ADB to lend $42m to RI's small businesses

ADB to lend $42m to RI's small businesses

JAKARTA (JP): The Manila-based Asian Development Bank (ADB) will provide US$42 million in loans to support small businesses in Indonesia.

Bank Indonesia Governor J. Soedradjad Djiwandono said on Thursday that the loans will be channeled through a secondary bank known as Bank Perkreditan Rakyat (BPR).

Soedradjad said that about $25 million will be provided in the form of soft borrowing, carrying a lower interest rate with a longer maturity than the other $17 million, for a program called a micro credit project.

He said the project is part of the central bank's program to support secondary banks, which are mostly located in the districts.

The project is expected to provide credit for about 300,000 small-scale businesses, each with assets of less than Rp 10 million ($4,650), he told a hearing with the Budgetary Commission of the House of Representatives.

The micro business project will be carried out in five provinces: West, Central and East Java, West Nusa Tenggara and South Kalimantan.

ADB said in Manila yesterday that it had approved an $85 million loan to Indonesia to provide latrines and water supply facilities for the poor in the provinces of Kalimantan and Sumatra.

The loan will come from the ADB's ordinary capital resources. Annual interest is at 6.11 percent. It will be repaid over 25 years, including a grace period of five years.

An ADB statement said 15 percent of the country's population lived below the poverty line, including the three million people who stand to benefit from the project.

Indonesia's rural communities have a shortage of clean water and toilet facilities. This leaves the population vulnerable to water-borne diseases such as diarrhea, one of the main causes of child mortality, it stated.

The project will also lessen the burden of carrying water "which mainly falls on women and children," AFP quoted the statement as saying.(hen)