Small businesses still face limited access to microcredits<\/p>\n
Leony Aurora, The Jakarta Post\/Jakarta<\/p>\n
People in the market call her Bu Haji, because the salted fish
\nseller has been on a pilgrimage to Mecca, Saudi Arabia or
\nsometimes Bu Janda, the widow, as her husband passed away a year
\nago.<\/p>\n
Her son left shortly afterward, taking everything from his
\nparents' kiosks in Bendungan Hilir market in Central Jakarta,
\neven the worn out wooden racks.<\/p>\n
\"He thought that because his father died, all this belonged to
\nhim,\" said Bu Haji on Tuesday as she packed crackers into plastic
\nbags. \"Poor, poor me.\"<\/p>\n
To stock her stall and keep her business afloat, Bu Haji
\nborrowed Rp 20 million (US$2,212) from the market's cooperative
\nunit.<\/p>\n
Recognizing the importance of microcredits -- defined by Bank
\nIndonesia as loans under Rp 50 million -- in the fight against
\npoverty, the United Nations has set 2005 as the International
\nYear of Microcredit.<\/p>\n
Today, in the launching ceremony of the program, eight
\nselected individuals from eight countries, including Indonesia,
\nwill receive microcredit awards in New York.<\/p>\n
Although deemed successful, microfinance has not reached as
\nmany people as it should. The latest government data shows that
\nonly 15 percent of some 30 million micro-entrepreneurs in the
\ncountry receive financing from banks.<\/p>\n
Lack of collateral and complicated procedures often prompt
\npeople in need of fresh funds to go to loan sharks, despite the
\nhigher interest they charge.<\/p>\n
Prihartini, who sells fruit in the same market as Bu Haji,
\narranged a Rp 60 million loan -- a little higher than the
\nmicrocredit criteria -- with 40 percent interest for a friend in
\nKlaten, Central Java, three months ago. In comparison, the bank
\nlending rate is around 16-18 percent.<\/p>\n
\"I get 2 percent of the interest,\" she said. \"He (the friend)
\ncouldn't approach banks because he doesn't have land
\ncertificates.\"<\/p>\n
To solve this, economist Pande Radja Silalahi said that the
\ngovernment should improve land ownership, or even provide land
\ncertificates free of charge.<\/p>\n
Director of the Institute for the Development of Economics and
\nFinance Imam Sugema urged banks to make more items eligible for
\ncollateral.<\/p>\n
For some entrepreneurs, a business license -- often also a
\nrequirement from the bank -- poses another obstacle.<\/p>\n
Roger, a florist, never arranges such a license. By law, he
\ndoes not have to -- his flower shop in Depok, West Java, operates
\nwith capital of less than Rp 200 million. \"It costs millions of
\nrupiah to get a business license,\" he said.<\/p>\n
Pande urged the government to be proactive and to go to small-
\nscale entrepreneurs instead of waiting for them to get the
\nlicense.<\/p>\n
The further development of microcredits should be headed by
\nbanks with the most experiences, which, in the case of Indonesia,
\nis Bank Rakyat Indonesia (BRI), said Pande.<\/p>\n
With more than 4,100 units across the country, BRI has been
\nrecognized as the initiator of microfinance in the world. \"Other
\nbanks may have different segments (targeted),\" he said.<\/p>\n
Imam referred to another source that has not been optimally
\nutilized: informal financial bodies.<\/p>\n
\"There are so many small businesses. Banks cannot afford to
\nknow as many customers closely,\" he said. \"They are also usually
\nless eager to take the high risks of non-performing loans.\"<\/p>\n
Many villages, for example, have collective rice barns, to
\nwhich villagers add a certain amount of rice per week. The money
\ngathered from these barns is later channeled back to the people.<\/p>\n
\"The government should guide these informal bodies,\" he said.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/small-businesses-still-face-limited-access-to-microcredits-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }