Govt pitches in support for micro financing, sets aside guarantee funds

Mustaqim Adamrah, The Jakarta Post, Jakarta | Fri, 10/30/2009 9:40 AM

Aiming to accelerate the development of micro, small and medium enterprises (MSMEs), the government will allocate Rp 2 trillion (US$202 million) each year over the next five years as a guarantee for them to secure bank loans.

Access to financing has been one of the major obstacles for the industry to grow, and this is what this fund — which could guarantee lending of up to Rp 20 trillion a year — is expected to change, President Susilo Bambang Yudhoyono said Thursday.

“Every year, there will be Rp 20 trillion in funding [for MSMEs], with Rp 2 trillion to be set aside from the state budget as a guarantee,” he said at the opening of the 2009 National Economic Summit.

“In five years, there will be Rp 100 trillion in funding in a scheme to help provide micro and small enterprises with working capital.”

Yudhoyono, however, also underlined that prospective borrowers should be creative and have a sense of entrepreneurship, calling for a reform in the national educational system to help students develop their entrepreneurial skills.

In the future, he said, students who had undergone 12 years of schooling were expected to become not so much “job seekers” as “job creators”.

He lamented the low number of entrepreneurs in Indonesia, less than 1 percent of total population, compared to the United States and Singapore with 15 percent and 7 percent.

MSMEs are one of six economic topics being discussed at the two-day summit being held at the Ritz-Carlton Pacific Place.

The summit is being jointly hosted by the government and the Indonesian Chamber of Commerce and Industry (Kadin) to hear suggestions from all stakeholders in the economy to help shape the country’s next five-year economic plan.

Sandiago Uno, Kadin’s deputy chairman for micro, small and medium enterprises and cooperatives, said the chamber expected the government to establish a micro financing institution to make it easier for micro borrowers to access loans.

So far, micro borrowers have received Rp 14 trillion under the government’s micro loan program (KUR) this year, out of a total Rp 20 trillion earmarked in the 2009 state budget, Sandiago said.

The government disbursed Rp 12.5 trillion in KUR loans last year, out of Rp 14 trillion allocated in the 2008 state budget.

KUR loans are channeled through BNI, Bank Mandiri, BRI, BPD, Bank Syariah Mandiri and Bank Bukopin.

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