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ice President Boediono has called on local banks to extend credit to innovative young entrepreneurs as they have a crucial role in the nation’s future development.

Boediono said the nation had many young entrepreneurs who were still studying at schools and campuses. This is a business potential that should be tapped. “Banks should go upstream,” he said during a young entrepreneur expo in Jakarta on Thursday.

Boediono said Indonesian lenders should not only disburse credit to well-designed business plans from big corporations. They should also look at raw projects envisioned by Indonesia’s youth, he said.

The issue was important since entrepreneurs had a strategic role in providing employment and propelling the country’s economic growth, Boediono said.

He cited the economics principle developed by Austrian economist Joseph Schumpeter, who has correlated a nation’s advancement with its level of entrepreneurship, innovation and creativity.

Boediono stressed that it was imperative for university rectors and school principals to construct a curriculum that could nurture entrepreneurship. At the same time, Indonesian teachers and lecturers must also promote a learning environment that reflected students’ interests so that the country’s education system will produce innovative students.

Boediono promised an environment in the state bureaucracy more conducive to the prosperity of future entrepreneurs. “I will improve the infrastructure, provide incentives and ease the issue of business permits for new entrepreneurs who are just starting out.”

His comments echoed those by Bank Indonesia (BI) Governor Darmin Nasution, who last year told banks to allocate more of their corporate social responsibility funds to nurturing entrepreneurs.

Indonesia is bereft of entrepreneurs. According to the World Bank’s 2008 entrepreneurship survey, entrepreneurs in Indonesia only account for 1.56 percent of its total population, a dismal figure compared to Malaysia’s 4 percent or Singapore’s 7.2 percent.

“Become an employment maker, not just an employment seeker,” former president BJ Habibie told hundreds of students attending the event in his keynote speech.

Habibie said that it was imperative to develop entrepreneurs so that Indonesia could climb up the value chain and be known as an industrial nation, not merely identified as one of the world’s largest exporters of natural resources and raw minerals.

“I disagree with the policy of importing too many [value-added goods]. Do not forget that if we import such goods from other countries, it is foreigners who reap the most benefits, not us,” he said.

Pushing Indonesian lenders to reach out more to young entrepreneurs will strengthen their role as financial intermediaries, thus promoting Indonesia’s goal of financial inclusion, analysts have said. At the moment, Indonesia’s credit-to-GDP ratio remains low at 32 percent, with approximately only 50 percent of total households having access to banking or other financial services.

Bank Mandiri finance director Pahala N. Mansury acknowledged that Indonesia’s untapped young entrepreneurs offered lucrative business opportunities for banks. “Of all the people with access to credit, only 20 percent [utilize credit facilities]. We see great potential in the Indonesian credit sector,” Pahala said
on Thursday. (sat)