Year of Microfinancing campaign launched
Muninggar Sri Saraswati, The Jakarta Post, Jakarta
The government officially kicked off on Saturday the Year of Microfinancing, a campaign to empower micro, small and medium- sized businesses (SMEs).
In his speech to mark the launch of the nationwide campaign, President Susilo Bambang Yudhoyono stressed the significant role the sector would play in the drive to reduce unemployment and poverty.
With small-scale businesses numbering at an estimated 42 million across the country, he said, "if each business in this program manage to absorb just one extra worker, then this sector alone would be able to employ an additional 42 million workers."
Under the campaign, in line with the United Nations-led Year of International Microfinancing program, some Rp 50 trillion in bank loans is to be distributed to businesses across the country.
The government hoped the loans would reduce the current unemployment and poverty rate, from 16.6 percent to 8.2 percent, and from 9.7 to 5.1 percent, respectively.
At the ceremony Coordinating Minister for the Economy Aburizal Bakri said the banking sector had set aside about Rp 60.4 trillion this year in total loans for micro, small and medium business -- part of a planned credit expansion totaling Rp 106 trillion.
"The empowerment of micro, small and medium businesses is crucial to our economy as a whole. Annually, (the sector) contributes between 2 to 4 percent to GDP growth," Aburizal said.
Saturday's ceremony was also marked by the signing of the first loans, amounting to Rp 164.62 billion, between 11 businesses and several banks.
Elsewhere, Susilo urged Bank Indonesia and the banking sector to find ways to lower loan interest rates gradually to boost SMEs' access to financing.
Among the main problems faced by small-scale businesses are access to financing, a high-cost economy, lack of technological capabilities, lack of good management and entrepreneurship, unfair competition from larger businesses and a lack of industry associations.
The campaign will also include exhibitions in about 12 host cities across the nation, which will involve hundreds of SMEs.