Wednesday, October 22, 2008

Employee empowerment Padang style

I went and had dinner at a Padang restaurant down the road from my hotel in Jayapura tonight and got to talking to one of the staff members. For those who are unfamiliar, Padang food (i.e. food from an area of West Sumatra inhabited by the Padang people) is by far and away Indonesia's most popular cuisine. Wherever you go in Indonesia, from Sabang to Merake, if a town has only one restaurant it's definitely selling Padang food. It's not just that Padang food is tasty (although it is), it's also due to the fact that Padang people are born salespeople. If there's a need, a Padang person will pop up in the most random places ready to fill it. Indonesians are very fond of backronyms and one of the most common is that Padang actually stands for "Pandai Dagang" or "Good at Selling Things" (it's funnier in Indonesian...). But I digress...

I was talking to this guy who had come all the way to Jayapura in West Papua (about the distance from Perth to Brisbane or LA to Washington DC) to work as a waiter in a Padang restaurant. I thought it seemed like a heck of a journey for a job that, I thought, probably didn't pay that well so I asked him whether he had a stake in the restaurant. Given his age (26) and his general lack of a managerial demeanour around the other staff I figured the answer would be no, but I was surprised...

He hadn't put up any equity, but apparently in Padang restaurants across the country the standard system is that the owners get 40% of the profit and the staff split the remaining 60% among themselves. He then launched into a quick economics lesson explaining the relationship between risk and return and the importance of incentivising good staff behaviours.

Empowering your staff like this is a pretty progressive notion; especially in Indonesia where labour practices are uniformly pretty terrible...

Impressive...

Tuesday, October 21, 2008

I for one welcome our new Papuan overlords

Until recently a Chinese private company was in negotiations with the Indonesian government to clearfell 1,000,000 hectares of old-growth Papuan rainforest to plant palm oil. Fortunately, the two governors of the provinces of Papua and West Papua put a freeze on all logging contracts earlier this year and the project has been in limbo ever since. With the leadership of the two Papuan governors, the Indonesian government is starting to understand that the value of this forest is substantially higher than the pittance they are getting from the loggers, but deforestation continues at a terrifying rate in Papua New Guinea.

Right now the clean development mechanism only permits carbon credits to be issued based on avoided deforestation projects. Basically, that means that you only get money for keeping a tree alive if you threaten to chop it down first. This is ridiculous... Until we can put a dollar value on the amount of carbon that a hectare of old growth Papuan forest absorbs in a year and start paying it to them, who can blame them for selling it of cheap?

If someone built a big bubble over, say, Europe, how long do you think it would last before they ran out of oxygen? Days, weeks? How long do you think the world would last if someone built an enormous bubble over Papua? I don't know, but I'd bet it wouldn't be long...

Until now the Papuans have been providing free oxygen production and carbon sink services to the industrialised world. Considering the state of our own old-growth forests, that's quite a public service. It's going to be a long time until someone puts a dollar value on it but, as far as I can see, the Papuans have in their possession a resource of far greater value to the world than the oil tucked away under Saudi Arabia's deserts. The pure value of the carbon sink and the oxygen its forests produce is probably enough, not to mention the water storage, the biodiversity and the simple stunning natural beauty of the landscape.

When the oil boom first hit the Middle East mid-late last century there wasn't just huge upheaval in Arab society, conservative British society threw a fit over the lavish spending of the Saudis with their gold-trimmed dishidashas and abaya-clad women trailing 5 steps behind. We're seeing a similar situation these days with petrodollar fueled holidaying Russian oligarchs holidaying in Europe and Asia these days staying in hotels that cost tens of thousands of dollars a night and drinking vodka with gold flakes in it.

Think about it... How long is it until we see Papuan oxygen barons wearing diamond studded kotekas flashing their money around in Crown Casino while Melbourne high-society clucks its collective tongue disapprovingly at the Papuan's largesse?