Monday, 18 January 2016

EMPLOYERS ASKED BANKS TO GIVE LOW INTERST RATES TO SMES



A Number of parties consider that banks should have targeted micro, small and medium enterprises (SMESs) because of its great potential with a total number of SMEs at 58 million units and greatly contributed to the GDP. In addition, the SMEs sector absorbs 97.16% of the workforce in Indonesia. While, alignment of bank credit to SMEs is only around 39.1 % or 22.15 million business units which utilize banking access.

By considering the low access of SMEs to banking, the Indonesia Employers Association (APINDO) proposed a loan scheme with low interest, which is 5%, for small and medium industries (SMII) who are having capital difficulty as an effort to improve performance in the midst of a slowing economy. Nina Tursinah, head of SMEs Women Entrepreneurs, Female Workers. Gender and Social of APINDO, in Jakarta, on Wednesday (September 9), said that the proposal is expected to be one of the policy packages to stimulate the performance of the industry. According to her, the scheme of business credit (KUR) with interest rate of 12% (2015) is still burdensome. for SME operators.
           
Nina said that her party had proposed SME funding schemes to the governments with a loan scheme that eases and the process for obtaining it is not difficult. He said that APINDO has a meeting with a number of related parties. Based on the minutes of coordination meeting between APINDO, the Director General of Small and Medium Industry associations, it is proposed to have a venture capital scheme, where investors think about the development of SMEs. It is targeted that there are 4,000 SME debtors as members of associations who get a friendly loan scheme, which comes from 40 associations of SMEs.

In the meeting, it is also agreed to give interest rate maximum 5% per year which is below the interest rates of Revolving Fund Management Institution (LPDP), with a loan ceiling between IDR 50 million and billion. Later, the guarantor is directed to Askrindo and Jamkrindo. In additions, it is also stipulated  an application criteria for loan which is called “Fiendly”, i.e. the receiving industries are required to perform the process of increasing value added, and the debtors is a member that has been guaranteed by respective industry association (associations become offtakers).

Mean while Executive Director of the Institute for Development of Economic and finance (INDEF). Enny Sri Hartati, highlighted that weak purchasing power has in impact on national productivity decline. The cline mainly occurred in public demand for products of processing industry. This resulted in an increasing number of industries, especially SMEs, to have difficulty in business continuity.

He pointed out that in the midst of these conditions, improvements of loan access to SMEs is considered very important in the midst of global and national economic downturn, which is generally still supported by the performance of large corporations. Loan disbursement to the agriculture sector, trade, considered to drive economy, and labor intensive industries is considered to drive economic activity of the middle to lower class society and maintain purchasing power.

According to her, improvement of access to credit for SME sector is part of an effort to answer criticism against economic growth which is overly-based on large corporation, so it has a multiplier impact on non-optimal equitable distributions, and when the global economy weakened, the national economy immediately declined.

He said that total third party fund (DPK) of national banks is around IDR 4,224 trillion as of June 2015, so it should not only be allocated to large corporate sector. Credit portion to large corporate sector amounted to 80%. It is sensitive to high GDP growth. Hence, there should be allocation to sector that are sensitive to the expansion of employment opportunities, which are played by SMEs. (E)

Business New - September 11, 2015

No comments: