Efforts intensify to develop micro and small businesses

The Jakarta Post , Jakarta | Sat, 10/06/2007 8:24 AM | Business

The Jakarta Post, Jakarta

With the help of government funds, three lending collateral providers for micro and SMEs -- two of which are state owned, will be able to guarantee up to Rp 14.5 trillion in bank loans for micro, small and medium enterprises over the next three years.

Assuming an average credit amount of Rp 25 million, the figure could provide financing access to over half a million SMEs and help support a workforce of 1.7 million people, said Suharsono, president director of PT Asuransi Kredit Indonesia (Askrindo), one of the three fund providers.

The other two providers are Perum Sarana Pembangunan Usaha (SPU) and PT Penjamin Kredit Pengusaha Indonesia (PKPI).

The funds were made available after the government allocated Rp 1.45 trillion to the three companies, based on a recently-issued presidential decree on the empowerment of MSMEs, issued in June.

""Our capacity to provide collateral substitution has expanded with the recent injection of capital from the government. This would in effect allow MSMEs greater access to financial institutions,"" Suharsono said at a media gathering Thursday evening.

Figures from a June 2006 Bank Indonesia report show there were 48 million MSME units registered in Indonesia, with only around 30 percent securing access to commercial financing.

Micro and small businesses account for 90 percent of the 48.9 million business entities in Indonesia.

The government has recently intensified efforts to promote the MSMEs sector, including the provision and facilitation of easier credit and collateral schemes.

Just last week, four state-owned lenders, namely Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI), Bank Mandiri and Bank Tabungan Negara (BTN), agreed to provide partial relief of the Rp 17.93 trillion worth of loans owed by around one million MSME debtors.

Mandiri to boost micro credit

Bank Mandiri is to intensify efforts to boost its loan expansion to include micro businesses, through a plan to open 111 more micro unit offices by the end of the year.

Should the plan materialized, the bank would boast a total of 311 Mandiri Micro Unit (UMM) offices.

Mandiri will open the new units in Jakarta, Depok, Tangerang, and Bekasi, as well as small cities around the country.

As of the end of the first semester, Mandiri had distributed Rp 2.1 trillion in loans to micro businesses -- representing a 10 percent growth from the same period last year.

Micro credit is a funding service with a maximum credit loan of Rp 100 million. (JP/09/Astrid Wibisono)

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