Golkar defends proposal on credit guarantee fund

Golkar defends proposal on credit guarantee fund

JAKARTA (JP): The Indonesian ruling Golkar party yesterday
clarified its initiative to set up a guarantee fund as a matter
of financial supervision rather than a proposal for establishing
a financial management company.

"We have never come to a decision to set up a financial
management firm, as it is currently misunderstood by many
parties," Warno Hardjo, head of Golkar's economic division, told
reporters here yesterday.

Minister of Finance Mar'ie Muhammad said on Wednesday that
there is no need to establish a credit guarantee fund, arguing
that existing institutions are already adequate to channel funds
to small firms.

Warno said that the term "guarantee fund", which does actually
mean a kind of credit insurance company, has been inaccurately
attached to Golkar's original objective of aiding the supervision
of the use of state companies' profits for small firm
development.

"Our starting point is how to help supervise and even
guarantee that funds from the state companies reach small firms
in time under the right procedures," he said.

He added that of around Rp 380 billion in funds set aside by
state companies from their net profits for the small-scale
business development, only an estimated Rp 200 billion had been
used properly.

But Warno, who is also a member of Commission VI of the House
of Representatives (DPR), said that Golkar's commitment to
setting up a supervising board should not be confused with the
establishment of a new credit insurance company.

Fahmi Idris, Chairman of Golkar's department of cooperatives
and entrepreneurs said earlier that his party was now in a strong
position to set up a guarantee fund in order to help small
businessmen get loans from banks because most of them are not
bankable.

Fahmi said small businessmen usually find it difficult to
obtain bank loans because they do not have taxpayer registration
numbers (NPWP), cannot produce balance sheets and have not made
feasibility studies.

Warno, meanwhile, contended that the proposed financial
management is only one of the alternative recommendations made at
Golkar's meeting in Cipayung on May 11.

"Our mission is to set up a supervision scheme," he pointed
out.

No reason

"Thanks for all the good suggestions to safeguard state funds,
but the government sees no urgent reason to set up a new credit
guarantee fund," he told the House Budgetary Commission on
Wednesday.

"It is better to improve the function and performance of
existing institutions such as the Cooperatives' Credit Guarantee
Fund (Perum PKB), the state-owned Indonesian Credit Insurance
Company (Askrindo) and venture capital company, PT Bahana," he
said.

Mar'ie said in his closing remarks at yesterday's hearing with
the Budgetary Commission that the government has always paid
special attention to the development of small-scale businesses,
including village cooperatives.

Bank Indonesia, the central bank, early this month reported
that the country's total banking credits reached Rp 183.6
trillion as of March, of which Rp 150 trillion were extended to
large-scale companies and the remaining Rp 33.6 trillion to
small-scale firms. (fhp)