Pulling Back the Curtain

Because you are reading this blog post, I will assume that you have been introduced to delicious Java Bite dried mangos.  Moreover, I will assume that you know that Java Bite dried mangos result from REI's effort to build into the lives of rural communities in Indonesia.  If you landed here without that background knowledge, you can get up to speed in two minutes by watching this video.

So, now that you know the basics, let me pull back the curtain a bit so that you can see what few people recognize.  To be honest, when REI allowed me to begin the development of these rural enterprises, I had know idea what was behind the curtain.  But now that Java Bite dried mangos are in production and finding their way to consumers in both Indonesia and the United States, it's time to dispel the notion that it's been a piece of cake!  Consider these rankings out of 189 countries in the world, which were recently published by the World Bank.*

114   
- This is the ranking for the country of Indonesia for it's "ease of doing business".

But hey, I'm a "cup is half full" sort of guy.  At least we are not drying mangos in Haiti, which ranks 180 out of 189.

155 
- Indonesia's ranking for the "ease of starting a business".

I will spare you the stories, but it took us a full two years to gain the legal permits necessary to carry out business transactions.

153 
- Indonesia's ranking for "obtaining construction permits".

Recently, a friend warned me to expect two years to elapse before our plans to build and operate a new production facility are realized.

117 
- Indonesia's ranking for "registering property".

The piece of land that we selected for a new production facility was negotiated in May.  Twelve months later, the owner finally had the land fully registered.  Regarding the next steps, including declaring the transaction, paying taxes, etc., it was estimated that final transfer is still months away.

172 
- Indonesia's ranking for "enforcing contracts".  

A little lesson in economics: Transaction costs increase when contracts are not enforced.  In such an environment the ability to manage transaction costs is an important business skill to learn.  I'm still learning!

71, 75, 78 
- Indonesia's ranking for "getting credit", "resolving insolvency" and "getting electricity", respectively.  

Finance and utilities are notable bright spots.  I don't expect to have any personal experiences with the first or the second.  But as we build a new village production facility I will soon make first-hand observations about the third matter.  Stay tuned!

160 
- Indonesia's ranking for "paying taxes".  

Yeah.  That's about right, . . . which is why I pay someone else to figure out and execute the payment of taxes for me.  Among the two certainties of life - death and taxes -, the former is much easier in Indonesia.

43 
- Indonesia's ranking for "protecting minority investors".

This is the best ranking Indonesia earned in the report.  Unfortunately, I'm not considered a minority investor.  I am a foreign investor, the protection of which was not evaluated for Indonesia.  I hope my personal circumstances never test the extent to which protection exists for me.

62 
- Indonesia's ranking for "trading across borders".

Having executed three shipments to the U.S., I can affirm that the third shipment was fairly straightforward.  But the first one represented months of confusion.  If you know what you're doing, exporting is relatively simple in Indonesia.  If you don't, . . . well, there's a learning curve to go up.

Now that you have peered behind the curtain, I hope that you recognize just how special are Java Bite dried mangos!

They are delicious.
They are healthy.
They create jobs.
They incentivize care for the environment.

AND THEY DEMONSTRATE WHAT PERSEVERANCE CAN ACCOMPLISH!




*Note:  Data for all 189 countries is available at http://www.doingbusiness.org/rankings

Building People Who Are Financially Vulnerable

Resource Exchange International, Inc. (REI) takes the matter of "Building People to Build a Nation" very seriously, mobilizing resources so that professionals in several countries can strengthen the strategic sectors of their country.  In Indonesia we direct our attention toward those whose income prospects are limited.  Specifically, we work among low-income families in rural villages, creating jobs that can equip them with skills and abilities they need to improve their lives.

In order to grasp the economics of this group of low-income households, consider data about their saving and borrowing practices.  Figure 1 presents some stark contrasts between the group representing the lowest 40% of household income and the group representing the upper 60% of household income.

Figure 1.  Contrasting practices of saving and borrowing.

Note that saving practices are noticeably less frequent among low-income individuals,

presenting a picture of financial vulnerability. In addition, over 70% of

low-income respondents reported that it would be difficult or impossible

to obtain funds in the event of an emergency.  Low savings behavior combined with limited prospects to fund emergency situations paint a picture of very fragile finances for those who are helped by REI in Indonesia.

In contrast, Figure 2 presents similarities between the two income groups, leading some to conclude that perhaps Indonesia has achieved a degree of equality between low- and high-income groups.  After all, the incidence of borrowing among the poor is quite similar to the incidence of borrowing among the high income families.  On the surface it appears that capital flows just as well toward low-income clients as to high-income clients.

Figure 2.  Apparent "equality" among the rich and poor in Indonesia.

However, it’s important to note that a low incidence of saving for the low-income population, which was observed in Figure 1, should imply a high incidence of borrowing. After all, the households who have no surplus cash reserves are the ones who need to borrow when they meet unexpected financial problems. The financial vulnerability of the low-income group makes borrowing more likely compared to the high-income group. The fact that a higher incidence of borrowing does not appear in Figure 2 provides evidence of a capital market failure.

In order to accomplish the aim of REI- building low-income individuals to build a community- finances must be addressed.  But rather than loan money to the low-income segment, REI in Indonesia has implemented a strategy involving income-generation, which strengthens household finances before emergencies arise.  Indeed, participating households typically double their annual income during periods of production.

The additional income obtained by the families who participate with REI allows those families to respond to emergencies and increases the likelihood for others that resources will be available when needs arise.

REI in Indonesia recognizes the financial vulnerability of those in the lowest income segments.  Believing that building into such people can lift the community, REI has devised a job-creation strategy that can develop those who are financially vulnerable to become productive members of society.

Check out the Java Bite online store to learn more about the products that result from REI's efforts.  In fact, take advantage of this special offer (the Family Bundle : $9.99 for 8 packs of delicious Java Bite dried mangos, shipped for FREE to any US address!) while it's available!

Can it happen in Indonesia?

Can Indonesia accomplish what happened in the Philippines?

The composition of mango exports from the Philippines changed dramatically during the last 10 years, shifting from low-value exports (fresh mangos) to increasing quantities of high-value exports, like mango puree and dried mangos.

The graph below shows that the value of mango exports (which represents most of what is captured in commodity code 80450) nearly tripled in the span of a few years.  During the same period, Indonesia maintained it's position as a trader of raw materials, which have relatively low export value.

What does this mean?  It means that the Philippine mango industry is way ahead of the rest of Southeast Asia.

Processing, instead of exporting, the raw mangos, adds jobs and income for the Philippines. Exporting those value-added, processed goods means that more people are working and earning money than if the raw mangos were exported.

Can Indonesia do this?  More importantly, can Indonesia do this in a way that allows more poor people to work and earn money?

Resource Exchange International, Inc. (REI) has devised a path for this to happen in Indonesia.

1.  Develop rural-based technology and processes that can produce exportable dried mangos.

Done.  You can find these delicious dried mangos in the US.

2.  Educate local residents to carry out the procedures under REI supervision.

Done.  You can view a short video to see what this looks like..

3.  Create a training and production facility which can expand a competent workforce able to operate and manage rural-based fruit processing enterprises.

REI will seek donors to fund a $250,000 project which establishes a training and production facility.  Without such a facility poverty alleviation goals may be sacrificed as the industry develops.  To join REI in their efforts to champion opportunities for the poor in Indonesia, select "Boaz Project" on this page and then complete the rest of the form.

Together, we can build people to build the nation of Indonesia.

Java Bite wants to go to America!

The island of Java is home to a lot of tropical fruit - mangos, pineapples, papaya, bananas, etc.  The continent of North America?  Not so much.

It's no surprise that the US doesn't produce a whole lot of tropical fruit products.  American farmers busy themselves with crops like corn, soybeans, wheat, etc.  So, America looks to the rest of the world to provide products made with exotic fruit.

Figure 2 shows that US imports of mangos, guavas and mangosteen have increased dramatically.  Countries like the Philippines and Thailand export a lot of these products to the US.  Indonesia hasn't been a very prominent player.  But that hasn't stopped us from being the first to ship dried mangos from Indonesia to the US.  Java Bite dried mangos from Indonesia are available right now in the US.  In fact, you can get them RIGHT HERE!

But why stop with dried mangos?  Java Bite wants to send pineapple products, too!  Figure 3 shows the substantial increase of US pineapple imports, mainly from Thailand.

Although Java Bite dried pineapple has been marketed in Indonesia for several years, those products have yet to make an appearance in the US.  But perhaps that may change in the near future.

And what about dried papaya?  And dried bananas?  Like dried pineapple, those Java Bite products have never made it out of Indonesia.  Java Bite wants to live in America and bring the whole family, too!

Create an account and sign up for our newsletter to find out when will be the next shipment to the US and which Java Bite products will be included in the shipment.  We will let you know when the other family members arrive.

Reversing the Trend

In 1776 Adam Smith stated what everyone believed at the time to be an irrefutable fact.

"Rich and civilized nations can always exchange to a much greater value with one another, than with savages and barbarians."

It made sense.  And it implied that trade would happen almost exclusively among the rich.

Indeed fifteen years of liberalized trade policies in Indonesia reinforce the notion that low-income, remote households are excluded from international trade.  Figure 1 shows that the exports from small- and medium-sized enterprises have diminished.  Specifically, the share of exports in the gross domestic product of Indonesia's small and medium enterprises have trended from low (9%) to lower (3.5%).

This matter motivated the President of Indonesia, Joko Widodo, to implore the diplomatic corps to promote abroad products made by small enterprises in Indonesia.  Apparently, the President would like to reverse the trend.

So, when the Indonesian embassy in Washington, DC wanted to include Java Bite products in their pavilion at the Summer Fancy Food Show, we accepted their invitation to participate!

If you happen to be in New York City, June 28-30, please visit our booth!

Java Bite products began with the motivation to train and equip village residents to produce export-quality dried fruit products.  Village-made products will find their way into the hands of folks in New York City.  Resource Exchange International, Inc. is proud to have created opportunities where none existed before.   I think Adam Smith would be proud too.