T

he Cooperatives and Small and Medium Enterprises Ministry has announced that it will grant money to budding entrepreneurs to facilitate them in obtaining land certificates to help them meet loan requirements, in a bid to upgrade existing micro-, small- and medium-scale (UMKM) businesses.

The ministry’s deputy assistant for funding, Tamim Saefudin, told a seminar in Jakarta on Thursday that the ministry had budgeted Rp 54 billion (US$5.5 million) this year in grants of Rp 25 million each for 2,160 novice entrepreneurs nationwide.

“We will grant the money to 1,500 of them on March 18. The funds come from the state budget and donations,” Tamim said.

Tamim said that the grants were expected to help the entrepreneurs finance their businesses and to trigger the emergence of new players, adding that lack of funds was still the main challenge for the aspiring businessmen in developing their enterprises.

According to the Central Statistics Agency, there are an estimated 4.5 million micro- to medium enterprises operating in Indonesia.

Although propping up the country’s economy, UMKM still face challenges, and Tamim said 70 percent of the business players —coming mostly from the micro sector — were not business-viable or bankable.

Tamim added that the low quality of human resources, inadequate marketing skills and lack of partnerships between players had stagnated the businesses.

“Most of the enterprises have little access to loans because they cannot take out the required mortgage or in the first place shy away from the complex procedure and also from banks’ high interest rates,” he explained.

To facilitate the entrepreneurs accessing credit, the ministry would give assistance to 20,000 micro business entrepreneurs to get land certificates.

Many of the entrepreneurs have no proper documents for their assets.

“We will help them to upgrade the status of their lands by simplifying the process. The certificates can be used in mortgages,” Tamim explained.

He said that to boost funding, especially in areas far from banks to reach, the ministry would alter 100 non-formal lenders into saving and credit cooperatives.

The ministry would also focus on developing funding from donations, especially to micro businesses, through cooperation with several foundations.

The Office of the Coordinating Economic Minister’s trade and industry affairs section has revealed that Indonesia currently has only some 700,000 entrepreneurs nationally and needed 4 million more to meet the country’s target
of having 2 percent of its total population running their own businesses.

Indonesia is still far behind neighboring countries Singapore and Malaysia, which have 7 percent and 5 percent respectively of their total populations working as entrepreneurs. (aml)