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The government is working on a credit insurance scheme to
encourage higher bank lending to small and medium enterprises (SMEs),
which often face difficulties in accessing bank loans due to lack of
collateral, Coordinating Minister for the Economy Boediono says.
Speaking Friday during a meeting with members of the Indonesian Chamber
of Commerce and Industry (Kadin) in Jakarta, Boediono said that credit
insurance would be provided by state-credit insurance firm PT Asuransi
Kredit Indonesia (Askrindo).
"Rather than setting up a new company to provide insurance, it would be
better to expand the operations of Askrindo to cover SME loans," he
said, adding that the government would also ramp up the operations of
state investment firm PT Permodalan Nasional Madani (PNM) so as to
enable it to expand its investment financing services to SMEs.
Askrindo was established by the government in 1971 to help SMEs obtain
access to financing, and has to date provided guarantees and credit
insurance cover to more than 6 million SMEs.
Meanwhile, PT PNM, which is on the government's 2007 divestment list,
was set up in 1998 after the financial crisis to take over the role
previously played by Bank Indonesia in providing microfinance loans.
The government is currently readying a policy package aimed at
strengthening SMEs, which, according to the Central Statistic Agency,
account for 50 percent of GDP.
Boediono said the package would tackle problems pertaining to financing
and market access for SMEs, human resources development, regulatory
reform and tax incentives.
Business associations, such as the Indonesian Textile Association (API)
and the Young Entrepreneurs Association (HIPMI), said there was a great
need for stronger linkages between the financial sector and SMEs,
including the putting in place of credit insurance schemes.
"I once thought that the main obstacle facing the SMEs lay in the
quality of their human resources and marketing skills, but I was wrong.
It actually lies in financing," HIPMI chairman Sanduaga L. Uno said.
Boediono also said that in addition to revitalizing credit insurance
firm Askrindo, the government would also support the roles played by
thousands of informal lenders in the regions which had contributed
significantly to the growth of SMEs. The Finance Ministry was currently
drafting a bill to provide a firm legal basis for their activities.
Meanwhile, KADIN chairman M.S. HIdayat said the government needed to
quickly establish standard criteria for defining an SME as different
government and businesses institutions defined them differently, thus
making it difficult for them to help the SME sector as a whole.
"The banking industry has its own definition of an SME, the chamber of
commerce has its own, and even the ministries employ different
definitions of SMEs," he complained.
Indonesian Employers Association (Apindo) chairman Sofyan Wanandi said
the government should also establish priorities in terms of which types
of SMEs it would focus on.
"We can't help all SMEs. We have to set priorities as SMEs come in many
shapes and forms," he said. He also urged the Trade Ministry, the
Industry Ministry, and the Small and Medium Enterprises Ministry to
improve coordination as regards SME development.
Hidayat expressed the hope that the government was serious about
empowering micro-entrepreneurs, saying that the planned policy package
for SMEs should be practical and be followed up by concrete action. "I
sincerely hope that its mere than rhetoric this time around," he said.
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