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In addition to a Rp 1.4 trillion (around US$149 million)
allocation to subsidize the interest on loans taken out by micro, small
and medium enterprises (MSMEs), the government also plans to streamline
the requirements for borrowing from state SME financing institutions.
Aside from the interest-subsidy fund, the government will also assist
SMEs to access financing by either waiving the collateral requirement
altogether or reducing the required value of the required collateral
from more than 100 percent of the loan to just 25 percent.
"Well, if collateral is needed, it should be about 25 percent. It
shouldn't be more than that," Cooperatives and SMEs Minister
Suryadharma Ali said, referring to the fact that between 100 and 125
percent collateral was normally required.
Suryadharma was speaking during a seminar on SMEs, which was also
attended by Coordinating Minister for the Economy Boediono.
According to a recent study jointly conducted by the Cooperatives and
SMEs Ministry and the Central Statistics Agency (BPS), 99.98 percent of
the country's businesses were found to be SMEs, providing work for
96.18 percent of the country's 85.4 million-strong workforce last year.
But despite being robust and an essential part of the country's private
sector, most SMEs suffer from capital constraints and poor management
that hamper their growth.
This forced the government to come up with its loan interest subsidy
scheme, which starts this year and is expected to continue in coming
years.
"The money will be given to state credit insurance firms like
Askrindo," Boediono said, as reported by detik.com.
The government had previously expressed its intention to strengthen the
financial capacity of the two state-owned credit insurance and
financing firms, PT Asuransi Kredit Indonesia (Askrindo) and Perum
Sarana Pengembangan Usaha.
The government, Boediono said, was also working on allowing alternative
forms of risk guarantees to be used by SMEs to secure loans, such as
warehouse receipts.
Inter-ministerial coordination would also be strengthened. "Almost
every ministry has a program to strengthen SMEs. We need to integrate
these programs so as to maximize results," Boediono added.
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