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)