Jakarta, March 19 (Antara) -- The government needs to develop its small
and medium enterprises (SMEs), which are the pillars of the country's
economy, with the upcoming ASEAN Economic Community (AEC).
Experts believe that Indonesia's small and medium enterprises are not
yet well-developed and need assistance from the government to overcome
the numerous constraints they face.
According to Indrasari Tjandraningsih from the Senior Research Centre
for Social Analysis (AKATIGA), the development of SMEs in the country
still faces internal and external obstacles, which make it difficult for
businesses in the sector to survive, grow and thrive.
"Based on the result of a research, SMEs face problems related to
professional management, among others, as part of internal constraints.
With regard to external constraints, they lack comprehensive and
integrated data, while their information distribution system is also
inadequate," Tjandraningsih said on Tuesday.
She revealed this in a discussion on "Promoting SMEs and Indonesian
Economic Development" held in cooperation with the AKATIGA, the RAND
Corporation and the National Team to Accelerate Poverty Reduction
(TNP2K).
As they are the economic pillars of the country, the government needs
to pay serious attention to SMEs, with the AEC being implemented at the
end of the year. If the country's SMEs cannot compete in the AEC,
Indonesia will be flooded with products from other member states of the
ASEAN.
Moreover, policies issued for Indonesia's industrial sector so far have
not been in favor of SMEs as the government often ignores small
industries, including household businesses, according to an economic
observer from the Strategic Socio-Economic Cadres Association (Akses).
"Ideally, SMEs and cottage industries should serve as the backbone of
the national economy," economic observer Suroto said recently.
He noted that many smallholders' industries, such as carving industries
in Jepara, leather and silver industries in Yoyakarta, metal industries
in Tegal, and many others in various regions, have closed down.
Suroto observed that government policies, which always give priority to
industries that depend on foreign investments, should be changed soon.
Furthermore, the 58 million SMEs in Indonesia provide employment to
more than 90 percent of the total workforce in the country. This sector
should be prepared to face the AEC next year.
The Ministry of Cooperatives and Small and Medium Enterprises stated on
its official website last year that there were some 58 million SMEs in
Indonesia. They were being prepared to face a global business
environment.
Other data showed that in 2011, when there were still 51 million SMEs,
about 53 percent of the nation's gross domestic product was contributed
by them.
Therefore, SMEs should be assisted to overcome problems they encounter in the run-up to the AEC.
According to the research carried out by the AKATIGA and RAND
Corporation, SMEs face barriers related to access to credit, which make
it difficult for them to finance investments to improve production
technology, as well as barriers to market access.
In addition, SMEs are usually informal entities and often face a lengthy bureaucratic process.
"This study provides a detailed insight into their problems and
explains factors that cause SMEs to face business constraints. It
recommends measures to mitigate these constraints, as well,"
Tjandraningsih from the AKATIGA explained.
"The central and local governments also lack coordination in providing
assistance, such as management aid and other SME development programs,"
she said.
Tjandraningsih added that SMEs also face other constraints, including
those related to raw materials, workers, licensing and certification of
products.
"With regard to raw materials, they face stock and price problems;
regarding workers, they lack skilled ones; they also face unclear
conditions and expensive costs over licensing and certification," she
pointed out.
She further noted that the government should help resolve these issues
by providing raw materials, reactivating Labor Training Centers (BLK)
and simplifying licensing procedures and product certification.
She emphasized that credit constraints had significant impacts on SMEs
because they were neither able to purchase improved technological
equipment to increase their capacity and productivity, nor were they
able to increase the number of their workforce.
"I hope the government modifies the national credit program for SMEs
and establishes an electronic credit information system," she stated.
With regard to credits, the Indonesian Young Entrepreneurs Association
(Hipmi) has suggested that the government increase its credit provision
in 2015 through the smallholders' credit scheme (KUR) for SMEs,
especially beginner businessmen.
"We hope the amount allocated for the KUR for 2015 is not reduced. It
should be increased, or at least maintained at the amount that had been
set aside for it in 2014," Chairman of Hipmi, Bahlil Lahadalia, said on
Wednesday.
It was reported earlier that in 2015, the government had set a target
of extending only Rp20 trillion for KUR, significantly lower than the
Rp36 trillion allocated in 2014.
The government cut the KUR amount this year due to increased bad debts
and non-performing loans (NPL) of the KUR program.
Hipmi
believes that the increasing NPL problem of the KUR was not solely
caused by the weaknesses of KUR recipients in managing their cash flow.
He noted that more than 95 percent of KUR credit recipients were
considered skilled, while those with less impressive skills constituted
less than 5 percent of the recipients.
"Issues related to banks can also be attributed, as not all banks have
the competence to manage credit risks for small businesses. So the
government made the correct decision to reduce the number of banks
assigned to channel KUR credits to SMEs," he explained.
Hipmi also appreciates the government's efforts to lower the NPL in the
KUR program by planning to reduce the number of distributor banks and
eliminate KUR retailers.
According to reports, the government will channel KUR credits again
this year. It has appointed three banks with the authority to provide
KUR assistance amounting to Rp20 trillion.
"The government has confirmed that the BRI bank will be a KUR
distributor. It will also invite Bank Mandiri and Bank BNI to ask their
readiness to become distributing banks for KUR credits," Minister of
Cooperatives and SMEs, AAG Ngurah Puspayoga, stated after a coordination
meeting on the KUR in Jakarta on March 3.
Puspayoga affirmed that only three banks were mandated to distribute
KUR credits to minimize the recurrence of the NPL problem, which was
often the case in the earlier KUR scheme.
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(T.A014/INE)
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(T.A014/A/BESSR/A/Yosep) 19-03-2015 20:28: |
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