Kadin and Golkar launch credit guarantee fund
Kadin and Golkar launch credit guarantee fund
JAKARTA (JP): The Indonesian Chamber of Commerce and Industry (Kadin) together with the ruling Golkar party have established a credit guarantee fund with a planned initial paid-up capital of Rp 50 billion (US$22.5 million).
In a presentation before government officials and business people here on Monday evening, Kadin's Chairman Aburizal Bakrie said the main mission of the guarantee fund, a kind of credit insurance firm, is to spur the growth of small and medium-size businesses.
"This guarantee fund is primarily designed to help small businesses secure credit from banks which they often fail to do because of their inability to fulfill administrative requirements," Aburizal explained.
When Kadin and Golkar put forward the initial plan to establish the guarantee fund early last year, it instantly sparked debate among policy makers and economists.
The opposing economists, including Kwik Kian Gie and Christianto Wibisono, claim that the fund is politically motivated and beneficial only to the ruling party.
The opposing ministers, including Minister of Finance Mar'ie Muhammad and Minister of Cooperatives and Small Enterprises Subiakto Tjakrawerdaya, believe that it is better to improve the function and performance of existing institutions like the Cooperatives' Credit Guarantee Fund (Perum PKB), the state-owned Indonesian Credit Insurance Company (Askrindo) and Venture capital company, PT Bahana.
Aburizal asserted on Monday night that the guarantee fund will not undermine the existing similar institutions but will work hand-in-hand to help small and medium enterprises. He argued that a number of countries, such as Thailand, the Philippines and South Korea, have more than one credit guarantee fund. And Japan alone has 52 guarantee funds.
Endorsement
At the presentation, however, Minister Subiakto endorsed the new guarantee fund, saying that the government has no reason to object to the formation of such an institution with a mission to help small companies.
Also on hand at the presentation were Golkar Chairman Harmoko, who is also the information minister, business tycoons Eka Tjipta Widjaja, Sudwikatmono and A.A. Baramuli.
Aburizal declined to mention how many people will become shareholders in the guarantee fund, confirming only that Kadin Foundation and the Golkar Foundation would be the principle shareholders.
"Besides individuals, we expect that a number of other foundations and banks will join us," Aburizal said.
Muchtar Mandala, chairman of a special team formed by Kadin and Golkar to spearhead the establishment of the guarantee fund, explained that to secure the operation, the fund will operate as a limited liability company and will be "profit-oriented".
He explained that the fund's sources of income include interest earned on bank deposits as well as commission, arranger and consultation fees from its client companies. Funding also came from banks using its service for selecting small companies as customers. (rid)