Mandiri provides loans to spur labor exports

Ridwan Max Sijabat, The Jakarta Post/Jakarta

People wanting to work overseas may now not have to sell treasured assets or borrow from loan sharks at outrageous rates after the signing of a deal allowing Bank Mandiri to help finance their recruitment and departure abroad.

The bank's director for small business and micro-banking, Sasmita, said Mandiri would allocate Rp 100 billion (US$10 million) in the initial phase to finance labor exports in the last quarter of this fiscal year.

"The funds will be used to cover the recruitment and departure fees of workers, who will work in Hong Kong and Taiwan. In its implementation, Mandiri will channel the funds through labor exporters with an annual interest of 17 percent," Sasmita said, following the signing of a memorandum of understanding with the Manpower and Transmigration Ministry on Friday.

Migrant workers in Hong Kong, Singapore, Malaysia and the Middle East would also find it easier to bank through Mandiri's overseas branches and partner banks in those areas, he said.

Mandiri has long been interested in the labor export sector, with migrant workers repatriating around Rp 1.5 trillion annually to their relatives through the bank, he said.

Mandiri is the third lender here which has committed to expanding its business in the labor export sector. The two others are Bank BNI'46 and Bank Chinatrust Indonesia.

Husein Alaidrus, chairman of the Indonesian Labor Supplying Companies Association (Apjati), said the participation of banks in the labor export market would benefit workers and labor exporters.

"The banks' participation in (this sector) has encouraged labor exporters to recruit more and more skilled and semi-skilled workers to work overseas," he said.

While the largest percentage of Indonesian migrant workers overseas were still house maids, this was because most labor exporters had been running short of funds to train workers, he said.

"If Indonesia can send semi-skilled and skilled workers, instead of housemaids, its remittance from the sector will double." Semi-skilled and skilled workers were paid between $400 and $1,200 monthly while unskilled workers were paid around $150 a month, he said.

Sending in skilled workers abroad would also raise Indonesia's foreign exchange from labor exports to around $10 billion annually in the near future from the current $4 billion.

Around 70 percent of some two million Indonesian migrant workers overseas are unskilled.

Halomoan Hutapea of the Legal Aid Foundation for Migrant Workers said the three banks should provide lower interest loan to help empower workers from poor economic backgrounds in rural areas.

"If the banks' rates of interest can be lowered, more workers would be expected to seek financial assistance.

"Many workers and their relatives have sold their land or other potential assets to finance their departure overseas, or taken a loan from brokers with irrational rates of interest."

Sasmita said the implementation of the agreement would help boost the bank's micro loans, which currently stand at Rp 1.5 trillion. (006)