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)