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House questions subsidized loan program's role in welfare
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Coordinating Economic Minister Darmin Nasution speaks to journalists at an event in Serpong, Tangerang. (JP/Anton Hermansyah)
T
he government has defended its subsidized loan program from criticism raised by the House of Representatives amid expectations to reduce economic disparity between Java and other islands.
During a hearing with government representatives on Thursday, lawmakers of the House's Commission XI, overseeing fiscal and the financial sector, expected the government to allocate more funds for the subsidized loan program – called the People's Business Credit (KUR) to customers outside Java.
KUR realization reached Rp 94.4 trillion (US$7.1 billion) last year, or just slightly below the targeted Rp 100 trillion, with more than half the figure disbursed in Java.
(Read also:Govt to allow cooperatives to join KUR program)
"[Majority KUR disbursement in Java] is not in line with the President's Nawacita vision in which he wants to build equality in economies in the farthest regions," said Maruarar Sirait, Commission XI member from the Indonesian Democratic Party of Struggle (PDI-P) faction.
Meanwhile, Coordinating Economic Minister Darmin Nasution said Java was home to the largest population of poor people and that bank branches were largely concentrated there.
"Java also is the biggest producer of rice. It is the island's biggest real power. Please don't see this as a problem of inequality," he said.
The Thursday hearing was also attended by Finance Minister Sri Mulyani Indrawati, Bank Indonesia Governor Agus Martowardojo and Financial Services Authority (OJK) commissioner for banking supervision Nelson Tampubolon.
The interest rate for the KUR program this year remains unchanged at 9 percent, although the government previously planned to cut it to 7 percent to trigger demand for loans. (bbn)
