Minimum credit level for small firms met
Minimum credit level for small firms met
JAKARTA (JP): Bank credit extended to small businesses,
including farmers, has grown by an average of 20 percent per
annum during the last six years.
Data from Bank Indonesia, the central bank, show that total
credit extended to small businesses reached Rp 40.3 trillion
(US$17.47 billion) as of the end of October 1995, as compared
with Rp 14 trillion as of 1989.
Distribution was as follows: 46.1 percent of the credit was in
loans worth a maximum of Rp 25 million, 25.1 percent in loans
worth between Rp 25 million and Rp 100 million and the remainder
or 28.8 percent in loans worth between Rp 100 million and Rp 250
million.
In its drive to help nurture small businesses, the government
has required all commercial banks to extend at least 20 percent
of their credit to small enterprises.
According to the central bank's weekly report dated Nov. 7,
outstanding credit, in both rupiah and foreign currencies,
extended by all commercial banks in the country, stood at Rp
216.76 trillion as of August.
In its newest move, announced in August, the government
assigned all state banks to provide collateral free credit with a
maximum level of Rp 50 million to small businesses.
The data at the central bank show that the total collateral
free credit extended to small businesses stood at Rp 72.5 billion
as of last month, compared to the Rp 29 billion recorded in the
previous month.
A source at the central bank noted yesterday that although the
growth rate for credit to small enterprises shows significant
progress, chronic problems still exist in extending that credit.
Banks, especially those which specialize in corporate banking,
still face difficulties in identifying feasible small-scale
enterprises. On the other hand, most small firms still have
problems with marketing, managing and fulfilling technical
banking requirements.
Cooperation
To reduce risk, the government has told banks to work closely
with cooperatives and other related institutions in extending
small-scale credit, especially credit targeted for farmers and
informal businesses.
Credit extended through cooperatives has grown by an average
15 percent per annum. As of August, credit of this kind reached
Rp 991.8 billion, compared with Rp 551.5 billion as of 1990.
Credit for farmers extended through cooperatives recorded a
very slight growth. The extension of such credit averaged Rp 62
billion per annum, 20 percent of which turned sour.
Because of the large amount of loan defaults, the government
introduced a new credit package which could be obtained directly
by groups of farmers.
The government earmarked Rp 125.4 billion in new credit for
farmers for this September's rice planting season.
The source said that, as of last month, Rp 45 billion had been
extended to farmers for the season.
Most of the credit for farmers has been channeled through
state-owned Bank Rakyat Indonesia. Only recently have a number of
other banks helped distribute the credit. They include state-
owned Bank Ekspor Impor Indonesia, privately-run Bank Bukopin and
development banks owned by the West Java, Central Java, East Java
and West Nusa Tenggara provincial administrations.
Bank Danamon and a development bank owned by the Irian Jaya
administration have also expressed interest in extending credit
to farmers.
The government, through Bank Rakyat Indonesia, also provides
special loans for primary cooperatives and their members. The
appointed bank has extended Rp 297 billion per annum in this kind
of credit.
In addition to the above schemes, multilateral lending
institutions also offer special two-step credit schemes for
small-scale enterprises, environmental groups and farmers. They
include the World Bank, Japan's Overseas Economic Cooperative
Fund, the ASEAN Japan Development Fund, the Exim Bank of Japan
and the Asian Development Bank.
As of last October, the two-step loans were recorded at US$1.1
billion, of which $850.1 million had been disbursed. (rid)