Cooperatives borrow US$420m

Cooperatives borrow US$420m

JAKARTA (JP): State-owned Bank Bumi Daya and privately-owned
Bank Danamon pledged yesterday to loan a total of Rp 1 trillion
(US$420 million) to the Federation of Village Cooperatives.

Bank Bumi Daya president Iwan Prawiranata, Bank Danamon
president Ninie Admajaya and the federation's chairman, Jeff
Mustafa, signed the loan agreements yesterday.

The loans are to be extended to regency-level cooperatives,
which will relend the funds to their members. No details were
given on the loans' terms.

President Soeharto, who witnessed the agreements, said such
cooperation should empower cooperatives to play a bigger role in
the country's burgeoning economy.

He said the two main barriers stunting cooperatives were their
lack of capital and qualified human resources.

About 90 percent of cooperatives' members are only elementary
school graduates.

"I hope that this cooperation between village cooperatives and
the private sector will help improve the village economy,"
Soeharto said.

He said that villages had great economic potential because
most of the country's 199 million people lived in them, which
served as the centers of rice production, handicraft and other
small business.

"If we can develop economic potential in villages, our economy
will grow faster and we will have a more equitable distribution
of income," the President said.

He said the government had successfully developed
cooperatives, but it needed the private sector's support to
accelerate their growth.

There are more than 47,000 cooperatives nationwide with 26.9
million members.

Soeharto called on state enterprises, private firms and
cooperatives to work together to create welfare for all, not only
for some individuals.

"Our constitution stipulates that the economy shall be
organized as a common endeavor based on the principle of the
family system. Public welfare, not personal welfare, should have
priority," Soeharto said.

He asked all economic forces to unite to face globalization
and free trade.

Unity should be pursued in all aspects of life, not only in
politics, society, culture and security, but also in economy.

"Without pursuing unity in our economy, we will lose amid free
trade which has become the order of the day," Soeharto said at
yesterday's ceremony.

Also on hand at the ceremony were Minister of Cooperatives and
Small Enterprises Subiakto Tjakrawerdaya, State Minister of
National Development Planning Ginandjar Kartasasmita and the
Humpuss Group's chairman, Hutomo Mandala Putra.

Besides the loans, the federation also clinched a cooperation
agreement with PT Satyasiaga Insurance Brokers -- a Humpuss Group
subsidiary.

Jeff Mustafa and Satyasiaga Insurance president Hanibal Nouvel
signed the agreement whereby the Humpuss subsidiary would provide
health insurance to members of cooperatives.

Soeharto praised the agreement, saying: "It is time for
cooperatives to provide health insurance to their members.
Maintaining the members' health is essential to improve
cooperatives' human resources." (rid)