramic Cluster in Klaten Realization of 3 PACA Exercises in Oct (parallel!)  Boyolali (Central Java)  Bima (West Nusa Tenggara)  Dompu (West Nusa Tenggara)

Who is involved in a PACA ? A “Champion” who suggests and coordinates the PACA –provincial or local government agency, Chamber, NGO, donor agency (e.g. GTZ) The PACA Team Other Local Organizations who take an active role in –financing –making staff available for the PACA Team Various Local Stakeholders who participate in the kick- off workshop, interviews, mini-workshops and the presentation

What is the PACA Team ? External Consultants who are familiar with the PACA method and LED –to introduce a fresh view at the local reality –to transfer their know-how to local members of the team Local Facilitators –for instance: professionals from the local business promotion agency, the local Chamber, the local university –not too young, too junior –with experience in economic promotion and in dealing with private business

Sequence of activities in a PACA Preparation: * Advance info * Hypotheses Preparation: * Advance info * Hypotheses Kick- off work- shop Kick- off work- shop Findings- Workshop: Elaboration of Diagnostic + Proposals Findings- Workshop: Elaboration of Diagnostic + Proposals Interviews Mini-workshops Presen- tation of Diag- nostic + Pro- posals Presen- tation of Diag- nostic + Pro- posals Imple- mentation Imple- mentation PACA-Project PACA-Exercise (2-3 weeks) Fieldwork (1-2 weeks)

Fieldwork Fieldwork Activities: 1) Qualitative Interviews selected entrepreneurs economic stakeholders supporting institutions in-house “conversation” or interviews during field trips 2) Mini-Workshops prospective clusters & supporting institutions In/near the cluster environment Available Tools: Interview Guideline Econ/Political Mapping Life-line Metaplan Method Porter’s Diamond Porter’s 5 Forces Transaction Matrix Mind-Mapping Metaplan Method

PACA Tools - Porter’s Diamond Competitive advantage and disadvantage of the sector What are the strong and weak points? Supporting institutions (factor conditions): * training, technology, finance, public util., infrastructure * location, land Strong + weak points Demand conditions: * Sophisticated demand * Unusual demand * Pioneering / innovative demand Strong + weak points Supporting industries (suppliers, subcon- tractors, service providers) Strong + weak points

PACA Tools - Porter’s Five Forces Rivalry: Who are competitors? Competitive advantage? Threat of substitutive products (radical tech- nical change, change in consumer behavior) Bargaining power of suppliers New entrants: How likely? Who? What advantage? Bargaining power of customers

How was the process of the PACA exercise (1)? The clusters were selected by the local/regional partners in a scoring process. Selected clusters in Boyolali:  Furniture  Milk  Tourism  Metal (copper) production

How was the process of the PACA exercise (2)? Then the preparation of the PACA exercise took place Which persons should be involved? How can the logistic be arranged? Information about the schedule Preparing information and marketing material Etc. Assistance of national and international advisors and the PACA team Realization of the fieldwork, analyzing and presenting proposals

Evaluation By Participants of the first PACA Facilitator/Multiplier Training Training Material Very satisfied about the content and quality of training material Organization Time-consuming bilingual training process (English / Indonesia), thus problems with the time-management Very satisfied with organization, training techniques, and handouts Satisfied with general time-frame and training steps In General Majority of participants saw its expectations met by the training Strong interest to implement PACA in the respective areas 

Aspects to consider (1) PACA requires intensive resources in preparation, realization and to maintain the follow up assistance Local/regional relevant partners should be early involved in the process, esp. those which can play in the future a driving and supportive role External expertise is still necessary PACA is cost intensive and therefore it is the question if local partners can replicate it in the same quality with their own funds – but: trained partners can use their know how for further replication Be aware to assist the follow up process, otherwise You loose the PACA spirit Continuation needs budget!

Aspects to consider (2) PACA could be scheduled shortly before budget planning processes, in order to raise the chance of receiving finance Get agreement and support from the local political decision makers Integrate relevant key persons in the PACA team Provide technical expertise on SME promotion Develop PACA manual to standardize the process

Lessons learnt (1) PACA is very time consuming and needs an intensive preparation Before the realization marketing for the process in the location is essential It is very positive to have all the material in the local language (flyer, checklists, guidebook: how to realize a PACA-exercise, book of concepts, handouts etc.) PACA is a powerful tool to have a relevant impact in a short time in a region Not more than 2 clusters shall be analyzed at one time

Lessons learnt (2) Marketing of the experiences is very important – other institutions have a high demand therefore PACA is just a start for a longer development process. It is not a mystic tool – the main resource of the process is the spirit and the motivation of the people!

Outlook In 2004 in other districts a PACA exercise shall be realized – the interest is already expressed! The PACA methodology seems to be suitable to analyze a district as a whole and to intensify communicating processes (Indonesian adaptation)

…. and now – the Indonesian PACA film:

Thank you very much For your kind attention !