Mon, 13 Jun 1994

RI, German banks develop small firms

JAKARTA (JP): Indonesian small and medium-scale firms are invited to make use of a business advisory service jointly provided by the state-owned Development Bank of Indonesia (Bapindo) and the German Investment and Development Company (DEG).

The Integrated Advisory Service for the Promotion of the Private Sector in Indonesia (IAS) which was launched in 1992 offers a complete range of services to develop business ties between Indonesian and German firms.

"Our services are primarily directed to small and medium-scale enterprises," said Manfred Manthey, the IAS project manager, at his office at the ATD Plaza building.

Manthey said IAS, which is assisted by a consulting team at the DEG head office in Cologne, could help Indonesian firms to seek German businessmen as joint venture partners.

Manthey foresaw an increasingly important role for IAS, especially now that the Indonesian business climate has improved markedly for German small and medium-scale firms after the recent easing of ownership and investment restrictions.

"German small firms are used to full control of their operations and the new foreign investment rulings allow for it," he noted.

IAS could also help arrange licensing or technical assistance agreements and other forms of business cooperation, Ruhariyanto, one of the Bapindo executives assigned to the IAS program added.

Ruhariyanto added that DEG offers equity funds and soft-term loans to local small and medium-scale enterprises and Indonesian- German joint ventures.

"Hence, besides helping promote business ties we also seek small and medium-scale enterprises which are viable for equity capital or loans from the German government-owned DEG investment and development finance company," he added.

According to Manthey, DEG has so far invested DM 160 million ($100 million) in equity and loan funds in 50 enterprises in the country.


Ruhariyanto said Bapindo had assigned its 41 branch offices throughout the country to identify small and medium-scale enterprises which are viable for DEG equity and financing.

The IAS program is based on a two-year agreement signed in early 1992 which was extended early this year for another three years.

"We spent the first two years mostly developing our information system and conducting studies on business opportunities in various fields," Ruhariyanto said.

But IAS has now been receiving a lot of inquiries from German small and medium-scale firms interested in doing business in Indonesia.

"A few weeks ago, for example, we help a German optic company seek a local partner for the production of glass frames," he said.

But he added that IAS does not involve in negotiations but acted mostly as a match maker.

He added IAS program, though basically not profit oriented, also helps Bapindo to get viable investment projects for financing.

"Moreover, since Bapindo is also the executive agency for the European Community Investment Partners (ECIP) we are in a better position to help arrange business cooperation with companies in the EC's 12 member countries," he added.

ECIP, like DEG, also offers equity capital and interest-free loans to joint ventures between Indonesian firms and companies based in one of the EC countries. (vin)