Redistribute assets lawfully to avoid suspicion: Kadin

JAKARTA (JP): The Indonesian Chamber of Commerce and Industry (Kadin) called on the government on Thursday to pursue legitimate ways to redistribute productive assets to avoid suspicion among foreign investors.

Kadin chairman Aburizal Bakrie said that a lawful asset redistribution would be conducted through fair transactions, not through charity.

"The way should be through purchases... But the government should give more opportunities to small and medium enterprises to purchase those productive assets," Aburizal told journalists after a meeting of the chambers new board of executives.

Such opportunities for small firms could be translated into a fixed portion of shares when the government privatizes state firms or liquidates state assets.

The government could also give a discount to small firms or small local investors to buy shares of state firms or companies it has taken over and sells through local stock markets.

Aside from the stock market, the government could also pursue other legitimate ways of redistributing assets. For instance, by tendering expired forest concessionaires, again, giving priority to small and medium firms.

"The country's large productive assets should not anymore be controlled by a small number of people. Therefore, I think it is just fair to give more attention to small and medium enterprises," Aburizal said.

He said that he supported the government's policy of providing billions of dollars of subsidized credits to small firms and cooperatives, because it could bridge the gap between the rich and the poor.

The government has allocated Rp 10.8 trillion (US$1.44 billion) in funds for small enterprises and cooperatives. However, only some Rp 2 trillion has been disbursed.

Aburizal said that the chamber was prepared to help the government channel the credits to the right targets.

He said he believed credits to small firms would be productive and could create more economic activities and employment.

In addition, loans defaulted by small firms in Indonesia stood at around 2 percent, far below the some 50 percent defaulted by big businesses, he said.

"Since the government for decades gave more attention to big businesses through credits which turned out to be sour, it is time for the government to give more attention to small firms through credits," he said.

"Besides, Rp 10.8 trillion is nothing, compared to the bad debts owed by big businesses. This amount is just the same with the outstanding debt of one big company," he said.

Giving credits to farmers, small firms and cooperatives would help the country's beleaguered economy, because it would create more productivity and eventually encourage domestic demand, he said.

If all allocated credits for farmers, small firms and cooperatives could be disbursed this fiscal year, Indonesia's economy would start to book a modest recovery next year.

Nevertheless, Aburizal warned that such a recovery would still be undermined by the huge unresolved foreign debts owed by big businesses.

"I guess this debt hangover will not be resolved until the end of 1999. Until then, foreign private capital will not re-enter the country," he said.

"The most optimistic view is that parts of this foreign debt problem will be settled by the year 2000," he said.

Without foreign private capital, recovery in Indonesia's economy would be very slow.

He said large businesses would still face big problems in 1999 due to lack of financing, high interest rates and weak domestic demands.

"Thus, hope comes from these small and medium businesses. With enough financing from the government, they would drive output and encourage demand." (rid)