IFC, Govt launch $19m initiative for SMEs

IFC, Govt launch $19m initiative for SMEs

I Wayan Juniartha, The Jakarta Post, Nusa Dua, Bali

The Indonesian government and the International Finance
Corporation (IFC) here on Tuesday officially launched a US$19
million program to help small and medium enterprises in the
eastern part of Indonesia.

The Program for Eastern Indonesia SME Assistance (PENSA), a
five-year technical assistance program, is cofunded by the IFC
and the governments of Australia, Japan, Switzerland and
Netherlands.

The program was officially launched by Minister for
Cooperatives and Small and Medium Enterprises (SMEs) Alimarwan
Hanan, followed by the signing of the MOU by the general manager
of Indonesia Enterprise Development Facility (IEDF), Chris
Richards, and representatives of Bank Rakyat Indonesia (BRI) and
Dharma Bhakti Astra Foundation, which are to assist the IFC in
implementing the program.

IFC, the private sector development arm of the World Bank,
would manage the US$19 million initial funding to provide
training and assistance aimed at improving SMEs capacity and
competitiveness.

The PENSA will focus on business sectors which have "regional
comparative advantages", such as furniture and handicrafts in
Denpasar (Bali), mining in Balikpapan (East Kalimantan),
agribusiness in Makassar (South Sulawesi).

It would conduct various training programs for banks and other
financing institutions in Surabaya, East Java, to create a wider
financial access for SMEs.

Praising the launch of the program as a very important event,
the World Bank's country director in Indonesia Andrew Steer
highlighted the fact that out of the 17 million registered
companies in Indonesia, only 1 percent had more than 20
employees. The rest were SMEs.

"The SMEs are absolutely essential for the future of this
country," he stressed.

"Throughout Eastern Indonesia today, there are millions of
people who need jobs, there are ten of thousands of good
entrepreneurs with good ideas that can change the face of this
country if they were given a little help. That's what this
program is all about," he added.

Separately, IEDF general manager Richards pointed out that in
Indonesia there were 15 million unregistered businesses, mostly
micro-size firms. Moreover, SMEs employed approximately 60
percent of the country's labor force and they were represented
across most economic sectors.

He also stressed that the PENSA would not provide SMEs with
direct funding or loans since the program would focus on training
and technical support.

However, the program would actively engage and facilitate the
involvement of various strategic partners, which were interested
in providing the SMEs with such funding.

Separately, the Embassy of Canada's development counselor
Julian Murray stated that his government would soon participate
in the program.

"Canada is not yet a donor (in this program), but we hope to
get our government's approval for PENSA in the next few months,"
he said.

Denpasar has been chosen as the location for the program's
headquarters with smaller representative offices to be
established in the other three cities -- Surabaya, Balikpapan and
Makassar. A satellite office would be established in Jakarta to
help create a better business environment and policy.

Including PENSA, IFC was currently managing nine SMEs
facilities in Southeast Asia, China, Africa, Southeast Europe,
South Asia and South Pacific.