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)