Consultants vital in SME development

The Jakarta Post, Jakarta

Aside from supporting regulations, business consultants have proved effective in developing small and medium enterprises (SMEs), according to the Asian Development Bank (ADB).

The bank arrived at the conclusion through its implementation of a project to empower SMEs in four regencies: Sragen and Pati in Central Java, and Pare-Pare and Bulukumba in South Sulawesi.

"SMEs here face problems in getting access to funds and the market. A business service provider is a solution, as it can provide consultation, product quality control or technology advice," project leader Peter Bissegger said on Friday.

The two-year, US$1.5 million project has just been completed.

Bissegger said the bank assisted 15 business service providers in the regions, providing them with training programs and arranging networking to financial institutions and other resources so they could, in turn, provide consultancy services to SMEs.

He said the bank also coordinated with local administrations to review regulations and, if necessary, to revoke those which did not support business, as well as to implement a one-stop service policy to cut out bureaucratic hurdles.

"It takes a clean and strong leadership to implement these things, since such policies kill part of some (governmental) agencies and cut off their income. As we know, issuing a license is considered a means to reap a profit," Bissegger said.

Hari Setyanto, a business policy advisor to the project, said Sragen was one regency that had improved its regulations to support SME development.

Since the project was initiated two years ago, the regency has revoked several bylaws, including one that levied the transportation of forestry and plantation products, and eased procedural regulations on obtaining business licenses.

"The growth of SMEs there increased to 61 percent over the past two years. The quality of industry-related bylaws has also improved, because they were seriously analyzed before their issue," he said.

SMEs, which comprise about 98 percent of the country's businesses, have been facing difficulties in locating markets and dealing with complicated regulations that have deterred many from starting or expanding businesses.

Aside from the ADB, several local agencies are running support programs for SMEs, such as the Indonesian Chamber of Commerce and Industry (Kadin). Kadin is working to set up a trading center for promoting SME products to both domestic and foreign markets.