Small business needs better coordination to develop

JAKARTA (JP): Better coordination among government institutions, banks and the Indonesian Chamber of Commerce and Industry is needed to accelerate development of small businesses in the country, a senior official said.

Banks, for example, can increase their cooperation with Kadin by allowing the latter's provincial offices to guarantee the repayment of credits owed to small businesses, Director General for the Development of Small Enterprises Sidik Prawiranegara said at the opening of a two-day meeting.

The meeting will discuss ways to promote the development of small enterprises, which generally face problems related to lack of capital, skills and market access.

Sidik said intensive discussions will be needed to formulate concrete measures for improved cooperation among government institutions, banks and Kadin.

He said the government has been trying to support the development of small enterprises by allowing state firms to allocate up to five percent of their after-tax profits for assisting small businesses and cooperatives.

The government, under Presidential Decree No. 16/1994, also allowed its institutions to appoint small enterprises to carry out projects without having to take part in tenders.

The government has also required banks to allocate no less than 20 percent of their outstanding credits for small businesses and cooperatives.

Role

"I urge Kadin's provincial offices to play a more active role, specifically, by providing recommendations to small enterprises which have shown themselves to be reliable in carrying out the projects of government institutions or state-own companies," Sidik added.

However, the chief of Kadin's department for small-scale businesses, Poppy Dharsono, said that the government's efforts to promote the development of small enterprises are frequently hampered by officials at local administration offices.

She explained that sometimes high level government institutions agree to award projects to small enterprises but officials at lower-level offices oppose their decisions and hold tenders for the projects.

Low-level government institutions sometimes delay payments for months, causing tremendous losses to small enterprises, she said.

Poppy also said that Kadin has provided consulting services for small businesses through its "Rumah Indonesia", which has thus far trained 350 consultants from several provinces.

The consultants work in provinces with monthly salaries of Rp 150,000 (about US$70), of which two thirds are provided by the Ministry of Manpower and the remainder by Kadin. (yns)