Govt to speed up funds to small firms

JAKARTA (JP): The government has pledged to remove obstacles in the distribution of funds set aside by state companies (BUMNs) to help small businesses.

State Minister of the Empowerment of State Enterprises, Tanri Abeng said, beginning next fiscal year, state companies will be allowed to channel funds directly to small businesses and cooperatives.

The new mechanism will speed up the distribution of funds, which are currently channeled through the state budget, Tanri said.

State companies are currently required to set aside one percent to three percent of their revenue to help small businesses. The program is proving difficult to administer as funds are pooled by the Ministry of Finance and allocated according to the state budget program.

The minister said that under the new mechanism, state companies would channel the special fund to small firms and cooperatives as soft loans.

Funds from state firms would still be recorded as state revenue in the state budget, he said.

"We are currently channeling the soft loan funds through the state fiscal budget mechanism. The shift to direct channeling will speed up the process (of distribution)," Tanri said, citing approval from Minister of Finance Bambang Subianto.

Tanri told Antara news agency on Friday that a direct channeling process will increase effective fund used by small- scale enterprises and cooperatives.

"The soft loan fund must be returned to state firms to finance the same program. It is an ongoing process. The purpose of the funds is to generate a new fund inflow to recipients in order to sustain the continuity of the revolving fund flow," Tanri said.

State firms, which booked combined net profits of Rp 12 trillion in 1998, should provide at least Rp 360 billion to help small businesses and cooperatives during the current fiscal year ending in March. (02)