Two-step loans only for healthy firms: Mar'ie
Two-step loans only for healthy firms: Mar'ie
JAKARTA (JP): The two-step loans pledged by Japan's Export-
Import Bank (Exim Bank) will only be provided to viable venture
capital and small-scale companies, says Minister of Finance
Mar'ie Muhammad.
He said Saturday that venture capital companies and small-
scale businesses applying for the two-step loans would be closely
evaluated.
Two-step loans are generally channeled to borrowers through
commercial banks.
"Those funds are our loans and we should, therefore, be very
careful in lending them to small-scale businesses," Mar'ie said
after the official opening of a capital venture firm in
Pekanbaru, the capital of the Riau province.
The capital venture firm was established by PT Bahana Artha
Ventura, a state-owned venture capital firm, in cooperation with
local businessmen. Riau is the 20th province to receive a
venture capital company since 1994. The government hopes to
establish similar companies in all of the country's 27 provincial
capitals.
The establishment of the venture capital companies was
sponsored by Bahana Artha Ventura, which injected Rp 1 billion of
equity participation into each.
Mar'ie said the government would further encourage the
establishment of venture capital firms in the country to provide
financial assistance to small-scale businesses.
The Japanese Exim Bank announced Friday a loan of 53 billion
yen (US$490 million) to Indonesia to finance capital investment
by small-scale enterprises.
Mar'ie said that about US$200 million of the Japanese bank's
loans would be used to support the activities of the country's
venture capital companies, which provide financial assistance to
small businesses.
The Japanese bank said in a statement Friday that the loans
are expected to help develop the domestic financial market, which
is a source of stable medium-to-long-term funds.
Small-scale enterprises employed almost 90 percent of the
Indonesian work force, or 70 million people, in 1994. They
contributed an estimated 15 percent of the country's gross
domestic product (GDP), the bank said.
The Indonesian government has highlighted the promotion of
such enterprises in its current 25-year development plan, which
was implemented in 1994.
The promotion supports various measures, including the
provision of tax breaks for venture capital companies, the
development of the domestic capital market and the requirement
that commercial banks extend at least 20 percent of their loans
to small enterprises, which are defined as companies with total
assets of no more than Rp 600 million ($250,000).
Meanwhile, venture capital companies in West Java, Yogyakarta
and Bali have complained that they are facing a shortage of funds
to meet the demand for venture projects in the provinces.
Executives from the venture capital companies told a hearing
with House Commission VII for Finance and Trade recently that
they are only able to finance less than half of the proposed
projects due to the capital limitations.(hen)