Fate of small industrialists

Fate of small industrialists

From Media Indonesia

The monetary crisis has severely hit all sectors of our life. The illogical exchange rate of the rupiah against the dollar has caused havoc in trade and industry. Employee layoffs cannot be prevented. Even for the people who can hold their own, they are in for difficult times. The situation is very much felt by small industries, which basically own very limited rupiah-base capital.

One example is small industries in automotive and heavy- equipment components (excepting machine components) which use iron plates as raw material. Both thin and thick plates are produced from local material.

The raw material is not hard to obtain provided one can follow the rhythm of the exchange rate against the dollar and pay in cash. Meanwhile, the business partners -- the recipients of the products -- who are none other than the big businesses and industrialists, cannot follow the same rhythm because they are bound by a fixed system of procedure.

So, while the small industrialists pay cash for the raw material, their product is paid for after one month to three months, sometimes longer and they can do nothing about it. Thus, basically, the small industrialists subsidize the big industries, upstream as well as downstream producers. This describes the real situation in the ongoing pattern of partnerships.

The system of partnerships needs revision in order that the small industries are assisted by the big ones, not the opposite. Especially in this monetary crisis. I do not know what will happen if the government does not take concrete steps soon to defend the existence of the rupiah in our own country.

M. SUNARTO HHW

Jakarta