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Jakarta Post

A new paradigm for microcredit

  • Nurkholisoh Ibnu Aman

Surabaya   /   Tue, December 1 2009   /  01:25 pm

In his speech at the opening of the recent National Summit, President Yudhoyono laid out a plan to expand the reach of micro-loans programs (KUR) by involving more banks and allocating more money from the state budget to guarantee the loans. He envisioned a Rp 100 trillion (US$10 billion) disbursement of micro-loans in the next five years. The plan is part of an initiative to accelerate the development of Micro, Small and Medium Enterprises (MSMEs) in the country. Access to financing has been identified as one major obstacle for the industry to grow, so KUR is designed to improve it. Under KUR's scheme, the government provides funds to guarantee the loans disbursed by a number of appointed banks. Should the loans turn bad, the government will share the loss with the channeling banks. To ensure the effectiveness of the program, KUR loans are restricted to new borrowers and for p...