Developing Small Business in Indonesia: Reflections on the Central Java Enterprise Development Project

The Central Java Enterprise Development Project (CJEDP), an experimental project sponsored by the U.S. Agency for International Development (USAID) and the Government of Indonesia (GOI), was designed as a way to test innovative approaches to the generation of employment and income through the development of small enterprises.

CJEDP was an application of an industry or subsector approach to enterprise development. Target subsectors were chosen during the design phase of the project on the basis of the existence of significant opportunities for strengthening the role and competitive position of small firms. Project resources were concentrated on the chosen subsectors rather than on cross-industry credit, technical assistance, or training programs. Activities were selected on the basis of their probable effect on the overall development of the industry and their enhancement of the importance of small enterprise within the subsector.

The project possessed the flexibility to assist any chosen client or type of client in order to accomplish its objectives. Emphasis was placed on private sector clients and beneficiaries. CJEDP tried to structure and implement its program in such a way that the client could achieve self-sufficiency.

CJEDP's toolbox included the ability to perform certain industry functions temporarily, provide expert technical and business advice, and sponsor specialized training programs, and the authority to contract for and provide technical direction to service providers. It could also administer transaction-cost subsidies and take other catalytic actions. Almost every activity involved a different combination of tools, and there was considerable adjustment in the mix over time. This flexibility was a key element in the CJEDP approach.

The status of the project was experimental; the risk of failure was accepted, decisions on what to do with whom were directed largely by technical rather than political criteria, and the structural environment was free of most bureaucratic rigidities and constraints.

CJEDP activities were organized into three subprojects: the Shrimp Production and Marketing Subproject, the Metal and Engineering Industry Development Subproject, and the Light Manufactured Export Development Subproject.