New organization to help close socioeconomic gap

Zakki Hakim, The Jakarta Post, Jakarta

About 500,000 small-scale entrepreneurs from 11 million poor families across the country established a new organization on Saturday that will seek to improve their bargaining power in dealing with the government and financial institutions.

Called the Micro Businesses Association (AKU), the new organization was founded mainly to preserve the gains made under a government-sponsored poverty eradication program through entrepreneurship, the secretary to the coordinating minister for people's welfare, Soetedjo Yuwono, said on the sidelines of the AKU's first national meeting.

He said the association was set up after a group of business tycoons, who had been providing loans to small-scale entrepreneurs since 1995, had discontinued their assistance at the start of this year.

A group of 100 business tycoons were gathered by President Soeharto in Jimbaran, Bali, to pledge a commitment to helping the government close the socioeconomic gap between people in the country. Since 1998, the funds raised from the leading businessmen have been channeled to poor families through the Dana Sejahtera Mandiri Foundation, which was set up by Soeharto.

The partnership program offered support in the fields of human resources, financing, market access and market information.

The partnership agreement expired at the end of last year and the revolving loans were recalled, leaving the emerging micro businesses in limbo, Soetedjo said.

The AKU urged the government on Saturday to allocate at least 5 percent of the Rp 40 trillion (US$4.49 billion) in state funds earmarked for the poverty alleviation program this year to micro enterprises at an interest rate of 6 percent per year.

"Conventional banks tend to be reluctant to finance small- scale enterprises, let alone micro businesses. We, therefore, will lobby the government to encourage financial institutions to extend facilities to micro businesses." newly-elected AKU chairman Imam Hariyadi said.

Developing micro businesses is one of the ways to eradicate poverty in the country, said Imam, who is also a deputy to the chairman of the National Family Planning Board (BKKBN).

Sulistiowati, a housewife from the East Java town of Jember who has participated in the micro business program for the last five years, said the program had helped her and many other poor families in her community.

"Currently from my handicraft business, I can earn at least Rp 1 million net per month," she said.

Five years ago, she received a Rp 500,000 loan from the program, which she repaid over one year at an interest rate of 5 percent.

"We hope the association can lobby the government to prioritize people like us in the national campaign against poverty," she said.

The association has recruited 40 percent of its executives from the BKKBN given their access to government circles.