ADS<\/p>\n
Transforming a Microfinance System : The BRI Experience<\/p>\n
"The Bank Rakyat Indonesia (BRI) Unit system, which is fully
\nself-financing and computerized, has become one of the world's
\ngreatest success stories in microfinance."<\/p>\n
The above statement, written in a report by the Harvard
\nInstitute for International Development (HIID), accurately
\ndescribes the achievements of Indonesia's oldest bank: BRI. Such
\nachievements were unimaginable when the bank was established more
\nthan a century ago, on Dec. 16, 1895, by Raden Bei Aria
\nWiriaatmadja, the vice regent of Purwokerto in Central Java.<\/p>\n
Having started out with only dozens of clients, today BRI
\nserves more than 30 million customers throughout the nation. As
\nthe bank with the largest network in Indonesia, it has 13
\nregional offices, 325 branches, 3,954 banking units, 147
\nsubbranches and 199 rural offices. BRI New York Agency is its
\noffice in New York. The bank has another office in the Cayman
\nIslands. Currently, the bank employs 37,000 people. By this very
\nfact, BRI goes to the record of Museum Rekor Indonesia (MURI)<\/p>\n
One unique characteristic marks BRI's long journey: its deep
\nconcern for small and medium-size businesses. This remains part
\nof its future plans, with the bank allocating 80 percent of its
\nportfolio to this sector. One of the reasons for this is that
\nsmall and medium-sized businesses have proven their capability to
\nsurvive, even during the country's recent economic crisis.<\/p>\n
The performance of the revamped BRI Unit system improved
\nsignificantly. In just two years a financial breakeven was
\nachieved. These achievements show that BRI Unit system is among
\nthe best examples in building a sustainable financing system for
\nthe poor. It also proves that contrary to popular opinion, the
\npoor are able to interact with and thrive within a market
\nmechanism. This has changed the way in which poverty alleviation
\nis viewed.<\/p>\n
From an international perspective, the BRI Unit system is a
\nmodel of sustainable development and as such performs the role of
\nmicrofinance best practice. This has been well documented in a
\nvariety of articles and international journals. Various
\ninternational organizations that have acknowledged the success of
\nthis system include the World Bank, Asian Development Bank,
\nUnited States Agency for International Development (USAID),
\nWomen's World Banking Organization, Islamic Development Bank and
\nAsia Pacific Economic Cooperation. Several studies have shown
\nthat the BRI Unit system has positively impacted rural area
\neconomic and social development. For example the Kupedes system
\nhad been shown to improve the length of children's schooling,
\nhousehold nutrition levels and the empowerment of women.<\/p>\n
International Visitor Program (BRI-IVP) Microfinance has
\nrecently gained recognition as an effective tool to improve the
\nquality of life and living standards of the poor. This is because
\nmicrofinance can help the poor in putting their productive assets
\nto use and at the same time help foster the development of micro-
\nsized enterprises. Therefore, many governments and international
\norganizations are now enthusiastic to develop microfinance
\nsystems. In this regard BRI, as a leading institution in
\nmicrofinance, commits to share its wealth of experience. In 1996
\nBRI established an International Visitor Program (BRI-IVP) in
\npartnership with USAID. BRI has also established a partnership
\nwith the Consultative Group to Assist the Poorest (CGAP), a World
\nBank affiliate organization, for the purpose of BRI-IVP capacity
\nbuilding programs such as the Study Visit Program and the
\nTraining Program, which includes on-the-job training in a BRI
\nUnit.<\/p>\n
Almost 1,730 participants from 45 countries have learned about
\nthe BRI Unit system and adopted it as best practice in their
\nrespective countries. This underscores the fact that the BRI Unit
\nmodel, besides being tried and tested, is also adaptable. One
\nchief reason participants are attracted to the BRI-IVP programs
\nlies in its approach and methodology, which are practically
\noriented.<\/p>\n
Technology of BRI<\/p>\n
Although the bank serves a huge number of customers in rural
\nareas, including the most remote villages, this does not mean the
\nbank is lagging behind in technology. In fact, technology-wise,
\nBRI is now one of the country's most advanced banks.<\/p>\n
MS 100, a survey conducted in 2002 of companies using
\ncomputers in the ASEAN region and Hong Kong, cited BRI as the
\nlargest computer user in Indonesia and number three among ASEAN
\nmember countries and Hong Kong. To date, the bank uses 25,583
\ncomputers. For its information technology, the state bank has
\ndeveloped the BRI IT Plan, which incorporates the Core Banking
\nSystem, Banking Delivery System and Management Support System.<\/p>\n
To provide the bank's customers around the nation with
\nconvenient services, BRI serves them through two types of banking
\ndelivery systems. The first is the conventional outlet, meaning
\nthe bank's premises where tellers and customer service staff
\nserve clients. The second type is e-outlets, which comprise
\nAutomated Teller Machines (ATMs) and phone banking. Currently,
\nthe bank has 582 ATMs all over the country, as well as 4,999 more
\njointly operated with other banks.<\/p>\n
As of September 2003, 587 offices had been connected in a
\nreal-time, online integrated network system using a centralized
\ndatabase in IBM AS\/400, Broadband VSAT (Very Small Aperture
\nTerminal), frame relay, as well as its website. In the very near
\nfuture, the bank, which earned the 2001 E-Company Award from
\nWarta Ekonomi business news magazine, is planning to use VOIP
\n(Voice Over Internet Protocol). With 140 foreign exchange and
\nmoney changer offices connected online, BRI is also spreading its
\nwings globally.<\/p>\n
BRI Performance<\/p>\n
Over the last few years of economic turmoil in the country,
\nThe bank, which earned the Best Brand Award 2003 from SWA
\nmagazine and Best Recapitalized Bank of 2003 from Investor
\nmagazine, has not only managed to stand solid, but has made
\nenormous progress. The relatively high business profit as per 30
\nJune 2003, which reached Rp 1.545 billion, shows an increase of
\n49.71 percent during semester I of 2002 at Rp 1.032 billion. The
\nprofit gain was almost 50 percent higher during semester I of
\n2003 due to an increase in interest revenue to Rp 7.408 billion,
\nin comparison to the same period in year 2002 at Rp 6.543
\nbillion.<\/p>\n
The relatively high profit is also due to Bank BRI managing to
\nmaintain the quality of productive assets up to semester I of
\n2003. The quality of this productive assets is reflected in the
\nlow level of nonperforming loan (NPL), at 3.41 percent. This
\nfigure is still within a limitation set by BI of 5 percent.<\/p>\n
BRI president director Rudjito said the growth was mostly due
\nto the increase in loans given to customers. This shows that BRI
\nhas also succeeded as a banking intermediary, as reflected in its
\nloan-to-deposit ratio (LDR) of 58.16 percent, which was above the
\nnational banking LDR. Loan distributed as of June 2003 was
\nrecorded at Rp 43.620 billion, or an increase of 21.68 percent
\ncompared with the loan distributed during the same period of last
\nyear, at Rp 35.848 billion. With the outstanding credit, the LDR
\nof Bank BRI reached 58.16 percent. Growth of credit during
\nsemester I of 2003 is dominated by micro, small and medium-scale
\nbusinesses (usaha mikro kecil menengah, or UMKM).<\/p>\n
The focus of UMKM business is reflected in the composition of
\nloan recorded in the Bank BRI portfolio, which was 91.62
\npercent. The loan distributed to microbusinesses amounted to
\n30.20 percent of all Bank BRI total loan portfolio. The loan
\ndistributed to small\/retail-scale businesses reached 51.92
\npercent and that distributed to medium-size businesses was 9.50
\npercent.
\n
\nAwards<\/p>\n
Due to the bank's strength and commitment to microbanking --
\nserving small and medium enterprises (SMEs) -- it has been
\nappointed by the government to conduct a related model project,
\nthe SME Center, in Indonesia. This project was part of an
\nagreement reached during a meeting in May 2001 between the
\nprivate sector, the Federation of Chamber of Commerce, Industry
\nand Service (FCCIS) and heads of governments within the G-15
\ngroup. The SME Center is meant to guide and develop small and
\nmedium businesses in facing global economic challenges.<\/p>\n
For its efforts in guiding and developing small and medium
\nbusinesses, BRI has received an award from the Indonesian Chamber
\nof Commerce (KADIN), especially for its achievements with the SME
\nCenter. The BRI internal audit received further international
\nrecognition on Nov. 19, 2002: the ISO 9001 Certificate in the
\nrisk-based audit category from three institutions -- the
\nRegistered American Bureau, United Kingdom Accredited System and
\nJoint Accreditation System (based in Australia and New Zealand).
\nBesides, BRI was the Best State-Owned Company in Customer
\nSatisfaction Strategy in 2003. The latest award received by BRI
\nis Best Financial Sector Organization of the Year 2003 and its
\nCEO, Rudjito, has earned Best State-Owned Company CEO 2003, in
\nthe Gold Category. Both of awards were made by the Office of the
\nState Minister of State Enterprises.<\/p>\n
However, the awards have not lulled the bank's management into
\ncomplacency; on the contrary, they have increased their
\nalertness.<\/p>\n
Next to its various achievements that are recognized worldwide
\nand its state-of-the-art technology, most important is the public
\ntrust of more than a century. All these form BRI's formidable
\nstrength for a more promising future in serving its clients with
\nthe highest level of satisfaction. For more detail about BRI,
\nplease visit its website: www.bri.co.id.<\/p>",
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"sponsor": "Okusi Associates",
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