Small-Timer Stimulus Is No Short-Term Plan: Minister

FEBRUARY 09, 2015

Solo, Central Java. The minister for cooperatives and small and medium enterprises, Anak Agung Gede Ngurah Puspayoga, says the government wants to spur the growth of SMEs by streamlining the process for small businesses to get a permit and improving their access to funding.

“The permits for micro and small enterprises will now be issued by a single office, the subdistrict office, so there’s no more long processing time,” Puspayoga said at a meeting with batik makers and entrepreneurs in Solo, Central Java, over the weekend.

Subdistrict offices will issue single-page certificates for small businesses, and applicants will also get a card from state-controlled lender Bank Rakyat Indonesia for future access to loans.

“The entire permit application process is meant to be free of charge,” the minister added.

Puspayoga said his office would also ensure that notary fees for applicants trying to set up a small business, in a bid to stimulate the growth of such enterprises.

The minister said the government was trying to close the growing wealth gap — as seen in an increase in the country’s Gini coefficient, from 0.36 percent in 2005 to 0.41 percent in 2013 — by promoting micro, small and medium businesses to empower low-income Indonesians and curb the unemployment rate.

“The government is committed to propping up small and medium business growth since these businesses have proved resilient during times of economic crisis,” Puspayoga said.

Gunawan Sumodiningrat, a former ministry staffer and now an economist at Yogyakarta’s Gadjah Mada University, said  small and medium enterprises had pulled through some of the rockiest times in Indonesia, including during the 1997-1998 Asian financial crisis, when many much larger companies folded.

Small and medium businesses have also long served as the fallback option for workers who have lost their jobs in big companies, many of whom then go on to grow successful businesses.

Micro and small enterprises are categorized by annual income.

Micro business earn up to Rp 300 million ($23,600) annually, while small enterprises turn over between Rp 300 million and Rp 2.5 billion.