RI economic program 'gains foreign support'

RI economic program 'gains foreign support'

JAKARTA (JP): Minister of Cooperatives and Small Enterprises
Adi Sasono said on Tuesday that his widely criticized people's
economy program had gained backing from Indonesia's foreign
donors.

The controversial minister, a staunch promoter of small and
medium-sized entrepreneurs (SMEs), said both local and
international parties accepted his plan to distribute Rp 10.8
trillion (US$1.23 billion) in subsidized loans to SMEs and
cooperatives.

"Neither the economy, finance and industry ministerial team
here or our international donors have any problems with the
program," he said after a meeting with the House of
Representatives' Commission VIII for the state budget and
finance.

Adi's program to provide financial assistance to smaller
enterprises through 17 subsidized loan schemes has been heavily
criticized by both local and foreign experts.

His critics say the program is not market oriented and is
merely a populist ploy to gain a political constituency.

Adi's people's economy program has won the support of the
International Monetary Fund (IMF). The program is included in the
government's new letter of intent to the IMF.

Adi said the IMF and other donors demanded tight monitoring of
the disbursement of the subsidized loans.

To accomplish this, the ministry has employed 5,120 personnel
to monitor the disbursement of the loans and prevent any leakage
from the funds, he said.

Adi said international donors also urged the government to
simplify the 17 loan schemes.

He insisted, however, that the schemes could not be simplified
further because the characteristics of small-scale businesses
were different and financial assistance for them could not be
generalized.

"We can't treat a farming loan in the same way as a fishery
loan, for example," he said.

He said he had also convinced international institutions that
the money spent to develop small-sized businesses was not an act
of charity, but part of the country's economic recovery program.

"This is an investment to open job opportunities. Without it,
rural people will migrate to the cities, and unemployment could
generate a vulnerable social condition and damage efforts to
stabilize our country," he said.

Adi said the only problems remaining in the program were
technical difficulties in disbursing the loans and the
misperceptions of large business groups who were concerned that
they would be victimized by the new program.

"There are misperceptions from some people that the government
will take over the assets of troubled conglomerates and
distribute them to small businesses."

"Our program has nothing to do with that matter at all, it has
all been misunderstood," he said.

The technical difficulties, meanwhile, mostly lie with
participating banks who are not used to channeling such large
amounts of subsidized credits, he said.

The allocated money for farming loans, for instance, now
totals Rp 8 trillion, compared to some Rp 200 billion per annum
in past years.

The new program also broadens those eligible for the loans
from government-sanctioned village cooperatives (KUD) to include
non-KUD cooperatives and nongovernmental organizations.

Indonesia's vast and sprawling geography has also hampered the
process, which will see loans disbursed in some 66,000 villages
across the country, Adi added.

Adi said that so far some Rp 2.2 trillion of the Rp 8 trillion
in farming loans had been disbursed, while an additional Rp 3.1
trillion would be disbursed over the next two weeks.

He said the disbursement of the remaining funds should proceed
smoothly because all the money had been channeled to banks.

"So the money is not with the cooperatives minister. I am not
Santa Claus, giving money away," he said, referring to an
expression coined by his critics to describe his program. (das)