Germany and Indonesia join forces on SME empowerment

The Jakarta Post, Jakarta

The German and Indonesian chambers of commerce, Ekonid and Kadin, signed a deal Wednesday to jointly empower small and medium enterprises (SMEs) here.

"SMEs run the economy of a country, but they are not overheard," the German Embassy's deputy chief of mission, Wolfgang Piecha, said before the signing of the partnership agreement between Ekonid and Kadin.

With training and technical support provided by Ekonid for Kadin, this Rp 11.7 billion (US$1.27 million) project is an extension of a similar Rp 10.2 billion program that ran from 2003 to 2006. The current partnership is due to expire in 2009.

"We want to help SMEs become technology-based companies and to bring them to the European market," Piecha said.

Indonesian SMEs have an attractive range of products, including shoes, electronics, textiles, foods and vegetables, that have the potential to penetrate the global market, he said.

According to project manager Andreas Gosche, SMEs account for some 94 percent of job creation in Germany.

He expressed hope that the project would help Kadin empower SMEs in Indonesia.

"Big companies can empower themselves, but SMEs need assistance.

"We should help SMEs grow because they can respond fast to economic changes and create job opportunities, while big companies take time to recover after being hampered economically," he said.

Local SMEs weathered the 1997 economic crisis much better than larger businesses, and led the country's recovery efforts.

This new partnership between Ekonid and Kadin will cover the provinces of Aceh, Jakarta and West, Central and East Java, as well as the Indonesian Textile Association.

"Several chairmen of Kadin's provincial chapters, like in Bangka and Belitung, Papua and Riau, have come to us, asking for similar help, but we think we should concentrate on where we have started until we have significant results," said Gosche.

The chairman of Kadin's West Java chapter, Iwan Dermawan Hanafi, said the project was expected to account for 10 percent of all new job opportunities in the province over its lifetime, if it was implemented as planned.

Earlier this month, Manpower and Transmigration Minister Erman Suparno said he expected about one million more Indonesians to join the unemployment rolls this year. Last year, the official unemployment figure stood at about 10.8 million.