Poverty eradication through bank loan, not charity<\/p>\n
Sari P. Setiogi
\nThe Jakarta Post\/Jakarta<\/p>\n
The government's offer to provide credit for the needy to help
\nthem run their own businesses and emerge from poverty looks too
\ngood to be true.<\/p>\n
A string of requirements have been set only to make it elusive
\nfor those who badly need the government loans, who would
\notherwise turn to loan sharks.<\/p>\n
\"I was rejected a couple of times by a state bank when I
\nwanted to borrow money to start an enterprise,\" Leli Yulifar told
\nThe Jakarta Post on Saturday.<\/p>\n
\"The bank asked for collateral under my husband's name which
\nwe did not have,\" she recalled. The tiny woman said she was the
\nbreadwinner in her family as her husband was unemployed.<\/p>\n
She then went to a loan shark, who demanded nothing but a high
\ninterest rate.<\/p>\n
Leli opened her garment home industry under name Nabilla
\nCollection. She now has a showroom, workshop and several
\ncounters.<\/p>\n
Another would-be small-scale entrepreneur, M. Yahya from
\nMalang, East Java, had his loan application approved by a state
\nbank, allowing him to start a leather business.<\/p>\n
However, after about two years, his business collapsed. \"I had
\nneither experience nor market understanding,\" he told the Post.<\/p>\n
Instead of enjoying profits, Yahya now owes money to cover his
\ndebt.<\/p>\n
Leli and Yahya are good examples of past mistakes in the
\ngovernment program to boost small and medium enterprises (SMEs)
\nthrough a link with banks.<\/p>\n
Working hand-on-hand with the four state banks: Bank Mandiri,
\nBank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI) and Bank
\nTabungan Negara (BTN), the government has made changes to the
\nscheme, including the credit ceiling which has been increased to
\nRp 50 million (US$5,494) from a previous Rp 5 million.<\/p>\n
The four banks have pledged to provide Rp 2 trillion
\nthroughout the year, but only one tenth of it has been disbursed
\nso far.<\/p>\n
Loans will be provided in particular for SMEs in agriculture,
\nplantation and fisheries.<\/p>\n
Secretary of the Poverty Eradication Commission Gunawan
\nSumodiningrat said on Friday the government set the maximum
\ninterest at 24 percent per annum.<\/p>\n
\"The interest rate is far lower than that offered by loan-
\nsharks of between 36 percent and 48 percent,\" said Gunawan.<\/p>\n
State Minister of Cooperatives and SMEs Suryadharma Ali
\nidentified several problems facing the poor in dealing with
\nbanks.<\/p>\n
\"First is the high interest. Second, the poor lack access to
\nthe bank as perhaps they do not have proper collateral,\" he said.<\/p>\n
\"That is why we will cooperate with the state banks which are
\nexpected to set easier requirements on collateral. We will also
\nmake it easier for people to obtain land ownership certificates,
\nso they could use it as collateral (in the bank),\" said
\nSuryadharma.<\/p>\n
Under the new scheme, the SMEs have to work with a cooperative
\nand a consultant from a non-governmental organization.<\/p>\n
\"The consultant will help the SME obtain bank loans as well as
\nkeep the enterprise on track and productive, while the
\ncooperative will deal with marketing,\" said Gunawan.<\/p>\n
The three will share the burden of unpaid debts.<\/p>\n
Some 36.1 million of the country's population are considered
\npoor or earn less than $2 a day.<\/p>\n
Gunawan said the government had set a target of reducing the
\nnumber of poor people to 32 million in 2005.<\/p>\n
\"It should be understood that eradicating poverty does not
\nmean charity. The new government is committed to fighting poverty
\nand transforming the poor into productive and independent
\npeople,\" said Suryadharma.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/poverty-eradication-through-bank-loan-not-charity-1447893297",
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