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Jakarta Post

Govt credit program fails to reach farmers, minister admits

  • News Desk

    The Jakarta Post

Jakarta   /   Wed, February 15, 2017   /  05:20 pm
Govt credit program fails to reach farmers, minister admits Coordinating Economic Minister Darmin Nasution speaks to journalists at an event in South Tangerang, Banten. (JP/Anton Hermansyah)

Coordinating Economic Minister Darmin Nasution has admitted that the government-sponsored People’s Business Credit (KUR) scheme has not reached farmers, who actually needed such a soft loan facility to boost agricultural productivity.

Banks were still reluctant to disburse funds to farmers, because many farmers only cultivated lands owned by other people. “They (the plots of land) are not bankable,” said Darmin, as reported by tempo.co on Wednesday.

Unfortunately, Darmin said, banks were the only financial institutions with the capability to distribute the funds.

“Banks have weaknesses, but they are the only [institutions] we have [to distribute KUR funds],” Darmin said during a hearing with House of Representatives Commission XI, which oversees financial and bank affairs, in Jakarta on Tuesday.

(Read also: Govt to allow cooperatives to join KUR program)

Many parties propose other institutions, like cooperatives or other financial institutions, to distribute KUR funds, but Darmin said banks were still the preferred option, for several reasons. First, banks have large networks across the country and second, banks were good at managing funds accountably and sustainably.

Finance Minister Sri Mulyani Indrawati made similar statements, but she saw another reason behind the failure of the KUR program to reach the people that actually needed such facilities, namely the limited financial resources of the state.

“It is because we do not have enough resources to meet all the demand,” she said, adding that the government would continue to evaluate KUR programs for better distribution. (bbn)

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