Sat, 05 Jul 2003

Eastern Indonesians to get bank loans

JAKARTA: The country's banks have eased their loan rules to allow entrepreneurs in the eastern part of Indonesia to obtain loans with less restrictions, according to Sate Minister for the Acceleration of Development of Eastern Indonesia Manuel Kaisepo.

"Previously, the banks' regional branches were only allowed to give a maximum loan of Rp 300 million (US$36,000). Above that amount, they (the entrepreneurs) have to fly to Jakarta to seek approval from a bank's headquarters.

"It is thus a high-cost effort to get loans," the minister said on the sidelines of a three-day regional investment forum on Thursday.

Kaisepo explained that after several meetings with some banks, it was agreed that entrepreneurs from eastern Indonesia could request up to Rp 2 billion for a loan without having to seek approval from Jakarta.

He did not specify which banks, however.

The eastern part of Indonesia is relatively poorer and less developed than western parts of Indonesia where most of the large Industrial centers and main government offices, such as Medan and Jakarta, are located.

As a result most of the development projects have been concentrated on the islands of Java and Sumatra over the past several decades.

The government is now seeking to boost development on the eastern islands and has appointed a minister especially tasked to handle the matter.

Kaisepo added that some banks also agreed to provide loans to fishermen and farmers in the region.

"We are looking for the best formula to establish a fund that will guarantee the repayment of loans channeled to those groups of people," he said.

"For example, local administrations may allocate some Rp 5 billion out of their budgets to set up the fund." --JP