Micro loans extended to poor families in E. Java

JAKARTA (JP): Bank Indonesia, the central bank, yesterday introduced loans for very small businesses in East Java in a bid to help eradicate poverty in the province.

Bank Indonesia's director of credit, Mukhlis Rasyid, yesterday signed documents on the channeling of the credit from the Asian Development Bank to the East Java development bank, 11 secondary banks and a number of non-governmental organizations in East Java to help alleviate poverty in the province.

Bank Indonesia said in a statement yesterday that it has also advocated the extension of such loans -- called micro credit -- in Central Java.

East and Central Java are among the five provinces chosen by Bank Indonesia for its micro-credit pilot project. The other provinces in the project include West Java, South Kalimantan and West Nusa Tenggara.

Micro loans, each with a value of up to Rp 500,000 (US$213), will be channeled to poor families and individuals or a group of poor families which run very small businesses. The loans will be available through development banks, secondary banks and non- government organizations in the five provinces.

"The main objectives of extending such loans are to help develop very small rural businesses, to help eradicate poverty and to encourage the participation of women in the development," Bank Indonesia announced.

The central bank has earmarked Rp 90 billion (US$38.5 million) for micro credit. Of the total fund, 60 percent will come from the Asian Development Bank.

The micro-credit program so far involves 37 secondary banks, 40 institutions specializing in extending credit to poor people and 16 non-governmental organizations in Central and East Java.

Within the next five years, it is expected that the central bank's micro loans will involve 700 institutions specializing in extending credit to poor people, 400 secondary banks, 30 non- governmental organizations and 300,000 customers. (rid)