Experts lament govt policy on poverty eradication

JAKARTA (JP): The government lacks the political commitment to narrow the widening gap between the rich and the poor and to curb conglomeration in the country's business activities, economists said at a seminar over the weekend.

Didin Daman Huri, an economist at the Bogor Agricultural University, said here Saturday that the government's existing policies to fight poverty and to support the development of the business activities of small-scale companies remain questionable.

He acknowledged that the government had introduced a number of financial schemes to help small-scale businesses and cooperatives and to fight poverty. "But such schemes are not only insufficient but also ineffective," he said.

Didin told a seminar organized by the alumni of the Association of Islamic Students that in the past, the government's economic policies were generally directed toward encouraging the activities of medium and large-scale companies mostly owned by businessmen of Chinese descent. Those companies, for example, faced no difficulties in raising loans from state- owned banks.

On the contrary, for cooperatives and small-scale companies, the government's loan facilities were almost "untouchable" not only due to the small amount of the loans allocated for them but also due to their inability to meet the requirements of the banks' bureaucracy, Didin added.

Bank Indonesia, the central bank, issued a number of "subsidized" loans to stimulate the economic growth in the early stage of President Soeharto's administration. Cooperatives and small-scale companies, however, received less than 5 percent of the credit, while the other 95 percent went to the medium and large-scale companies.

"The privileges given to those medium and large-scale companies allowed them to grow rapidly so that they have now become large conglomerates," he said.

Didin noted that the central bank no longer provides subsidized credit, but the intimate relationship of those companies with the government still enables them to obtain more loans from state-owned companies than small businesses and cooperatives can get.

Their close relationship with the authorities also enables them to benefit from almost all of the government's large projects, he explained.

"This is the main reason why the concentration of business activities in certain business groups continues." he told the seminar, which also featured senior economists Hartojo Wignjowijoto and Eki Syachrudin.

Didin said that the concentration of business activities among a handful of businessmen could be eliminated only by an anti- monopoly trust.

"Almost all economists have pointed out the need to introduce an anti-trust law, but neither government nor the House of Representatives has touched the issue," he said.

At the seminar attended by over 500 students and former HMI activists, Hartojo said the wide gap in the country's business activities not only resulted from the government's failures in adopting the principle of a market economy and in curbing corruption, but was also due to the poor quality of the country's democracy.

"How could you help the poor or small companies if the House members represent the interests of the authorities," he said.

Eki suggested that the political climate be changed so that everybody is allowed to criticize the government's policies openly without any fear. (hen)