Mega to sign decree on SME this week
Mega to sign decree on SME this week
A'an Suryana, The Jakarta Post, Jakarta
President Megawati Soekarnoputri has endorsed the latest decree
on the restructuring of debts owed by small and medium-sized
enterprises (SMEs), and is set to sign it on Thursday, a senior
government official says.
"The President agrees with the latest draft. The decree will
take immediate effect once it has been signed," Taufik, a deputy
at the Office of the State Minister of SMEs and Cooperatives,
told participants at an SME seminar here on Tuesday.
He said that the latest draft of the presidential decree was
the 25th version.
The government has been trying to come up with a restructuring
plan for the debts owed by the SMEs for the past six months.
Initially, the above ministry, with strong backing from Vice
President Hamzah Haz, proposed a significant haircut facility and
soft restructuring terms for the SMEs.
But this has been protested by banks who argue that such a
policy could do further harm to their already shaky financial
positions and would be unfair to other SMEs which have been good
in repaying their debts.
These conflicting interests and intense lobbying by the banks
has forced the government to revise the presidential decree many
times.
The amount of debt owed by the SMEs totals around Rp 39
trillion (US$4.31 billion) including those owed to banks already
taken over by the Indonesian Bank Restructuring Agency (IBRA).
Restructuring these debts is crucial to allow banks to resume
lending to the SMEs.
The new version of the presidential decree does no longer
specify the size of debt haircut facility for the SMEs. Under
the previous versions, the haircut was set at 30-50 percent.
Banks have protested such a facility.
Some analysts have said that the new version of the decree,
reflects the triumphant of banks in lobbying the government
particularly via the Office of the Coordinating Minister for the
Economy.
"We hope that the debt problem could be resolved soon, so that
the SMEs could start generating productive activities, in a bid
to spur economic growth," said Taufik.