WB urges government to empower small and medium-scale businesses

Rendi A. Witular, The Jakarta Post, Jakarta

The World Bank will propose to the new government efforts to empower small and medium-scale businesses by creating efficient regulations and providing sufficient access to capital markets, a bank senior official said.

Managing director Peter Woicke said the agency would discuss several problems that hampered small businesses doing business here with President Susilo Bambang Yudhoyono this Friday.

"The conditions for creating small businesses are not particularly great here yet. The large number of regulations mean it is very difficult to set up new companies or to hire workers. I think there should be more emphasis on these issues," Woicke said in a ceremony on Thursday.

Woicke, who is also a marketing manager in the bank's investment arm, the International Finance Corporation (IFC), said if the new government managed to address these problems, economic inefficiencies would be greatly reduced, thus boosting the confidence of small business owners to expand.

Economic inefficiencies are estimated to account for about 40 percent of production costs in the country.

These inefficiencies mean entrepreneurs are reluctant to start or expand their businesses, which would soak up unemployment and create extra revenue for the government in the form of taxes.

According the bank's annual World Development Report for 2005, uncertainty about the content and implementation of government policies is the top concern faced by businesses in developing countries, including Indonesia, these days.

The bank ranks Indonesia along with Laos, Cambodia and Vietnam in the bottom quartile of 145 nations surveyed about the ease of doing business.

Woicke suggested the government should focus on providing easier access for small businesses to capital markets, in a bid to help finance their expansion.

The bank and the IFC are expected to help Indonesia in providing facilities for companies to gain access to capital and funds to develop business infrastructure here.

"The country needs a lot of infrastructure and it needs long- term financing for that. I think that is where the World Bank and the IFC can be intensively involved," he said.