Financial facilities allocated for informal business sector

Bambang Nurbianto The Jakarta Post/Jakarta

With little fanfare, the city administration in March last year launched a program aimed at helping vendors and small traders.

Under the program, the city administration offers loans of up to Rp 5 million (US$526) to individuals, without need for collateral, to expand or open businesses in the informal sector, including home industries and farming.

"Unfortunately, the program has not been made widely known," secretary of the City Council's Commission B on economic affairs, Nurmansjah Lubis, told The Jakarta Post over the weekend.

"Relevant officials must disseminate information about this new program so that small entrepreneurs can use it to expand their businesses," he said.

The new policy is stipulated in Gubernatorial Decree No. 38/2004 on the provision of financial facilities for small businesses.

The program is implemented through city-owned Bank DKI, with interest set at 12 percent a year.

An individual can apply for a loan of up to Rp 5 million, while small businesses that are managed by more than one person can ask for loans of up to Rp 10 million.

To get the facility, applicants are only required to produce a copy of their Jakarta identity card, two passport-sized photos, a business proposal or profile, plus recommendation letters issued by the administrative agencies responsible for the respective businesses sectors -- such as agriculture, animal husbandry, fisheries, industry, trade and services.

The term of the loans are for two years, however this can be extended for another year under certain circumstances.

According to the gubernatorial decree, soft loans are also available for small entrepreneurs and cooperatives, Rp 50 million and Rp 100 million respectively, but collateral is required to obtain such loans.

The program will be monitored by an advisory team that comprises, among others, officials of the City Planning Agency, the City Secretary's Economic and Legal Bureau, the City Manpower Agency and Bank DKI.

The gubernatorial decree stipulates that the city administration will be responsible for 70 percent of possible bad debts, while Bank DKI will be responsible for the remaining 30 percent.