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)