Small businesses ask for easier financing access<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
One day, 63-year-old Suherman, a small-scale entrepreneur, asked
\nfor a loan from a local bank in Jakarta. He needed to borrow Rp 2
\nmillion (US$219) to support his business that produced
\ncaramelized traditional snacks.<\/p>\n
\"I didn't understand why the process was so difficult,\"
\nSuherman told The Jakarta Post.<\/p>\n
He had to undergo a lengthy process that started by acquiring
\nand filling out piles of application papers, to which he had to
\nattach his land certificate as collateral.<\/p>\n
Weeks afterwards, a bank official surveyed his house, a 200
\nsquare meter plot of land in Kemanggisan, West Jakarta.<\/p>\n
All in all, it took him almost a year to finally secure the
\nloan.<\/p>\n
Still, despite all this trouble, Suherman can be counted
\namong the lucky ones. Thousands of other small scale
\nentrepreneurs were not considered worthy enough to even submit a
\nloan application, much less have it actually approved.<\/p>\n
There are plenty of tales of how small businesses experience
\ndifficulty in securing access to financing, and this at a time
\nwhen the United Nations has officially declared 2005 as the
\nInternational Year of Microcredits.<\/p>\n
According to a discussion held here recently, limited access
\nto credit currently poses the biggest obstacle to the development
\nof micro-, small- and medium-sized enterprises (UMKM).<\/p>\n
\"More than 60 percent of UMKM have never received loans from
\nbanks or other financial institutions,\" said lawmaker Irsan
\nTanjung during the discussion.<\/p>\n
He cited the latest data from Bank Indonesia and the Ministry
\nof Cooperatives and SMEs that shows that only 37.7 percent -- or
\n15 million -- of Indonesia's 42.39 million SMEs have accessed
\nloans from some 11,548 bank branches and 37,062 branches of non-
\nbanking financial institutions, with total credits of Rp 35.2
\ntrillion as of June 2004.<\/p>\n
Partly to blame for this state of affairs was the
\nimplementation of Law No. 10\/1998 concerning banking, which
\nrequires a long chain of bureaucratic steps to obtain loans, and
\nincluded hard-to-meet collateral requirements.<\/p>\n
Against this backdrop, Irsan said that it was crucial that the
\nbanking sector give special treatment to SMEs in obtaining
\nbusiness credit.<\/p>\n
Andang Setiobudi, head of SMEs research and development unit
\nat Bank Indonesia, also said that banks should be more aggressive
\nin extending loans to SMEs especially after the central bank
\nissued new banking regulations last week that were designed to
\nexpand bank lending into the private sector, including SMEs.
\n(004)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/small-businesses-ask-for-easier-financing-access-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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