Tuesday, 23 September 2014


Today banking circles believed that small and medium business [UKM] did not deserve any credit from banks. It was only natural that capital was one of the main handicaps of UKM in trying to expand business. Rosan P. Roeslani, Chairman of the Indonesian Chamber of Commerce [KADIN], Banking and Financial Section stated in Jakarta on Tuesday [26/8] that UKM in Asia, including Indonesia, had poor access to credit from banks, although they were the propellers of economy.

Rosan stated that UKM’s contribution to economic build up was great so all parties must contribute effort for strengthening UKM whereby to increase productivity and competitiveness. The UKM sector of the provinces should be the life blood of the national economy especially UKM who export products.

Rosan also rated that with the existing potentials, Indonesia’s future was in the regions. At provincial level, the potentials were overall including agriculture, mining, tourism industry and UKM. Meanwhile to increase productivity and competitiveness he saw that most small businesspeople were facing hindrances like poor financial support from banks.

To quote BI’s data, pipelining of credit for micro, small and medium business [UMKM] at the banking sector today was 20% of all outstanding credit at home. The sectors aimed at were trading, but mining was certainly not included because it was not small business.

Bank Indonesia’s Regulation [PBI] No. 14/22/PBI/2012 on Credit on Credit Extention or Financing by banks and technical aid for Developing Micro, Small and Medium business stipulated that the ratio for UMKM was at least 20% of total credit given by stages. In that policy, banks were obliged to extend credit 5% of the entire credit portion. Furthermore in 2016, 2017, and 2018 credit extention to the UMKM sector must be increased gradually by 10%, 15% and 20% respectively.

The provincial Governments needed to be active in easing financial access for UMKM through collaboration with banks. One of the roles to be played by the Provincial Government was extention of subsidy aid to UMKM. Financing was an important aspect in developing UMKM. Financial support to UMKM by the Government and banks was most important because it concerned people’s welfare.

Meanwhile the Permanent Committee of KADIN, Venture Capital and Alternatif Financing Dept Safari Azis stated that most of UMKM were rated as not bankable so they were handicapped in financing access for business development. Pursuant Nusantara Berdikari Financing Agency stated their commitment to support local UKM who were not bankable with financing facilities.

At least the financing institutions formed by KADIN had extended working capital up to Rp 3 billion to UKM in some provinces in Indonesia with minimum ceiling of Rp50 million and maximum 500 million per business unit. Today Safari said, the Government and businessplayers must synergize to jack up export of premium commodities which were potential in the regions whereby to contribute to national economy.

With huge potentials of other commodities, Azis was optimistic that businessplayers, especially UKM, could increase their export. Therefore all financing facilities were expected to support the endeavor in the form of capital, financing by bank and export insurance. (SS)

Business News - August 29, 2014

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