Wed, 24 Mar 1999

No extra protection for small firms: Adi

JAKARTA (JP): The government will not provide excessive protection for small and medium-scale enterprises because it would discourage competition, Minister of Cooperatives and Small Enterprises Adi Sasono said on Tuesday.

Adi said any efforts to build strong business competition through protection would be doomed to fail, as was demonstrated by past measures by the government.

"In past years, the government gave excessive protection to conglomerates. This resulted in the destruction of our economy."

"The government will not repeat this mistake by providing excessive protection for small-scale businesses because it will not build competitiveness," he said at a seminar on rebuilding Indonesia's international competitiveness.

However, Adi said a certain amount of government protection for small businesses would be needed because the market economy would only take off when all players had equal footing.

Adi, lambasted by critics for his populist policy of distributing cheap loans to small businesses, again defended his so-called people's economy, calling it a democratized economy.

"We can't promote the people's economy if we continue to practice cronyism like in the past. The people's economy means we have to democratize our economy."

Adi also said his concept of the people's economy did not contradict with the market economy or oppose conglomerates or big businesses.

Big businesses are an essential part of his vision for developing the economy, he said, adding conglomerates still could do business in the country as long as they were not monopolistic.

Adi promised the government would never tolerate monopolies or unfair competition.

"There will be no more businessmen controlling over 3.6 million hectares of forests, controlling 90 percent of the supply of a commodity or two companies holding 80 percent of the domestic paper market."

"Such practices have resulted in a high-cost economy because competitors could not enter the market."

However, efforts to ensure fair competition and create a competitive market economy would be futile unless the country adopted an open political system, he added.

Adi said because Indonesia was pursuing a competitive, market- friendly, people-oriented economy, it won the approval of the Asia Pacific Economic Cooperation (APEC) forum to establish an APEC entrepreneurship center in Jakarta.

"We are currently conducting a feasibility study and gathering resources needed to realize the plan. Further moves will be taken at the APEC ministerial meeting in New Zealand next month."

He said the center would provide, among other things, business consultations, market information, programs to improve human resources and access to financing. (gis)