Credits without collateral

Finance Minister Mari'e Muhammad has disclosed part of a government plan to extend credits without the requirement of physical collateral for small businesses. The credits, to be referred to as Kredit Kelayakan Usaha (Business Viability Credits), will carry a ceiling of Rp 50 million and require only a certificate of viability as collateral. During the first phase, the credits will be extended by state-owned banks.

Apart from capital, other constraints are at present limiting the growth possibilities for small-scale businesses. Low managerial skills, limited marketing abilities and the "menace" of big businesses are among the problems with which they have to struggle.

Apart from providing those easy credits the government should also feel obliged to protect the right of existence of small- scale businesses. Perhaps it is appropriate to reserve certain lines of business for these businesses exclusively, barring big businesses from entering.

At present, even soy sauce mills, which, in the past, sustained numerous small businesses have been taken over by big businesses. Who knows, the time will come when tempe (fermented soy bean cakes) and tofu mills will have to suffer the same fate. If this happens the provision of special credits for small-scale businesses will carry little meaning.

-- Bisnis Indonesia, Jakarta