Govt urged to optimize UNIDO aid for SMEs
The Jakarta Post, Jakarta
The aid agreement signed by the government and the United Nations Industrial Development Organization (UNIDO) here late last month should be excellent momentum for the empowerment of small- and medium-sized enterprises (SMEs), businessman Tony Agus Ardie says.
"We should optimally utilize the technical assistance, expertise, information and other resources offered by UNIDO, which has experience in helping empower SMEs in many developing countries," added Tony in an interview.
A UNIDO mission, headed by Director General Carlos Alfredo Magarinos, made a three-day visit to Indonesia, including Yogyakarta, last month to reaffirm its commitment to helping develop SMEs in the country.
During the visit, Magarinos and Industry and Trade Minister Rini Soewandi signed the UNIDO Country Service Framework Agreement for Indonesia.
"The projects to be funded under the agreement are valued at only about US$8 million, but they are nevertheless important as a catalyst for the empowerment of SMEs," said Tony who accompanied the UNIDO delegation during its visit to Yogyakarta.
Tony recalled Magarinos' reiteration of the vital role of SMEs as a major generator of jobs and consequently a key instrument to reduce poverty, thereby removing some of the primary causes of crime and terrorism.
As UNIDO's primary mission is to promote industrial development, notably with SMEs in developing countries, and enhance industrial cooperation at the global, regional and national levels, Indonesia can benefit greatly from the resources the organization has and the experience and expertise it had, according to Tony.
During his visit to Yogyakarta, Magarinos visited an integrated shrimp farming venture developed by Tony's PT Indokor in cooperation with local farmers and Gadjah Mada University, as well as a leather industrial center.
The UNIDO chief praised the three-pillar concept used by the Yogyakarta administration in empowering SMEs, involving businesses and the Gadjah Mada University under the leadership of Yogyakarta's Governor Sultan Hamengku Buwono.
The development of SMEs, according to Magarinos, should be based primarily on local initiatives and the three-pillar concept promoted by the sultan augurs well for the promotion of local initiatives and creativity.
Tony added that much had been written and preached about of the vital role played by SMEs to create employment, as well as the creativity and flexibility of SMEs in adapting to changing economic environments.
"What is urgently needed now is actual implementation of the commitment to empower the grass-roots economy through integrated technical assistance in production and marketing and easy access to soft-term loans," Tony said.
He said with more than 40 million people fully unemployed or under-employed and most big businesses still grappling with mountains of bad debts, the empowerment of SMEs was indeed necessary.
Indonesia, he added, could benefit greatly, especially from UNIDO's concept of establishing clusters of upstream and downstream industries.
Single-industry clusters, for example, in leather or agribusiness, could become specialized in certain areas, reducing overall costs for suppliers, workers, infrastructure development and other related logistics, he said.
Tony added that clusters of industries could reduce the costs of transportation and significantly improve the supply chain management. This in turn could decrease the costs of distribution and other logistical arrangements that usually account for more than 15 percent of free-on-board prices of export commodities in Indonesia.
He said superior logistical capability in clusters of industries allows companies to revamp their supply chain management to ensure the smooth movement of goods to the final users.
"Clusters of industries also enable assemblers and the big retail chains to gain maximum cost savings by rationalizing when and where they want to procure products and how they organize production," Tony added.