Small firms face major obstacles

Small firms face major obstacles

JAKARTA (JP): A tedious bureaucracy, complicated licensing
procedures and a lack of financing sources are the major
obstacles to developing small business in Indonesia, says the
Association of Indonesian Economists.

The association's first secretary, Mangara Tambunan, said here
Tuesday that the government had not fully supported the
development of small business as expected.

Mangara also a lecturer at Bogor Agricultural University said
tedious bureaucratic procedures forced small businesses to spend
more money than they should to get the licenses and other
approvals needed to support their operations.

He said the association had identified seven major obstacles
to the development of small business here.

The other four obstacles are poor marketing, lack of raw
materials, lack of management and lack of technology.

"Small businesses find it difficult to get credit from banks
because most small entrepreneurs can not make applications which
meet the banks' criteria," he said.

He said that small business also had problems marketing due to
the weakness of their bargaining power, unhealthy competition,
and the lack of information about local and international
markets.

"Small businesses get insufficient information about the
buyer, market potential, and marketing ways," he said.

He said that not enough raw materials, and the poor quality
and rising prices of raw materials were also big problems.

Economist Sri Mulyani Indrawati of University of Indonesia
said the country needed a policy to create a supporting
environment for small business.

"The government has to issue a policy which will reduce
transaction costs in licensing, buying raw materials, operating
businesses, distributing products and obtaining information," she
said.

She said the main problem in creating a policy to satisfy all
sides was that different industries had different needs.

"It is a dilemma for the authorities in making a satisfactory
policy. The policy may not be suitable for all kinds of
industries," she said.

The association also announced yesterday that it would hold a
seminar on empowering and preparing small business for the 21st
century.

The seminar, in Malang, East Java on Dec. 18 and Dec. 19.,
will be held in cooperation with the Asian Foundation, and the
Association of Indonesian Agriculture Experts. (gis)