Speedy help needed for SMEs: KPEN

Speedy help needed for SMEs: KPEN

Fitri Wulandari, The Jakarta Post, Jakarta

The National Economy Recovery Committee (KPEN) urged the
government to speed up the restructuring of debts owed by small
and medium enterprises (SMEs), and to apply tariffs on four
commodities to protect domestic industry.

KPEN chairman Sofyan Wanandi said on Thursday that the
government should pay greater attention to SMEs given their
important role in speeding up the country's economic recovery
amid the current global economic slump.

He said foreign direct investment in the country was expected
to slow down in the future as investor confidence declined due to
the collapse of many big corporations worldwide and the legal
uncertainties faced by foreign investors now operating in the
country.

"We predict that FDI in Indonesia will be scarce in the
future. Therefore, we have very limited options for saving our
industry and economy," Sofjan told a press conference.

The KPEN urged the government to speed up the issuance of the
planned presidential decree on SME debt restructuring as many
such debts were non-performing.

SME debt restructuring was important for the country's economy
as SMEs had proven their ability to weather the economic crisis
and to employ huge numbers of people.

"The government must pay serious attention to the SMEs because
it is these that are really going to save us, particularly as
regards employment," he said.

Sofjan referred to a recent statement made by Coordinating
Minister for Economic Affairs Dorodjatun Kuntjoro Jakti saying
that the government would issue a decree on the restructuring of
SME bad debts in early July.

Dorodjatun said total SME bad debts amounted to Rp 28.1
trillion (about US$3.2 billion).

Bank Indonesia has also signed an agreement with the country's
banks for the distribution of a total of Rp 30 trillion in loans
to SMEs.

Aburizal Bakrie, chairman of the Indonesian Chamber of
Commerce (Kadin) said that the decree would give the banks a
legal basis for restructuring their SME loans.

"The SMEs should be able to run their businesses better and to
access loans," said Aburizal, who also attended the press
conference.

In addition, the KPEN also urged the government to set clear
cut policies in applying measures to protect four domestic
commodity producers -- those of rice, sugar, soybeans and corn.

"We can use quotas, tariffs or whatever else to protect our
farmers. The government should apply these measures, not just
talk about it," Sofjan said.

Over the past few years, imported rice, corn, soybeans and
sugar have been flooding the domestic market and threatening
local producers given their lower prices.

At present, Indonesia imposes a 30 percent import tariff on
rice, and tariffs of between 20 percent and 25 percent on sugar.
There are currently no tariffs on corn and soybeans.

Recently, the government has said it would apply higher
tariffs on the four commodities. A team set up to formulate the
tariffs is expected to complete its work next month.

The KPEN did not suggest any tariff figures.

However, Sofjan suggested that while such tariffs should
benefit farmers, they should not burden consumers.

The KPEN further called on the government to enact legislation
that would support the bringing about of a better investment
climate.

"The government should produce policies and laws which can
provide stability not only for domestic businesses but also
foreign investors," Aburizal said.

He cited the government's policy on wages, which had caused
concern for businessmen and foreign investors.

However, he said that the coming law on labor affairs, which
was currently being debated in the House of Representatives could
provide fair solutions to the problems.

"The law should protect both workers and industry," he
remarked.