Govt to speed up funds to small firms

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)