New action will strengthen small business development

JAKARTA (JP): The new package of reform measures launched yesterday included new steps to bolster the development of small businesses through the allocation of more money from state-owned companies.

Minister for Cooperatives and Small Business Development Subiakto Tjakrawerdaya said yesterday that the Rp 500 million (US$231,000) limit that a state company was allowed to set aside from its annual net profits for small business development had been lifted.

"This move is expected to release more funds for small business development," Subiakto added.

He said the allowable uses of state companies' funds for small business developments were also extended to cover more categories of small-scale enterprises.

"The capital of the state owned PT Bahana venture capital company will be increased to enable it to expand its role in small business development," he said.

Subiakto added that the dividends gained by capital venture firms from their equity participation and the capital gains on their equity investments were both exempted from income tax. The minister explained, this was done to create an incentive for the establishment of more venture capital companies.

"The government will encourage the establishment of venture capital firms in provinces and districts to bring more financial resources closer to small firms with high growth prospects," the minister added. (vin)