Collateral-free loans hailed

JAKARTA (JP): The government's plan to allow banks to extend collateral-free loans to small businesses, proposed by Minister of Finance Mar'ie Muhammad two weeks ago, was discussed yesterday at a monthly ministerial meeting on economics and finance.

Coordinating Minister for Industry and Trade Hartarto said that all the ministers who attended the meeting had agreed to support the policy.

Besides allowing small businesses to obtain bank loans of up to Rp 50 million (US$22,065) without collateral, the government will also try to find small enterprises partners among large- scale businesses, he said.

Minister Mar'ie said on Aug. 22 that the government was drafting legislation to allow the collateral-free loans. He said the regulation was expected to be completed within the next two months.

Minister of Cooperatives and Small Enterprises Soebiakto Tjakrawerdaya said that the government is currently formulating a definition of the term "small-scale business."

"We will brief the House of Representatives on the planned definition during a deliberation on the bill on small businesses," he said yesterday.

He said that, at present, various government institutions, including the central bank, have differing definitions of "small- scale business."

Soebiakto said that the bill on small businesses defines a small business as a firm with assets of up to Rp 200 million and annual sales of up to Rp 1 billion.

He said that, apart from providing the collateral-free loans via state-owned banks, the government will also provide management and marketing assistance to small businesses. (04/rid)