Guarantee fund needs government ruling: Kadin

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)