T

he International Finance Corporation (IFC), a member of the World Bank Group, is due to invest an additional US$12.5 million in its long-term partner PT Bank Hana to help Indonesia’s small and medium enterprises (SMEs) to grow and contribute more to the country’s economic development.

“Small and medium enterprises are the backbone of Indonesia’ economy, but only 30 percent of these businesses have access to financing, and at least 65 percent of them need additional funding to scale up operations, create jobs, and help people escape poverty and improve their lives,” said IFC’s vice president and general counsel Rachel Robbins at a press conference on Wednesday.

Robbins said the IFC has a total lending portfolio of $1 billion in Indonesia to promote sustainable growth through financial investment and provide advisory services.

As the third-largest bank in South Korea and one of the IFC’s trusted business partners, Bank Hana shares the same vision on the need to promote Indonesia’s SME sector. In 2007, Hana acquired small local bank PT Bank Bintang Indonesia to better serve the SMEs.

“In 2011, we had a loan portfolio of Rp 2.3 trillion [$250 million], and 40 percent went to the SME sector. This year, we are looking at an increase of Rp 1.5 trillion, of which one third will go to SMEs,” said Raul SH Park, Bank Hana’s director and chief finance officer.

The bank faces difficulties to further increase the lending portfolio to SMEs due to difficulties in business analysis and evaluation. Bank Hana’s chief executive officer Chang Sik Choi said: “Unlike in Korea, where we thoroughly analyze applications from companies before giving loans for safety reasons, analyzing local enterprises’ financial status is not easy here. Now we are trying to develop a scoring system to help us review business transactions to offer loans more efficiently.”

CFO Park said one of the difficulties Indonesia’s SMEs face in qualifying for loans is a lack of sufficient infrastructure to gain trust from banks. “It’s hard to find SMEs that are qualified for loans. Right now, we mainly look for potential ones through big corporate companies. What the government can do is to improve its accounting system, which can shorten the time for [companies’ qualification] analysis and help us disperse loans more easily.”

PT Bank Hana has 21 branches across Indonesia, and it plans to open 50 more by 2013. The bank aims to be a top-40 bank in Indonesia and will continue to focus on lending to SMEs.