Cooperatives, SMEs remain neglected

Cooperatives, SMEs remain neglected

Rendi A. Witular and Yuli Tri Suwarni, The Jakarta Post, Bandung

The country's cooperatives and small-medium enterprises (SMEs)
remain underdeveloped and commitments to assist their financing
by the government, banks and corporate business has not
materialized.

The sluggish development of the sector, which played a key
role in cushioning the impact of the late 1990s financial crisis
on the nation's economy, was of great concern, said State
Minister of Cooperatives and SMEs Suryadharma Ali.

"Lack of access to financial resources, poor bargaining power
against the corporate sector, and an inability to increase
production capacity are some of the key problems currently facing
the sector," he said.

Suryadharma made his remarks during a launching ceremony for
micro financing year on Tuesday in conjunction with National
Cooperatives Day. The ceremony was also attended by President
Susilo Bambang Yudhoyono.

In his speech, Suryadharma emphasized the need for the
business community, including state enterprises, to immediately
realize their promises to assist in nurturing the cooperative and
SME sector.

"Lending for these small businesses is still hard to get. Not
to mention the high interest on loans as well as burdening
collateral if they manage to secure them. State-controlled and
privately owned banks are still difficult and cannot be relied
upon," he said.

The central bank and the government have ordered local banks
to allocate a total of some Rp 60.4 trillion (US$6.20 billion) in
lending this year for cooperatives and small-medium businesses.
The figure is lower than last year's lending realization for the
sector worth about Rp 75 trillion.

In response to the lack of commitment by state-controlled
banks in assisting small businesses, Coordinating Minister for
the Economy Aburizal Bakrie said banks could not be blamed for
the problems since their focus was to seek higher profits for the
state.

"The government cannot not force banks to channel more of
their loans to small and medium businesses. They should calculate
their lending based purely on business considerations and in
order to bring in more profits for the state," said Aburizal.

At present, there are 130,000 cooperatives and 4.5 million
SMEs throughout the country. The government has targeted the
number of cooperatives to soar to as many as six million by 2009.

Meanwhile, President Susilo acknowledged that there were still
numerous problems confronting the country's small and medium
businesses, but the government was upbeat the sector would grow
significantly with the intense involvement of other parties.

"We understand that the development of the sector is not yet
maximal. But we are heading toward improvement," said Susilo.

Susilo said that the government was now focusing on improving
availability to financial resources for the sector, as well as
its management, worker productivity, marketing, and partnership
with the corporate sector.

During the ceremony, Susilo also witnessed the disbursement of
loans worth Rp 443 billion from state-controlled banks, financial
institutions, cooperatives and corporations, to 49 cooperatives
and 6,900 SMEs.

Susilo said the funds were expected to help accelerate their
development.