Selective regulation needed

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)