Cheap loans for small firms and cooperatives

Cheap loans for small firms and cooperatives

JAKARTA (JP): The government announced on Friday it had
allocated more than Rp 10 trillion (about US$1.3 billion) for
heavily subsidized loans to small and medium businesses and
cooperatives, and another Rp 100 billion for ailing public
transportation companies in major cities.

Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita said the transportation companies had to
be given the cheap credit facilities, with an interest rate of 6
percent, because they had no freedom to offset the soaring prices
of imported auto components by raising fares as the latter were
regulated by the government.

"The public transportation sector is a vital part of the
economy," he told reporters following a meeting of the Economic
and Finance Resilience Council.

The country's public transportation sector is heading toward
the buffers as prices of imported auto components continue to
soar in the wake of the sharp plunge of the rupiah.

The government also said in a statement that it had allocated
more than Rp 10 trillion in cheap loans to help small and medium
businesses and cooperatives survive the year-long economic
crisis.

It said that the loans, which had an average interest rate of
16 percent, would be channeled through 14 micro credit schemes
offered by participating banks, cooperatives, and certain non-
governmental organizations across the country.

Credit for the small and medium businesses would cover almost
all sectors, with loans ranging from Rp 5 million to Rp 3
billion, and repayment terms from one to 15 years, the statement
said.

It added that the credit limit for working capital of small
businesses was limited to Rp 5 million with a one-year repayment
term, while for investments it was limited to Rp 25 million with
a five-year repayment term.

The government also said that the cheap loans would be given
to the country's rural banks to help them survive the current
crisis. (rei/prb)