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