Poor families to get cheap loans

JAKARTA (JP): The government launched on Tuesday two schemes of cheap credits to help poor families, small businesses and cooperatives survive the year-long economic crisis.

Director General of Financing and Development Services Deswandhy Agusman said that the two micro credit schemes, called Credit for Small and Medium Entrepreneurs (KPKM) and Credit for Technology Application in Alleviating Poverty (KPTTG-Taskin) will be given to small and medium businesses and poor families at an annual interest rate of 16 percent.

"Small businesses and poor families are not required to have collateral to obtain the loans, which will range from Rp 1 million to Rp 5 million," Deswandhy said in a launching ceremony for the credit schemes, part of 16 heavily subsidized credit schemes announced by the government last month.

Deswandhy said that the government has appointed state Bank Negara Indonesia (BNI) and Bank Rakyat Indonesia (BRI) to channel the loans.

Deswandhy said that the loans issued under the KPTTG-Taskin scheme would be also given to self-help groups, groups of poor families who are making productive efforts to lift themselves out of poverty.

He said that the government has allocated Rp 100 million for the KPTTG-Taskin scheme alone, which will be given as working capital or investment loans.

The repayment for working capital loans under the scheme will be due in one year, with a grace period of three months, while the repayment of investment loans will fall due in three years with a grace period of one year, he said.

"If we can help small businesses in easing their capital problems, I believe that we might further alleviate poverty," Deswandhy said.

In October, the government announced that it had allocated at least Rp 10 trillion (US$1.3 billion) to fund 16 micro credit schemes designed to help SMEs and cooperatives.

Loans issued under the schemes come at interest rates of between 6 and 16 percent, compared to about 50 percent for normal commercial loans. The loans are offered through commercial banks with the help of non-governmental organizations across the country.

The schemes cover almost all sectors of the economy, including farming, fisheries, housing, trade and commerce, and poultry farming.

Loans available range from Rp 5 million to Rp 3 billion, with repayment periods varying from between one and 15 years.

Working capital loans are limited to Rp 5 million, with repayment due within one year. For investment loans, the limit has been set at Rp 25 million, with repayment due within five years.

Deswandhy said that so far the government has launched five micro credit schemes including the two recently-launched schemes with allocated funds of Rp 1.5 trillion.

Meanwhile, Minister of Cooperatives and Small and Medium Enterprises Adi Sasono said separately on Tuesday that the government has targeted the disbursement of Rp 8.2 trillion in farming loans until September next year.

He said that the government allocated Rp 1.8 trillion in farming loans last month and the amount is expected to reach Rp 4 trillion by the end of the current planting season which would fall in March or April next year.

"Over sixty percent of the farming loans will be distributed to farm laborers," he said on the sidelines of a seminar. (gis/das)