House approves law on medium, small businesses
House approves law on medium, small businesses
JAKARTA (JP): The House of Representatives approved a bill yesterday empowering and protecting small and medium-size enterprises.
Minister of Cooperatives and Small Enterprises Subiakto Tjakrawerdaya said yesterday that the new law will provide a more conducive business climate for small firms to work with larger firms and to become independent businesses.
Subiakto said that cooperation between small firms was needed to strengthen their bargaining power, to increase their economies of scale and to prevent the development of "abnormal" market practices such as monopolies, oligopolies and monopsonies.
"Efforts to prevent abnormal market practices... will be done through deregulation, trade regulations, price determination and penalties," he said.
However, he added that certain monopolies, oligopolies and monopsonies would be allowed to exist if they are considered beneficial to the people.
Partnership
The law places much emphasis on partnerships, which, Subiakto said, should be based on a reciprocal need between large and smaller firms.
"This will hopefully be achieved by incentives and without any coercion," he said.
Subiakto said the law also makes provisions for training and development programs between smaller enterprises and government agencies.
The law also stipulates penalties for medium and large companies which undervalue their assets in order to be categorized as small companies.
The penalties range from fines of up to Rp 2 billion (US$873,362) to the temporary or permanent suspension of business licenses.
The law also puts into place a means of preventing large firms from taking over their smaller counterparts illegally.
Violators can be fined up to Rp 5 billion or have their business licenses suspended or canceled.
Subiakto explained that companies categorized as small firms are those with maximum total assets of Rp 200 million (US$88,200), excluding land and buildings, or those with maximum annual sales of Rp 1 billion.
The definition, he said, was needed to avoid different interpretations of the term and to reduce the likelihood of abuse. (pwn)