SMEs in Aceh finding it difficult to start over<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
Despite their eagerness to get back on their feet and start anew
\nafter last year's tsunami, small and medium enterprises (SMEs) in
\nAceh are apparently still finding it hard to seek the necessary
\ncapital.<\/p>\n
The SMEs are facing difficulties in obtaining new credit and
\nservicing their previous liabilities, when all their assets and
\nbelongings were devastated by the Dec. 26 disaster, a seminar
\nheld on Tuesday by the World Bank's International Finance
\nCorporation (IFC) and Bank Indonesia (BI) revealed.<\/p>\n
"There is actually a lot of enthusiasm for economic activities
\nin Aceh nowadays, particularly among SMEs. Unfortunately,
\nchallenges remain on how to provide financing for these SMEs,"
\nsaid Chris Richards, general manager of IFC's Program for Eastern
\nIndonesia SME Assistance (PENSA).<\/p>\n
"One of the main issues was how SMEs can obtain new credit to
\nrestart their businesses, when their previous outstanding loans
\nhave yet to be resolved, leading to discussions on a debt write-
\noff scheme for SMEs."<\/p>\n
Data from the Ministry of Cooperatives and SMEs shows that
\nsome Rp 1.1 trillion (US$112 million) of SME loans in Aceh have
\nturned insolvent due to the tsunami, including Rp 543 billion
\nfrom Aceh's Regional Development Bank, Rp 408 billion from BRI,
\nRp 82 billion from Bank Bukopin and Rp 55 billion from BNI.<\/p>\n
Nearly 4,000 SMEs in Aceh and North Sumatra, that had a
\ncombined sales revenue of Rp 35 billion and employed some 18,000
\npeople, have been affected by the tsunami.<\/p>\n
In light of this, BI has issued a regulation on special
\ntreatment for SME loans in tsunami-affected areas, which includes
\nallowing banks to write off such debts, and exempting SMEs from
\nBI's uniform collectibility policy on loans from more than one
\ncreditor.<\/p>\n
However, several lenders have found it difficult to implement
\nthe regulation, particularly the debt write-off scheme, on
\nconcerns it would hurt their own financial condition.<\/p>\n
Richards said BI, IFC and related lenders might exempt loans
\nthat turned bad because of the tsunami and not because of
\nmismanagement.<\/p>\n
Head of BI's credit bureau, Ratna E. Amiaty, suggested the
\nestablishment of a credit insurance agency in Aceh to help
\nencourage lenders to provide loans to SMEs that lack collateral
\nto guarantee their loans.<\/p>\n
Richards also welcomed the idea, suggesting the insurance
\nagency and lenders coordinate with each other so that it does not
\nadd to the chain of bureaucracy for SMEs in obtaining credit. He
\nalso cautioned subsidizing credit costs for SMEs, as it may lead
\nto an unhealthy credit environment in the future.<\/p>\n
BI Senior Deputy Governor, Miranda S. Goeltom, separately said
\nthat the central bank objected to SME subsidies such as lower
\ncredit interest rates, arguing the potential moral hazard to the
\nbanking industry and the SMEs themselves. She, however,
\nacknowledged the need of more financial access to SMEs, stressing
\nthe need to empower their management skills.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/smes-in-aceh-finding-it-difficult-to-start-over-1447893297",
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"sponsor": "Okusi Associates",
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