Govt empowers small businesses through bill on microfinancing
Govt empowers small businesses through bill on microfinancing
Leony Aurora, The Jakarta Post, Jakarta
To accelerate and better coordinate the distribution of credit
for small businesses here, the government is drafting a bill on
microfinancing for non-bank microfinancing institutions, a senior
official said.
Dipo Alam, the chairman the National Committee for Microcredit
Year 2005 who is also the deputy minister to the Coordinating
Minister for the Economy, said in a recent press conference that
the committee had designed several programs to enhance the
performance of non-bank microfinancing institutions.
"(One of our programs) is to pass a law on such institutions,"
Dipo told reporters. He did not elaborate on the details as the
bill had not yet been completed.
However, the bill is expected to serve as a legal basis for
the institutions and to coordinate thousands of non-bank
financing agencies currently serving micro businesses.
Microcredit is defined by the central bank as a loan below Rp
50 million (US$5,373).
The committee's deputy chairman Kusmulyono said there were at
present some 50,000 non-bank financing bodies in the country,
such as cooperatives and credit banks, in addition to hundreds of
banks including Bank Rakyat Indonesia's village units and
regional development banks.
"This is the right time to strengthen them," said Kusmulyono,
also president of government's investment firm PT Permodalan
Nasional Madani (PNM).
The bill however, would not regulate non-governmental
organizations (NGOs) that are providing saving and lending
facilities for micro businesses using funds from donors, he
added.
Such NGOs, many of which operate in remote areas where there
are no formal financing bodies, have repeatedly asked the
government to recognize their efforts and draft a law to protect
their activities.
"PNM will encourage those NGOs to become formal bodies (into
financing bodies), so that they can be audited and regulated
under the bill," said Kusmulyono further.
The bill is expected to be passed later this year, he added.
The move is in conjunction with the implementation of the
International Microcredit Year 2005, which was launched by the
United Nations in November last year as an effort to help fight
poverty.
The national committee was established in August last year,
grouping together representatives of the coordinating minister
for the economy, coordinating minister for people's welfare,
ministry of trade, state minister of cooperatives and small and
medium enterprises, BRI, Bank Mandiri, and the University of
Indonesia.
Noted Indonesian singer Anggun also attended the press
conference and has been appointed as a spokeswoman in Indonesia
and other Asian countries for the UN program.