Germany provides technical assistance to help SMEs
Sandy Darmosumarto, The Jakarta Post, Jakarta
The Indonesian and German governments signed on Thursday a declaration of intention to establish Business Technology Centers (BTC) in Batam, Yogyakarta and Jakarta. The centers are aimed at helping technology-based small and medium enterprises (SME) boost their market competitiveness. "The BTCs will become centers of comprehensive activity, where collaboration between research suppliers and entrepreneurs will be transformed into economic activities," said State Minister for Research and Technology Hatta Rajasa.
"SMEs need technological backup," commented the minister, adding that, "SMEs will greatly benefit from this scheme. It has the potential of being applied to all the provinces." He said that the scheme could "improve the nation's innovation system and help speed up regional economic growth."
Under the scheme, Germany's Ministry of Research and Education will provide professional technical assistance and training to SMEs under the guidance of BTCs. All centers will mutually share and disseminate information. The scheme will enhance interaction between local governments, technology and research suppliers, and SMEs.
Talking on behalf of his government, Germany's Ambassador to Indonesia Gerhard Fulda stated that the BTC scheme "applies experiences, methods, and knowledge acquired during the long cooperation between both nations' scientists."
The three centers possess different abilities, and assistance will cater to the needs of the region.
In Batam, attention is put on service activities through the strengthening of SMEs' manufacturing processes, so that they can interact with larger industries on the island.
The center in Yogyakarta will concentrate on the development of traditional medicines and culture-based industries.
The Jakarta office will prioritize the improvement of SMEs that are involved in information technology, manufacturing and service practices.
In terms of financing, Bank Muamalat and Bank Bumiputera, together with the Ministry of Research and Technology, will provide financial assistance for the project.
"Small enterprises will each get from Rp 50 million to Rp 500 million, while medium enterprises will get Rp 500 million to Rp 5 billion. The length of funds provision will depend on the nature of the business," A. Riawan Amin, president of Bank Muamalat, told The Jakarta Post. "Around 70 percent of the bank's credit is disbursed to SMEs."
Riawan favors the expansion of this scheme to regions other than Jakarta. Bank Muamalat has an extensive network of micro- financing throughout Indonesia.
On the other hand, Bank Bumiputera is still in the initial stages of its relationship with SMEs. "For Jakarta alone, we provide Rp 10 billion, from now until the end of 2003," said Winny Hassan, president director of the bank.
No specific technical details are known on the rate of interest implemented, nor the profit sharing between the BTC and the banks.
In the end, Minister Hatta hoped that Indonesia would have a better environment for a science-and-technology-based economy, thus paving the way for German technological investors to explore opportunities in Indonesia.
A similar scheme was introduced earlier this month by the World Bank's International Financial Corporation (IFC) in which US$22 million worth of technical assistance and training would be disbursed over a 5-year period, to assist SMEs in eastern parts of the country. Corporate partners in this particular scheme included Astra.