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)