Govt fails to empower SMEs, curb poverty, says Kadin chief

Apriadi Gunawan, The Jakarta Post, Jakarta

High unemployment and poverty levels are partly the result of the government's failure to empower small and medium enterprises (SMEs), Indonesian Chamber of Commerce and Industry (Kadin) chairman Mohammad S Hidayat says.

Speaking Wednesday to the annual conference of Kadin's North Sumatra branch in Medan, Hidayat said the government had failed to strengthen SMEs and to develop the country's infrastructure.

He said that of the 43.4 million SMEs registered by Kadin, only 5 million of them received any government support.

"This is proof that the government has yet to succeed in strengthening our SMEs. If handled properly, they could contribute positively to the growth of business in Indonesia," he said during his address.

With slow real-sector growth, it will be difficult for the government to create new job opportunities and to reduce the number of people living under the poverty line.

"Based on Kadin figures, the number of poor people in Indonesia stands at 39 million, higher than the 37 million reported by the government. Meanwhile, the number of jobless people stands at some 11 million," he said.

Regarding infrastructural development, Hidayat said that the construction of highways, bridges, power plants, etc., was not progressing as expected.

"This is because the role played by local investors in infrastructural development is still limited," he said. Given these circumstances, it was reasonable that most major infrastructure projects were awarded to foreign investors.

Hidayat said that he was aware that the government faced a lot of hurdles in its attempts to improve the nation's infrastructure, particularly as regards land acquisition.

"We want the government to issue a regulation on land acquisition, just as in the developed world, so that middlemen and speculators cannot jack up prices as they please," he said.

Speaking at the same event, Investment Coordinating Board chairman Muhammad Lutfi asked North Sumatra governor Rudolf Pardede to immediately set aside land to be used for the development of a special economic zone (SEZ) in order to attract more foreign investors to the province.

"Actually, none of the provinces have yet to submit their reports. But, this is important for North Sumatra province as the Penang (Malaysia) minister has informed me of his desire to cooperate with Medan, given declining competitiveness in Penang nowadays," he said.

"Last year, North Sumatra was the fifth best foreign investment destination in the country. Japan was the biggest foreign investor on $3 billion, followed by the U.K. on $2.5 billion, Luxembourg on $940 million, Malaysia on $900 million and Singapore on $820 million," Lutfi said

Rudof said he had promised Lutfi that he would promptly submit a list of potential zones as requested.