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NEWS UPDATES 31 October 2009

Indonesia govt lends support to MSMEs

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

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 20 trillion rupiah a year — is expected to change, President Susilo Bambang Yudhoyono said Thursday.

“Every year, there will be 20 trillion rupiah in funding [for MSMEs], with 2 trillion rupiah 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 100 trillion rupiah 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 14 trillion rupiah under the government’s micro loan programme (KUR) this year, out of a total 20 trillion rupiah earmarked in the 2009 state budget, Sandiago said.

The government disbursed 12.5 trillion rupiah in KUR loans last year, out of 14 trillion rupiah 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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