Bank channel loans to small enterprises

JAKARTA (JP): Bank Indonesia, the central bank, said yesterday that subsidized loans for small- and medium-scaled enterprises had been made available through state banks and Bank Bukopin since early this month.

Small and medium firms or cooperatives needing additional working capital to run or expand their businesses should go to one of seven state banks or Bank Bukopin to get the low-interest loans, the central bank said in a statement.

The seven state banks are Bank Negara Indonesia, Bank Rakyat Indonesia, Bank Ekspor Impor Indonesia, Bank Tabungan Negara, Bank Dagang Negara, Bank Bumi Daya and Bank Pembangunan Indonesia.

Small and medium firms could apply for working capital loans of up to Rp 3 billion (US$545,450), with one-year maturity and a 17 percent interest rate -- far below the market rate of between 25 percent and 35 percent.

As for workers, they could also apply for such subsidized loans, with a maximum Rp 25 million per worker.

"This working capital loan for small and medium enterprises could be in the form of a new loan or an additional loan for an existing business or for business expansion which does not need new investment credit," the central bank said.

The assigned banks, nevertheless, should give priority to small and medium firms working in labor intensive businesses so the loans could benefit more people.

Besides being labor intensive, the applying firms should be engaged in export activities or distribution businesses, especially those dealing with people's daily needs.

Companies eligible for the subsidized loans are industrial companies with maximum assets of Rp 5 billion or nonindustrial firms with maximum assets of Rp 600 million, excluding land and buildings, or with a maximum turnover of Rp 3 billion.

The goal of these subsidized loans was aimed at reducing the negative impact of the monetary crisis, especially for low-income workers, the central bank said.

Banks assigned by the government to channel the loans should process loan proposals and assess the viability of the proposals based on prudent banking practices, it said.

The funds for the subsidized loans had been taken from state- owned workers insurance firm PT Jamsostek and other state firms.

President Soeharto instructed Jamsostek last month to channel Rp 2 trillion of its investment funds to state banks or Bank Bukopin to give loans to small- and medium-sized firms. (rid)