Germany provides technical assistance to help SMEs

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.