Business recovery scheme initiated in Surakarta
Business recovery scheme initiated in Surakarta
SURAKARTA, C. Java (JP): The government has launched a multi-
billion rupiah program to reconstruct business in this historical
city which was severely damaged during two days of mass looting
and arson one week before the end of Soeharto's 32-year rule in
May.
Minister of Finance Bambang Subianto, Minister of Industry and
Trade Rahardi Ramelan and Minister of Defense and Security/Armed
Forces Commander Gen. Wiranto symbolically presented Rp 266.5
million (US$20,500) worth of venture capital to seven small-scale
entrepreneurs over the weekend.
"Venture capital financing is the most feasible and effective
funding scheme through which to rehabilitate the hundreds of
small and medium-scale business establishments devastated here in
May," Bambang said.
Bambang said state-owned PT Bahana Artha Ventura, which
provided the venture capital, would recoup its investments under
a profit-sharing scheme.
"Bank loans are out of question because they are hard to
arrange and come at unaffordably high interest rates," Bambang
said during the simple ceremony.
Surakarta's Mayor Imam Sutopo earlier recounted that on May 13
and 14 about 310 commercial buildings, department stores and
factories, 261 cars and 400 motorcycles were totally destroyed
during a complete breakdown in law and order.
"The orgy of looting and burning caused around Rp 457 billion
in material losses, left 11,400 workers jobless and caused the
death of 29 people in this city of 530,000 people," Imam added.
"Let us work together to heal our wounds," Bambang said at the
ceremony held on the blackened, charred remains of what was
formerly a major shopping center in this city. Most other major
shops in Surakarta suffered a similar fate.
Gen. Wiranto said he was stunned that Surakarta had been the
worst affect of several towns and cities hit by riots in May.
"This is not the Surakarta I knew, where I was born and raised
in a pleasant environment of patient, hospitable and law-abiding
people," Wiranto said somberly.
Bambang said the program in this city would be a model for
financing the rehabilitation of business in Jakarta and Medan in
North Sumatra, which were also badly damaged during massive
unrest in May.
Industry and trade minister Rahardi said he viewed business
reconstruction as crucial to reviving economic activity because
most of the establishments damaged during the riots were shops
and trading outlets, both vital links in the distribution system.
Bahana's president Hafiz Arief estimated that about 600 small
and medium-scale entrepreneurs in Surakarta badly needed venture
capital to reconstruct their businesses.
"Funds are not a problem because we have received aid from
Japan's Export and Import Bank and several other international
institutions. But we need time to assess the commercial viability
of candidates," Hafiz added.
He said Bahana's financing scheme for businesspeople here was
not a standard venture capital scheme under which investments
were converted into equity shares.
"Most of the businesses we are helping are either small shops
or family-owned firms which do not have the necessary capital
structure and incorporation status for equity participation by
outside investors," Hafiz added.
Bahana would therefore provide them with venture capital to be
repaid in installments under a profit-sharing scheme, Hafiz said.
Bahana is cooperating with the Surakarta-based PT Sarana Solo
Ventura, a three-year old venture capital company owned jointly
by Bahana and several big investors, including former president
Soeharto's son Hutomo Mandala Putra. (vin)