Guarantee fund needs government ruling: Kadin

JAKARTA (JP): A licensing constraint has hindered the operation of the guarantee fund founded jointly by the Indonesian Chamber of Commerce and Industry (Kadin) and the ruling Golkar organization last October.

Kadin's chairman, Aburizal Bakrie, said yesterday that the fund, called PT Penjamin Kredit Pengusaha Indonesia, has not acquired its operation license yet from the government.

"The government seems to have a difficulty in licensing our guarantee fund because there is no ruling governing it," Aburizal said.

He suggested that the government should draft rulings on guarantee funds to encourage other institutions to establish such funds to help small and medium-sized enterprises.

"A guarantee fund is not a bank, an insurance, a leasing firm or a pension fund. It needs special rulings to govern it," he added.

The guarantee fund, a kind of credit insurance firm, is intended to operate as a limited liability company and will be "profit-oriented."

Aburizal said Minister of Finance Mar'ie Muhammad had promised him that the government would soon issue a "provisional license" for Kadin's guarantee fund until the government sets up rulings on such institutions.

Capital

Aburizal explained that Kadin's guarantee fund, established with an initial paid-up capital of Rp 6.16 billion (US$2.6 million) last October, currently has collected some Rp 10 billion from local tycoons as its capital.

At the launching of the fund last October, 31 noted figures and big businesses participated in its establishment. Minister of Cooperatives and Small Enterprises Subiakto Tjakrawerdaya, PT Bakrie Investindo, and business tycoons Eka Tjipta Widjaja and Sudwikatmono helped strengthen the fund's capital by contributing Rp 1 billion each.

The fund is expected to have accumulated a total paid-up capital of Rp 25 billion when it starts operating, half the original target of Rp 50 billion.

The fund's sources of revenues will include interest earned on bank deposits as well as commission fees, arrangement fees and consultation fees from its client companies. Funding will also come from banks using its service for selecting small companies as customers.

Aburizal said earlier that the guarantee fund will guarantee bank loans of between Rp 50 million (US$22,000) and Rp 250 million for small businesses.

In a related development, the government announced last August that it allowed state-owned banks to extend collateral-free loans of up to Rp 50 million to small enterprises. (rid)