Financial facilities allocated for informal business sector

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.