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)