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Giving back to society is 'right thing to do'

Palm oil giant Golden Agri-Resources funds schools, builds infrastructure and develops housing in the communities it operates.

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"One of my core beliefs is that giving back to wider society is the right thing for businesses and individuals to do. I believe this is at the heart of GAR; improving the livelihoods of people and communities around our operations . . ." - Franky Widjaja, chief executive and chairman of Golden Agri-Resources
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Golden Agri-Resources (GAR), also provides employment for close to 750,000 people and contributes almost 8 per cent of Indonesia's total palm oil production.

ENTREPRENEUR Franky Widjaja is in charge of a company that helps to manage almost 485,000 hectares of palm oil plantations, or the equivalent of nearly seven Singapores.

His company, Golden Agri-Resources (GAR), also provides employment for close to 750,000 people and contributes almost 8 per cent of Indonesia's total palm oil production.

These achievements are laudable in their own right but for Mr Widjaja, the company's real impact is on the community in which they work in. In particular, the firm has actively supported education in Indonesia.

GAR provides funding to build and maintain schools and other educational facilities at their plantations. To date, the company has built and managed 253 schools with over 2,400 teachers, educating more than 40,000 students.

"The Indonesian palm oil industry makes a significant contribution to the local communities. Education is a pillar of our community development programmes. We see it as the key to unlock the potential of Indonesia and as an effective way to break the poverty cycle that affects many of its people," says Mr Widjaja, who is also the chief executive and chairman of GAR.

At the same time, the company has built and maintained infrastructure such as roads, bridges, clinics and places of worship like mosques and churches. It has also developed housing and sporting facilities and provided financial help for the communities to celebrate festivals. Simply put, GAR has put much effort into improving the lives of the people they work with.

"One of my core beliefs is that giving back to wider society is the right thing for businesses and individuals to do. I believe this is at the heart of GAR; improving the livelihoods of people and communities around our operations through the creation of new skilled jobs, infrastructure and of course, value-added products of Indonesia," says Mr Widjaja.

This drive to make a difference traces back to his father, business tycoon Eka Widjaja, who left his home in Fujian China to come to Indonesia when he was just nine years old. At 17, during the 1930s, the elder Widjaja started selling biscuits from a bicycle rickshaw.

Through sheer perseverance and ambition, he survived the war, economic recessions and built his business empire from scratch. Often, he would get his son to follow him to meet customers and suppliers, hoping that his business acumen and ambition would rub off on his son.

"My father instilled a sense of drive in me at a very young age as he would bring me along to business meetings. This was of course in the early days before my father built the business into the world leader it is today," recalls Mr Widjaja.

Mr Widjaja took a slightly unconventional educational route, leaving his home to study in Japan in the 1970s instead of more popular destinations such as the United States or the United Kingdom.

"To be honest, I am surprised that it was not more popular. I graduated from Aoyama Gakuin University in 1979 when Japan was approaching the height of its economic power, making Japan a great place to learn from the best," he says.

It was at university where he was exposed to some of the sharpest minds in business, learning from them to build his own family business.

"The experience created an entrepreneurial spirit combined with a sharp business acumen that became second nature to me. This is also something I believe is at the core of GAR's success today," he explains.

After he graduated, he began to help his father's fast growing business conglomerate, the Sinar Mas group, which had interests from pulp and paper to property, chemical, banking and agriculture. In the 1980s, Sinar Mas bought oil palm plantations in North Sumatra under PT Smart Tbk, which was listed on the Jakarta stock exchange in 1992.

Four years later, GAR was founded and became the parent company of PT Smart. GAR was listed on the Singapore stock market in 1999. Today, the company is one of the largest palm oil plantations in the world, with a global distribution network holding assets of more than US$14 billion. Last year, it recorded revenues of US$7.6 billion, with a net profit of some US$113 million.

His role in leading GAR combined with his vision in creating a global company was what earned him the inaugural Asean Entrepreneurial Excellence award at this year's EY Entrepreneur Of The Year 2015 Awards.

MOVING UP THE VALUE CHAIN

The company's success, notes Mr Widjaja, was largely due to its attention to technology, which allows it to get the best out of their operations, or what the company calls "operational excellence".

"We keep getting better at everything we do, from harvesting practices to how we get our products onto the tables of consumers. Operational excellence in our company means practicing our day-to-day activities efficiently and precisely. We call it 'precision agriculture' practice. This has made us one of the lowest cost palm oil producers in the world," says Mr Widjaja.

The decision to focus on delivering the final refined product to their customers also helped give the company an edge over its rivals. Prior to 2007, refined products by GAR only constituted 40 per cent of its products shipped, with the other 60 per cent in basic or crude form.

Over time, the company decided that the best way forward was to move downstream to better service its clients. At the same time, it expanded its pool of customers internationally, with the goal of delivering products directly to their buyers. To this end, GAR formed several partnerships and joint ventures with shipping firms to extend the company's distribution and logistic capabilities.

"This initiative provides a holistic solution to GAR's international transportation by securing greater and more flexible access to large shipping capacities," says Mr Widjaja.

Last year, it also teamed up with Louis Dreyfus Armateurs, an international maritime transportation and services specialist, to enhance the company's capacity and efficiency in shipping its palm oil products domestically. That same year, it acquired an established nation-wide Indonesian distributor with logistic capabilities to enlarge its consumer product business and to be more cost efficient.

Acquiring these new capabilities meant that GAR was no longer simply providing of raw materials to customers but moving up the value chain instead. Looking ahead, Mr Widjaja is optimistic especially as GAR sits in the centre of the growing South-east Asia region.

"I believe the Asean region is one of the world's most dynamic regions. The core fundamentals for economic growth are here, and I believe growing populations and an emerging middle class make for exciting opportunities in the future," he says.

"There will almost certainly be challenges and bumps in the road, but the fundamentals are there and it is up to the private sector to tailor their growth strategies and harness the opportunities on offer."