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.