Government Plans Village-Based Businesses

The Jakarta Globe, Teguh Prasetyo, February 6, 2009 

In an attempt to counteract the rising tide of job losses, the Ministry of Industry will continue to develop rural small- and micro-business centers through its “One Village, One Product” program, or OVOP, which began this year. 

“Upon seeing the massive layoffs in manufacturing, the ministry realizes the need for empowerment programs such as OVOP to help create industrial centers and more labor-intensive development projects in villages,” Agus Tjahajana, the ministry’s secretary general, said on Thursday. 

OVOP programs encourage the residents of a village to pool their efforts to develop their local economies by utilizing nearby natural resources. 

According to the Ministry of Manpower and Transmigration, 17,488 workers were laid off from January 2008 until December, but the Indonesian Employers Association, or Apindo, placed the figure at 100,000 dismissed workers for all of 2008. 

Fauzi Azis, director general of small and medium industry at the Ministry of Industry, said that through training and technical assistance, OVOP would help villages develop agricultural, furniture and handicraft businesses. 

“The program will also develop human resources for firms operating in villages,” he said OVOP program is currently being implemented in villages in Java, but Fauzi said the program would also be expanded to Sumatra, Kalimantan and West Nusa Tenggara Province. 

“We also want villages in the program to add value by developing their own natural resources such as agribusiness plantations for corn, potatoes, cacao and other corps,” he said. 

The ministry also plans to continue cooperative efforts between OVOP and local and foreign institutions like the Japan External Trade Organization, or Jetro. 

Agus said that smaller firms tend to be more resilient in times of financial crisis and collectively employ large numbers of workers throughout the country. 

Ministry data show that the number of Indonesian SMEs in increased to 3,554,706 manufacturing businesses employing 7,633,768 workers in 2008, compared with 3,442,306 firms with 7,632,931 employees in 2007. The total value of SME exports came to $10.5 billion in 2008, up from $10.2 billion the year before. 

This month, the government announced a stimulus budget for cooperatives and small- and medium-sized businesses totaling Rp 315 billion ($26.8 million). In addition to the stimulus, the ministry has also allocated roughly Rp 59 billion to help fund the OVOP program.