PNM to manage microcredit scheme

Rendi A. Witular, The Jakarta Post, Jakarta

The government plans to appoint state-owned investment firm PT Permodalan Nasional Madani (PNM) to exclusively manage and channel proceeds collected from state-owned enterprises (SOEs) to help small and medium-sized enterprises (SMEs) starting next year.

State Minister of State Enterprises Sugiharto said on Tuesday that the new plan had been drawn up as most of the proceeds in the past had been poorly managed by various institutions, with a huge amount of the loans turning sour.

"We should learn from the past," Sugiharto said, pointing out that between 50 percent and 60 percent of the SOE funds channeled by the various institutions in the form of loans to SMEs during the past couple of years had turned bad.

He refused, however, to disclose the total amount of the bad loans.

The government hopes that with one-roof loan management and channeling by PNM, the amount of non-performing loans will drop to around 10 percent.

Sugiharto said the government would channel between 1 percent and 5 percent of the SOEs' net profits next year to PNM to finance local micro-entrepreneurs, but with the prior approval of the shareholders of the SOEs.

The government has targeted harvesting at least Rp 1 trillion (US$111 million) next year from the SOEs for fund the microcredit scheme.

In addition, the government is also trying to harness idle funds parked in banks, which are currently estimated at some Rp 300 trillion, to help expand lending to micro-businesses next year.