Govt to disburse Rp 3.1t funds to SMEs

The Jakarta Post, Jakarta

The government said on Wednesday it would disburse around Rp 3.1 trillion (US$364.71 million) in special loans for small and medium enterprises (SMEs) next week.

Director-General of Financial Institutions Darmin Nasution said that many of the channeling banks and financial institutions had already fulfilled the necessary requirements.

"The funds will certainly be disbursed starting next week," Darmin said.

Among the channeling banks appointed by the government are Bank Mandiri, Bank Syariah Mandiri, Bank Rakyat Indonesia, Bank Tabungan Negara, and state-owned pawnshop operator Perum Pegadaian.

Darmin, however, said that rural development banks (BPDs) were yet to fulfill the requirements, including approval from the local legislative council.

The government has promised the funds to help the SMEs obtain working capital, a move which in turn should help create new jobs.

SMEs form the backbone of the Indonesian economy. Government records show that in 2002, SMEs totaled 3.03 million across the country, or equal to 95.78 percent of the country's total business units, and absorbed 11.89 million jobs.

According to Law No. 9/1995 on small enterprises, a small- scale enterprise is defined as one having net assets of up to Rp 200 million ($23,500) and maximum annual sales of Rp 1 billion.

Meanwhile, a medium-scale company is defined as one having annual sales of between Rp 1 billion to Rp 50 billion.