Govt to help empower micro, small businesses

Wahyoe Boediwardhana, The Jakarta Post

Indonesia is working toward initiating a new program to empower micro and small businesses, earmarking up to Rp 381 billion (around US$40.4 million) to finance the project.

State Minister for Cooperatives and Small and Medium Enterprises Suryadharma Ali said in Surabaya recently that the program was subject to approval by the Finance Ministry and would be used to help more than 2,000 businesses across Indonesia. Suryadharma's ministry would oversee the initiative.

"The fund is to help them to get over hurdles that SMEs face in getting sources of capital," Suryadharma said.

"As you know, their biggest obstacle is access to finance."

The ministry's data shows that less than 5 percent of more than 40 million micro, small and medium enterprises in Indonesia did not have secure access to bank lending, making it harder for them to compete with their bigger rivals.

The fund would target 2,038 creditors nationwide, with the management and supervision to be handled by the ministry's Revolving Fund Management Agency (LPDB).

LPDB director LPDB Fadjar Sofyan said he was upbeat about the program, "because there would be a verification from the receiving parties about their usage of funds".

"There would be no excuses for unreported funds," Fadjar said.

"If the funds are used, the businesses will need to report what they were used for. Unused funds that are not returned and can not be verified would be categorized as a state loss due to corruption."