Govt approves Rp 3.1t loan package for SMEs

Govt approves Rp 3.1t loan package for SMEs

A'an Suryana, The Jakarta Post, Jakarta

The government has approved a Rp 3.1 trillion (US$348 million)
soft loan package for the country's small and medium enterprises
(SMEs), Ali Marwan Hanan, the state minister for cooperatives and
SMEs, said on Thursday.

Ali said that the disbursement of the loan package would start
later this month.

"The minister of finance has approved the loan, and he has
also assigned me to select a number of financial institutions to
channel the package.

I have appointed those institutions today," Ali told reporters
after attending a national banking seminar here.

He said that among the selected institutions were provincial
development banks, state-owned pawnshop operator Perum Pegadaian,
and state-owned financial institution PT Permodalan Nasional
Madani.

Ali said that medium-sized enterprises could borrow up to Rp
500 million, while the limit for small-sized companies was Rp 50
million.

No details of the structure of the soft loan package were
available.

"We are hoping that the financial institutions that we have
assigned to channel the loans can provide the SMEs with better
contractual terms and other benefits, compared to the
conventional (bank) loans," said Ali.

SMEs had long been shunned by the country's banking industry.
But after the late 1990s financial crisis which sent many banks
and big companies to the wall, there is now a growing interest in
lending to the SMEs.

Number of SMEs in 2001 and 2002

Business Size 2001 % 2002 %
=============================================================
Small enterprise 39,869,505 99.85 41,301,263 99.85
Medium enterprise 57,681 0.14 61,052 0.15
SMEs 39,927,186 99.99 41,362,315 0.01
Big businesses 2,084 0.01 2,198 0.01

Total 39,929,270 100.00 41,364,513 100.00
=============================================================
Source: The Office of the State Ministry for Cooperatives and
SMEs