SME financing gets a boost
SME financing gets a boost
The Jakarta Post, Jakarta
To help improve financial access for micro-entrepreneurs, the
government will support the raising of Rp 800 billion (some US$80
million) in funds next year for 2,000 micro-financing agencies
across the country to channel as credit.
The funds, Minister of Cooperatives and Small and Medium-Sized
Enterprises (SMEs) Suryadharma Ali said on Saturday, were
expected to come from a Rp 200 billion allocation in the state
budget derived from the government's fuel price hike compensation
program, and would be disbursed to the micro-financiers through
state financing firm PT Permodalan Nasional Madani (PNM), state-
owned lender Bank Mandiri and privately owned, sharia-based
lender Bank Muamalat Indonesia.
Under the program, PNM, Mandiri and Muamalat will each
contribute further by doubling the assistance funds, taking the
total amount for the micro-financing agencies to Rp 800 billion.
"The funds will be given to such micro-financing institutions
as rural credit cooperatives in the regencies and subdistricts
throughout the country," said Suryadharma quoted by Antara.
"If the program proves to be successful, then we may even
extend it to micro-financiers at the sub-district level."
This year, the ministry has disbursed Rp 106 billion through
the three lenders, raising a total of Rp 424 billion in funds for
444 micro-financing institutions to channel as credit.
It is targeting to support a total of 5,557 micro-financing
agencies until 2008 under the scheme, a continuation of its
previous success of raising Rp 617 billion in funds for 5,174
micro-financiers from 2000 to 2003.
The amount of funds, however, is strikingly low compared to
the Rp 4.65 trillion in direct cash subsidies for 15.5 million
low-income households that the government has also allocated for
the fuel price compensation scheme, despite criticism that the
scheme would only create a dependent mentality among the poor and
that the funds should instead be used for labor-intensive
projects or supporting SMEs.
SMEs, which have proven their resilience against economic
crisis and help absorb manpower, are still facing financing
problems due to the lack of formal requirements for making
commercial loan applications.
Meanwhile, in a similar move to support micro-entrepreneurs,
the Asian Development Bank (ADB) last week disbursed $2 million
in grants to restore micro-enterprises and support microfinancing
institutions in the tsunami-affected Aceh province and North
Sumatra's Nias island.
The grant will be used to provide micro-credits schemes
averaging Rp 5 million each to some 1,500 micro-enterprises
through local regional development banks over a two year period.