Kluster Penelitian Terapan dan Pengembangan Global/ Internasional RESEARCH REPORT THE ROLE OF CULTURE LEAD DEVELOPMENT IN EMPOWERING THE SMALL-MEDIUM ENTERPRISES (SMES) IN INDONESIA AND BRUNEI DARUSSALAM Arranged By: Leader : Dr. Susminingsih, MAg NIP.197502111998032001 (IAIN Pekalongan) Members : 1. Agus Fakhrina, M.S.I NIP. 197701232003121001 (IAIN Pekalongan) 2. Dr. Nassir (UNISSA Brunei Darussalam) INSTITUTION FOR RESEARCH AND COMMUNITY EMPOWERMENT (LP2M) PEKALONGAN ISLAMIC STATE INSTITUTE MINISTRY OF RELIGIOUS AFFAIRS OF THE REPUBLIC OF INDONESIA 2018 ABSTRACT The potency of Muslims such as social capital and their spirituality are significant for the resilience of SMEs in Indonesia and Brunei Darussalam. The life of the community develops as the culture develops. In a culture, reflects the worldview, the value that is believed, and the behavior shown by each society. Culture Lead Development (CLD) becomes the mainstream in the development of SMEs. Culture lead society development. The analysis of a social system in a society covers the economy and social contexts of the society itself. The phenomenon of social system holds its own characteristics based on the culture bearing the different analysis. It caused by the social values in each region which are the results of the individual values of the interacted society. The culture constellation using a symbolic-reciprocal environment clearly illustrates that humans are both individual beings and social beings. Development and culture has reciprocal relationships. Development will meet its form if humans have a culture that will be applied in development. Culture will develop into a new culture after development can be felt by humans, and so on. Emphasizing that the economic system does not stand alone but it is integrated with the environmental system is the principle that underlies the spirituality and industry balance. All goods and services produced to meet human needs are extracted from nature, whether from mining, agricultural or fishery materials. Behavioral trends in the economic and transaction field cannot be separated from the attention form cultural research. Most of the production and consumption systems directly extract natural resources and environmental services. Human survival determines cultural sustainability. The symbiotic relationship between culture and social order is long-term. The harmony of society is continuously formed because there is a conformity of shared value. The method in this research uses in-depth surveys and interviews towards the research object. This research applies qualitative research method with sampling method. The qualitative data based on the fact that the field is the data alive, iii dynamic and changing, descriptive approach here not only exposure data is passive, however the description is critical analysis with a correlational perspective. The research uses descriptive-evaluative approach. A descriptive research is to describes about a variable, symptom, or phenomenon. While evaluative approach is use to analyze the process which is undertaken in order to determine a policy by using a technique that develops the thinking framework in order to make a decision in entrepreneurship. This qualitative study used for an output of strategic policy output in the form of the SMEs’ managers economic independency strategy through the utilization of crativity and innovation in Indonesia and Brunei Darusalam Research found that culture is humans’ identity as well as their resource. Human develops through culture. Culture as a resource has stayed and settled in the minds and souls of every human being. There is a reciprocal relationship between human activity in SMEs and culture in Indonesia and Brunei Darussalam. The abstraction process from resources to a culture coming from innovation and creativity has a strong relationship with the spirituality level of entrepreneurs. Culture and innovation are the keys to achieve the sustainability of SMEs in both countries. iv LIST OF TABLES Table 1.1. Previous Researches ...................................................................................... 8 Table 3. 2. SME contribution on national GDP on 2013-2015 ........................................ 36 Table 3. 3. SME Contribution in non-oil and gas export in 2013-2015 ............................36 Table 3. 4. Number of Indonesian SMEs and Workforce Absorption in 2017 .................39 Table 3. 5. MSME number & MSME workforce in accorance to Pekalongan City Act no.20 of 2008 in 2017 ......................................................................................39 Table 3. 6. Trade, Cooperative, and SME Agency of Pekalongan City Batik MSMEs Partners Data .................................................................................................40 Table 3. 7. Trade, Cooperative, and SME Agency of Pekalongan City Batik MSMEs Partners Data ....................................................................................................41 Table 3. 8. 2017 Export Realization ..................................................................................43 Table 3. 9. SMEs Partner Farmers.....................................................................................99 v LIST OF FIGURES Figure 3. 1. Indonesian Batik Week ................................................................................ 45 Figure 3. 2. Pekalongan Batik Craftsmen on Their Activities ......................................... 46 Figure 3.3. 2018 International Batik Exhibition............................................................... 48 Figure 3. 4. 2018 International Batik Exhibition .............................................................. 48 Figure 3. 5. 2018 International Batik Exhibition.............................................................. 49 Figure 3. 6. 2018 International Batik Exhibition.............................................................. 49 Figure 3. 7. 2018 International Batik Exhibition ............................................................. 50 Figure 3. 8. Kampung Batik Djadoel Rejomulyo, Semarang........................................... 50 Figure 3. 9. Kampung Batik Djadoel Rejomulyo, Semarang........................................... 51 Figure 3. 10. Kampung Batik Djadoel Rejomulyo, Semarang ......................................... 51 Figure 3. 11. Jenis Pelayanan di Kampung Batik Djadoel Rejomulyo, Semarang .......... 52 Figure 3. 12. Semarang City Government Participation in Batik Exhibition.................... 52 Figure 3. 13. Minggon Jati Activities, Batang Regency .................................................. 53 Figure 3. 14. Minggon Jati Activities, Batang Regency .................................................. 53 Figure 3. 15. Minggon Jati Activities, Batang Regency ................................................. 54 Figure 3. 16. Minggon Jati Activities, Batang Regency ................................................... 54 Figure 3. 17. Minggon Jati Activities, Batang Regency .................................................. 55 Figure 3. 18. Laweyan Batik Village Monumen, Solo ..................................................... 56 Figure 3. 19. Batik Tjahaja, Laweyan Batik Village, Solo .............................................. 59 Figure 3. 20. Batik Tjahaja, Laweyan Batik Village, Solo .............................................. 59 Figure 3. 21. Pekan Nyawang Laweyan Event, September 25th – October 2nd, 2018 .... 60 Figure 3. 22. Ngecap Batik Activity ................................................................................. 61 Figure 3. 23. Religiosity of Batik Laweyan Entrepreneurs............................................... 63 Figure 3. 24. Batik Laweyan Wayang Painting Creativity ............................................... 64 Figure 3. 25. Laweyan Batik Business Activity ............................................................... 64 Figure 3. 26. Ondel-Ondel Sentra, Kampung Pulo, Central Jakarta ................................. 66 Figure 3. 27. Al Fathir Betawi Ondel-Ondel Art Workshop Activity .............................. 67 Figure 3. 28. Ondel-Ondel Production Activity ............................................................... 68 Figure 3. 29. “Ratu” Ondel-Ondel Product, Al Fathir Art Studio ................................... 68 vi Figure 3. 30. Ondel-Ondel Frame Production, Al Fathir Art Studio ............................... 69 Figure 3. 31. Ondel-Ondel Reparation Workshop, Al Fathir Art Studio ......................... 69 Figure 3. 32. Tenun Ikat Troso Production House, Kayra, Jepara ................................... 70 Figure 3. 33. Organization Structure Paguyuban Tenun Troso Cooperation, Jepara ....... 71 Figure 3. 34. Tenun Troso Pattern Copyright ................................................................... 72 Figure 3. 35. Tenun Troso Production Process ................................................................. 73 Figure 3. 36. Tenun Troso Thread Rolling Process ......................................................... 73 Figure 3. 37. Production Room of Weaving Troso .......................................................... 74 Figure 3. 38. Display Room and TrosoKayraJepara Woven Fabric Store ....................... 75 Figure 3. 39. Wood Smoothing Process ........................................................................... 76 Figure 3. 40. Wood Cutting Room ................................................................................... 76 Figure 3. 41. Kasongan Pottery Craft Center, Bantul