Selective regulation needed

JAKARTA (JP): Bank Indonesia Governor J. Soedradjad Djiwandono said the inefficiency in the country's economic activities has partly resulted from excessive regulations.

Speaking in a seminar on the promotion of small-scale businesses in Palembang, South Sumatra, on Saturday, Soedradjad said economic regulations should, therefore, be reduced such as through the reduction of licensing procedures and requirements to reduce operational costs in the country's overall economic activities.

"But it does not mean that the country's economy should be absolutely freed from regulations or the government's intervention," he was quoted by Antara as saying.

He said that the government's intervention in managing the economy is still needed to ensure that the economy is moving in the right direction.

Soedradjad said that if a deregulation package causes a negative impact on the people, the government's intervention could, for example, be enforced to minimize its negative impact.

Most of the government's direct intervention is made in dealing with market failures such as when the market mechanism no longer works, he said.

He, however, warned that such market intervention should be supported by transparent rulings so that economic players would also be informed on the mechanism of the intervention.

"The rules of the game in the enforcement of the government's intervention should be clear," he added

In a separate development in Banda Aceh at the northern tip of Sumatra, Minister of Finance Mar'ie Muhammad also called for a stronger effort in helping small-scale companies, which generally lack capital and management skills.

He said that activities of capital ventures should, for example, be expanded to all parts of the country to give a wider capital access to small-scale firms, which often face difficulties in raising credit from banks due to their lack of business skills and collateral.

"The number of capital ventures should be increased to help small economic players," he said in his speech at the opening of PT Sarana Aceh Venture, a capital venture in Aceh.

Breakthroughs

He considered the establishment of capital ventures in the country as one of the important breakthroughs in helping small- scale businesses.

Bahana Artha Ventura, the state-owned capital venture, has established, at least, 10 capital ventures in provinces in cooperation with local businessmen.

The already operating capital ventures include PT Sarana Jabar Ventura in West Java, PT Sarana Sumut Ventura in North Sumatra, PT Sarana Jatim Ventura in East Java, PT Sarana Yogya Ventura in Yogyakarta, PT Sarana Jateng Ventura in Central Java, PT Sarana Bali Ventura in Bali, PT Sarana Sumatra Selatan Ventura in South Sumatra, PT Sarana Sumatra Barat Ventura in West Sumatra and PT Sarana Lampung Ventura in Lampung.

Mar'ie said the government would also soon introduce another breakthrough to further speed up the development of small-scale businesses in the country.

He, however, refused to elaborate the planned breakthrough. (hen)