Most SMEs not reliant on bank loans: Survey

JAKARTA (JP): Most small and medium-sized enterprises (SMEs) still rely on traditional sources to finance their activities, according to a survey conducted by Akatiga, a rural business surveying agency.

Akatiga, which focuses its research activities on the development of SMEs, said most SME owners use their own money or that borrowed from relatives or friends to support their businesses.

The agency's survey issued on Tuesday shows that only 1.2 percent of 320 respondents had used bank loans. However, it found out that most of them were able to survive despite the absence of the bank loans.

The respondents in the survey, which was financed by the Manila-based Asian Development Bank (ADB) and conducted in cooperation with the Asia Foundation, operate in Bali, Central Java, Yogyakarta, West Sumatra and South Sulawesi. The companies are mostly involved in garment and furniture manufacture, food production and the service industry.

"Although the companies are able to survive without bank loans, their future expansion will be very limited," Erna E. Chotim, a senior executive of the agency, said.

She called on the government to come up with more concrete action to help the companies because existing policies had failed to help them.

She cited that many international agencies had provided loans to support the country's SMEs but there were no records showing where the funds were directed.

ADB approved early this year loans amounting to US$200 million to finance a program of a far-reaching policy reforms to deregulate and liberalize Indonesian industry. The main target of the program is to create business opportunities for the SMEs.(02)