Mar'ie confident of overcoming economic hurdles
Mar'ie confident of overcoming economic hurdles
JAKARTA (JP): Finance Minister Mar'ie Muhammad is confident
Indonesia will weather the current economic storms to anchor with
a much stronger economic structure.
"I believe we're all confident that we'll come out as winners
from the current difficulties, and with a stronger economic
backbone than before. Amen," he said in a short speech at a
signing ceremony to form PT Mitra Ventura Indonesia, a holding
company of about 25 venture capital operations in the country.
He did not elaborate as he was leaving in a hurry to avoid
reporters.
The minister, however, said earlier in his speech that one
important lesson learned from the economic crisis was that small
and medium enterprises were amazingly resilient, "due to their
flexibility to the situation".
"This is a golden opportunity for us to further develop small
to medium enterprises and cooperatives," he said. But he added
that the important role of large businesses should not be
neglected.
He said that with the launch of the holding company, Indonesia
had taken a further step in developing its small and medium
businesses.
Mitra Ventura is a holding company of some 25 local venture
capital operations in the country. It is a joint venture
operation with state venture capital firm PT Bahana Artha
Ventura.
Mitra will have the backing of an international network from
the Export Supporting Council (DPE), since many of the 25 venture
capital firms' clients are exporters.
Backbone
Mar'ie said the holding company would be the backbone of the
regional venture capital companies, especially when making larger
business deals.
Venture capital is funds used for investors in small companies
that are considered to be in their first phase of growth. Funding
is provided by private and institutional investors.
Anwar Surjadi, director general of small business, said
venture capital was a positive alternative to bank financing
because it did not charge interest being based on profit sharing
or equity participation.
He said that since 1994, when the first venture capital
project was launched, some Rp 90 billion had been extended in
loans to more than 1,400 small and medium businesses.
Bahana Artha is a unit of state investment firm PT Bahana
Pembinaan Usaha Indonesia. The firm has actively sponsored the
establishment of venture capital operations throughout the
country.
Erwin Bantovani, a director at Bahana Artha, said the firm
planned to sponsor a launch of two new venture capital firms in
East Timor and East Nusa Tenggara.
He said the only foreign institution actively involved in
financing the firm's venture capital project was Japan's Exim
Bank, which as of last year had poured in 21 billion.
"But many other foreign institutions have started sending us
proposals," he told The Jakarta Post.
He refused to divulge the foreign firms' names because
negotiations are still in process.
He said small and medium businesses were quite profitable,
with a report claiming an internal rate of return (IRR) of up to
40 percent or higher.
The IRR minimum requirement to get venture capital financing
is 18.5 percent and many of the firm's clients had IRR levels
above the minimum.
Erwin said the average lending package was about Rp 250
million (US$26,216), up to a maximum Rp 500 million. The average
assets of target businesses were about Rp 600 million. (08)