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Hempri Suyatna: Small business must stand up to govt
(JP/Simon Sudarman)The nationâs micro-, small- and medium-sized enterprises (SMEs) have great potential to serve as an economic pillar of the state, according to Hempri Suyatna, from Gajah Mada Universityâs School of Social and Political Sciences in Yogyakarta
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(JP/Simon Sudarman) (JP/Simon Sudarman)
(JP/Simon Sudarman)
The nation's micro-, small- and medium-sized enterprises (SMEs) have great potential to serve as an economic pillar of the state, according to Hempri Suyatna, from Gajah Mada University's School of Social and Political Sciences in Yogyakarta.
However, local SMEs haven't been properly managed and their presence has been made a stepping-stone by officials to realize personal ambitions, the academic says.
'Despite all the boasts about capital aid, given the present way of SME management, with the government lacking a populist economic development vision, everything will be in vain,' said Hempri.
According to Hempri, SME management has for a long time been politically motivated. As a result, government officials, their wives, their children and other assorted relatives take part in running institutes, foundations or associations governing SMEs.
'The time has come for SME businesspeople to receive political instruction so that they are capable of criticizing government policies, particularly regarding SMEs,' the prolific columnist and analyst indicated. 'On the other hand, they won't be easily mobilized and their businesses won't be politicized by officials.'
Such flaws in management will unfavorably affect capital aid disbursements, product marketing and business guidance, in which only businesspeople who are ready to approach certain officials will be prioritized.
'When cases of SME bad debts arise, the SME community is not to blame, because most of the capital provided for funding these businesses is not professionally raised but is more based on close ties with officials,' he claimed. 'Exhibition facilities also go to the same SME circles instead of those critical of government policies.'
Hempri also said that government policies designed to develop SMEs are inclined to be capitalistic, rather than those that favored of the growth of people's economic ventures. Consequently, there has been no sincere commitment to boost the potential inherent in SMEs.
'The policies allowing the spread of modern shopping centers in remote villages are actually stifling people's economic efforts, as is the case with capital loans at high lending rates of 12 to 24 percent annually,' Hempri said.
'In fact, in ASEAN countries, their annual lending rates are in the range of 7 to 8 percent only,' said Hempri, who had made a people's economic study and provided business guidance in Kalimantan.
The plight of SMEs has worsened as they struggle to survive amid a low spirit of nationalism in society. People in Indonesia, Hempri said, took little pride in the 'Made in Indonesia' and glorified foreign goods.
He doubted that public service ads and commercials touting locally made goods would be effective.
On the other hand, Hempri said SME development and growth needed to reflect the principles of economic democracy as defined by Article 33 of the 1945 (unamended) Constitution, which states that the nation's economy should be based on collective efforts and cooperatives.
Hempri says that local SMEs will be unable to compete with their ASEAN counterparts after the launch of the ASEAN Free Trade Area in 2015.
He'd rather see local businesses promote products that they can make with what economists call a comparative advantage, including those that are typical of Indonesian culture, such as batik and other
traditional commodities.
On the government's role, Hempri was critical. 'Guidance for SME businesses should be consistently and continuously provided while government departments should maintain their synergy and common vision.'
This has not been the case, he added. 'The government mostly undertakes large projects with less optimal results. Interdepartmental synergy is vital because SME management and guidance involve
various ministries.'
Hempri said SMEs could become a reliable pillar of economic development for the nation, given good management. He said his research indicated that 98 percent of all businesses in Indonesia were SMEs, while just 0.01 percent were major enterprises.
Further, the nation's 50,000 small businesses could provide jobs for upward of 150 million people in
Indonesia. 'For the empowerment of SMEs the government should issue rules to create partnerships between large corporations and SMEs through patterns of subcontracting from upstream to downstream levels.'
'This may serve as one of the methods for empowering the existence of SMEs,' suggested the man who supports batik makers in Magelang, Central Java, and assists the Yogyakarta provincial Office of Industry, Trade and SMEs.
On taxation, Hempri was passionate. 'Policies that will impoverish SMEs should also be abolished such as electricity and fuel price rises as well as tax imposition. I completely disagree with taxes on SME businesses.'
The father of one child and a soccer enthusiast continued. 'Such taxation is too hasty and unfair. Taxes should be based on profits, instead of assets.'
