Uniform criteria needed for small enterprises

JAKARTA (JP): The slow pace of small enterprises is attributed to lack of coordination among related governmental institutions and the different criteria given to them, an official said yesterday.

Soeharto Prawirokusumo, an expert assistant to the Coordinating Minister for Economy and Finance, said at a one-day seminar on small enterprises, there are, for example, no uniform definitions and criteria of small businesses in Indonesia.

The definition given by Bank Indonesia (the Central Bank) states small enterprises are those with a working capital of no more than Rp 600 million (US$275,000), excluding land and buildings.

"For other government institutions, companies with such a criterion are regarded as medium entities," Soeharto said. "So, by definition, it suggests that many bank credits allocated for small enterprises have actually gone to larger entities."

Governor of Bank Indonesia, J. Soedradjad Djiwandono, said credits extended by banks to small businesses as of last June reached Rp 31 trillion ($14.3 billion) or 26 percent of their total credits, exceeding the government-set target of 20 percent.

Soeharto suggested the government introduce uniform criteria for small enterprises to prevent "free riders" from using facilities given especially to small businesses.

Coordinator

He also proposed the government form a special policy coordinator to promote the development of small business enterprises, in which many related institutions are represented.

"The establishment of such a policy coordinator is timely because our current, discreet treatments for small enterprises have proven to be ineffective," said Soeharto, addressing the seminar organized by his office, in cooperation with Konrad Adenauer Foundation of Germany.

Kai M. Schellhorn of Konrad Adenauer said Indonesia could learn from other countries which put small businesses at the forefront of their economy building.

"The economy of modern industrialized countries relies on small and medium enterprises. In this way, there is no way for conglomerates to be formed anymore," Schellhorn told The Jakarta Post.

He said early next year his foundation will cooperate with the Hasanuddin University in Ujungpandang, South Sulawesi, to conduct an advisory project for small and medium enterprises.

Latanro, chairman of the Center for Small-Scale Enterprise Development at the Hasanuddin University, said the cooperation is expected to boost the growth of small and medium businesses in eastern provinces.

"We hope that small and medium enterprises will be the prime mover of economy in the eastern part of the country," Latanro said. (rid)