RI needs broad-based development

RI needs broad-based development

SOLO, C. Java (JP): Minister of Finance Mar'ie Muhammad
reaffirmed on Saturday the urgent need for broad-based economic
development to ensure sustainable growth in the long term.

"Even in the major industrial countries, small and medium-
scale enterprises continue to play an important role in the
economy," Mar'ie noted after inaugurating a new venture capital
company, PT Sarana Surakarta Ventura.

He told hundreds of big businessmen attending the opening
ceremony that an economy which depends mainly on several large
business groups is vulnerable to instability.

"If something happens to just a few of the large business
conglomerates, such an economy may be in for serious troubles,"
Mar'ie cautioned.

He therefore welcomed the establishment of PT Sarana Surakarta
Ventura, which will specialize in providing equity capital and
loans to small and medium-scale enterprises.

Capital

Surakarta Ventura has a paid-up capital of Rp 5.25 billion
(US$2.35 million), of which 19.05 percent is owned by the state
venture capital company -- PT Bahana Artha Ventura -- and the
remaining 80.95 percent by 54 big businessmen and companies who
are either based in Solo or hail from that town and its
surrounding districts.

President Soeharto (in a private capacity) and his son Hutomo
Mandala Putra, chairman of the widely diversified Humpuss group,
together own 9.5 percent of the new venture capital.

Such noted entrepreneurs as Setiawan Djodi, Sukamdani S.
Gitosardjono, Usman Admadjaja, Robby Sumampow and large companies
such as Lippobank, Gudang Garam, Bank Central Asia and Batik
Keris are also shareholders.

Earlier in April, the same businessmen, led by Hutomo Mandala
(known as Tommy), also founded PT Bengawan Solo Dana Utama with a
paid-up capital of Rp 9.95 billion, which will operate as a
holding or investing company for new enterprises developed in
Solo and its surrounding districts.

A few weeks after its founding, PT Bengawan Solo set up a
finance company, PT Bengawan Solo Multi Finance, with a paid-up
capital of Rp 5.96 billion. This company will provide lease,
factoring and consumer financing.

Surakarta Ventura is the 11th venture capital company set up
by the state-owned PT Bahana Artha Ventura in joint ventures with
businesses in the provinces.

Mar'ie regards the equity participation of the big businessmen
in the venture capital company as a reflection of their
commitment to arrest the widening inequality between small and
big companies.

Many business analysts have of late criticized the glaring gap
that continues to grow between small and big firms, most notably
after the massive deregulation drive in 1985.

They warned the government of the increasing concentration of
asset ownership and market power in the hands of a few large
business groups.

The same issue was also raised by the World Bank in 1991 which
warned of the dangers posed by the concentration of market power
and asset ownership in the hands of several large conglomerates.

Astra partners

Mar'ie called on big companies to make a concerted effort to
help raise the capabilities of small and medium-scale firms,
either through venture capital financing or sub-contracting
arrangements and other forms of technical and marketing
partnerships.

He said PT Bahana Artha Ventura would soon set up new venture
capital firms in West and East Kalimantan, Riau and Jambi
provinces in joint venture with local big businessmen.

"Big companies can and should bridge the small and medium-
scale enterprises with the formal financial system and the
market," he said.

Mar'ie then praised the activities of PT Astra International
through its Business Partnership Program to help small and
medium-scale firms in Java.

Mar'ie, accompanied by Minister of Cooperatives and Small
Business Development Subiakto Tjakrawerdaya near Solo, also
visited Ceper, near Solo, to look at the achievements of small
and medium-scale casting firms which have been assisted by Astra
and its subsidiaries since 1991.

Under the program, Astra and its subsidiaries such as Bank
Universal and Astra Mitra Ventura, a venture capital company,
United Tractors, Federal Motor, Komatsu, have been providing
small casting firms in Ceper with equity and loan funds,
management, technical and marketing assistance. (vin)