Bank told to provide Rp 20t for SMEs

The Jakarta Post, Jakarta

In an another bid to empower the country's small and medium enterprises, the government has launched a program to provide a total of Rp 20 trillion in bank loans per year for small and medium enterprises (SMEs).

Coordinating Minister for People's Welfare Yusuf Kalla told reporters on Monday that under the program, domestic banks would provide loans for SMEs with the government providing assistance, such as supervision and insurance guarantees.

"The government will subsidize (supervision and insurance guarantees) with state budget funds allocated for (the empowerment of) micro entrepreneurs," Yusuf told reporters after a Cabinet meeting.

He said 15 domestic banks had voiced readiness to participate in the program, including state Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia '46 (BNI).

"Domestic banks should clearly show with whom they side," Yusuf said, adding that the program was part of the government program to alleviate poverty.

Yusuf said starting this year, the banks would provide a total of Rp 20 trillion in loans for SMEs, but he did not specify when the program would end.

Quoting data from the Central Bureau of Statistics, Yusuf said 19 percent of the country's population, or 38 million people, lived in poverty, with a monthly family income of Rp 450,000 per month.

The credit-for-SMEs program is the latest in a series of programs recently announced by the government to promote SMEs, which analysts say absorb most of the country's workforce. Many have been able to weather the economic crisis but others are still in the doldrums due to outstanding debt.

Some parties, including several legislators, have been pushing the government to alleviate the firms' financial burdens by cutting their debts.