Kadin-sponsored guarantee fund set to operate

JAKARTA (JP): Guarantee-fund firm PT Penjamin Kredit Pengusaha Indonesia is ready to guarantee credits extended to small and medium enterprises this year.

The company's president, Mahmud Jakile, said recently that the fund got its operating license from the government only last August -- 10 months after its launch.

"Only after we got the license, could we look for prospective clients. Nevertheless, we have listed some small and medium companies as our prospective clients," Jakile said.

They include West Sumatra handicraft firms grouped in a cooperative, small firms affiliated to a state plantation firm in South Sulawesi, two small firms in Irian Jaya and others in the greater Jakarta area.

Jakile said earlier the fund would guarantee bank loans to small businesses of between Rp 50 million (US$20,990) and Rp 250 million.

It does not guarantee loans below Rp 50 million because state- owned banks have been encouraged to extend collateral-free loans of up to Rp 50 million to small enterprises.

"As a profit-oriented firm, we need to select only businesses with good prospects. If possible, we will prepare them to go public by selling shares on the capital market," Jakile said.

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 to select small companies as customers.

The guarantee fund was established with an initial paid-up capital of Rp 6.16 billion (around US$2.6 million) in October, 1995, by the Indonesian Chamber of Commerce and Industry in cooperation with the ruling Golkar party.

The chamber's chairman Aburizal Bakrie said last week the guarantee fund had collected Rp 12 billion from local tycoons as its capital -- far short of its original target of Rp 50 billion.

At the launching of the fund last Oct. 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.

Aburizal said the establishment of the guarantee fund was expected to help spur the development of small enterprises so that they could grow into medium and then large businesses.

"As we all understand the main weaknesses of small businesses are that they lack capitals and managerial skills and that they are not bankable. Therefore this guarantee fund is expected to help small businesses secure bank credit to groom their businesses," Aburizal said.

He added the guarantee fund was to complement the government- sponsored venture capital programs that had invested in small enterprises through equity participation. (rid)