Development of Agribusiness Enterprises - Asian Productivity ...

2. POLICIES AND PROGRAMS FOR PROMOTING
THE DEVELOPMENT OF
AGRIBUSINESS ENTERPRISES
INTRODUCTION
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Dr. Kaman Nainggolan
Director
Center for Agricultural Data
and Information
Ministry of Agriculture
Jakarta, Indonesia
The world today is characterized by rapid and fundamental change toward a new global
economic order. Geopolitical change, which is not easily predictable in terms of its direction
or impact, and the increasingly rapid development of science and technology are driving the
world economy into an era of globalization.
The rapid advances that are occurring in the areas of information, telecommunication
and transportation technologies are further accelerating this phenomenon of globalization.
It is with almost blinding speed that we are entering the globalization era and we thus face
a great deal of uncertainty and probable instability in the international economy. Obviously,
globalization will also affect national economies, including the agriculture sector and its
various activities.
Over the past three decades, the global economy has grown enormously. The successes
of General Agreement on Tariffs and Trade (GATT), Asia-Pacific Economic Cooperation
(APEC) and other forms of regional economic development have produced agreement on
opening up the market worldwide. The most significant action to achieve free trade is to
reduce, step by step, tariff and non-tariff barriers that are believed to have been the obstacles
to world trade in the past. We have witnessed the acceleration of international financial flows
and the massive growth of foreign direct investment fuelled by the opening of world markets,
all of which have contributed to significant expansion of the global economy. Thus, the
success of such multilateral agreements would simultaneously provide greater opportunities
for, and challenges to, improving efficiency in winning markets.
According to the World Bank (1995), however, the benefits accruing to developing
countries from multilateral liberalization depend mainly on the policy reforms of those
countries and, to a lesser degree, the liberalization carried out by their main trading partners
and the major world players. Therefore, related policy reforms in the agriculture sector
(especially in the developing countries) have to be carefully and comprehensively formulated.
To compete in the international market, product quality must meet the requirements
of the standardization systems, such as the ISO 9000 series. Therefore, the quality of
production and marketing management should be improved to conform to international
standards. Products of world-class quality increase competitiveness and access to
international markets. Accordingly, the agribusiness process should be market-driven in the