Minimum credit level for small firms met<\/p>\n
JAKARTA (JP): Bank credit extended to small businesses,
\nincluding farmers, has grown by an average of 20 percent per
\nannum during the last six years.<\/p>\n
Data from Bank Indonesia, the central bank, show that total
\ncredit extended to small businesses reached Rp 40.3 trillion
\n(US$17.47 billion) as of the end of October 1995, as compared
\nwith Rp 14 trillion as of 1989.<\/p>\n
Distribution was as follows: 46.1 percent of the credit was in
\nloans worth a maximum of Rp 25 million, 25.1 percent in loans
\nworth between Rp 25 million and Rp 100 million and the remainder
\nor 28.8 percent in loans worth between Rp 100 million and Rp 250
\nmillion.<\/p>\n
In its drive to help nurture small businesses, the government
\nhas required all commercial banks to extend at least 20 percent
\nof their credit to small enterprises.<\/p>\n
According to the central bank's weekly report dated Nov. 7,
\noutstanding credit, in both rupiah and foreign currencies,
\nextended by all commercial banks in the country, stood at Rp
\n216.76 trillion as of August.<\/p>\n
In its newest move, announced in August, the government
\nassigned all state banks to provide collateral free credit with a
\nmaximum level of Rp 50 million to small businesses.<\/p>\n
The data at the central bank show that the total collateral
\nfree credit extended to small businesses stood at Rp 72.5 billion
\nas of last month, compared to the Rp 29 billion recorded in the
\nprevious month.<\/p>\n
A source at the central bank noted yesterday that although the
\ngrowth rate for credit to small enterprises shows significant
\nprogress, chronic problems still exist in extending that credit.<\/p>\n
Banks, especially those which specialize in corporate banking,
\nstill face difficulties in identifying feasible small-scale
\nenterprises. On the other hand, most small firms still have
\nproblems with marketing, managing and fulfilling technical
\nbanking requirements.<\/p>\n
Cooperation<\/p>\n
To reduce risk, the government has told banks to work closely
\nwith cooperatives and other related institutions in extending
\nsmall-scale credit, especially credit targeted for farmers and
\ninformal businesses.<\/p>\n
Credit extended through cooperatives has grown by an average
\n15 percent per annum. As of August, credit of this kind reached
\nRp 991.8 billion, compared with Rp 551.5 billion as of 1990.<\/p>\n
Credit for farmers extended through cooperatives recorded a
\nvery slight growth. The extension of such credit averaged Rp 62
\nbillion per annum, 20 percent of which turned sour.<\/p>\n
Because of the large amount of loan defaults, the government
\nintroduced a new credit package which could be obtained directly
\nby groups of farmers.<\/p>\n
The government earmarked Rp 125.4 billion in new credit for
\nfarmers for this September's rice planting season.<\/p>\n
The source said that, as of last month, Rp 45 billion had been
\nextended to farmers for the season.<\/p>\n
Most of the credit for farmers has been channeled through
\nstate-owned Bank Rakyat Indonesia. Only recently have a number of
\nother banks helped distribute the credit. They include state-
\nowned Bank Ekspor Impor Indonesia, privately-run Bank Bukopin and
\ndevelopment banks owned by the West Java, Central Java, East Java
\nand West Nusa Tenggara provincial administrations.<\/p>\n
Bank Danamon and a development bank owned by the Irian Jaya
\nadministration have also expressed interest in extending credit
\nto farmers.<\/p>\n
The government, through Bank Rakyat Indonesia, also provides
\nspecial loans for primary cooperatives and their members. The
\nappointed bank has extended Rp 297 billion per annum in this kind
\nof credit.<\/p>\n
In addition to the above schemes, multilateral lending
\ninstitutions also offer special two-step credit schemes for
\nsmall-scale enterprises, environmental groups and farmers. They
\ninclude the World Bank, Japan's Overseas Economic Cooperative
\nFund, the ASEAN Japan Development Fund, the Exim Bank of Japan
\nand the Asian Development Bank.<\/p>\n
As of last October, the two-step loans were recorded at US$1.1
\nbillion, of which $850.1 million had been disbursed. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/minimum-credit-level-for-small-firms-met-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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