Determined to keep abreast of affairs throughout the country, President Susilo Bambang Yudhoyon has installed a 'situation room' at the Presidential Palace. (Antara Photo/Widodo S. Jusuf)

“ … Here is another one. A change in what Human nature will allow for government. "Careful, Kryon, don't talk about politics. You'll get in trouble." I won't get in trouble. I'm going to tell you to watch for leadership that cares about you. "You mean politics is going to change?" It already has. It's beginning. Watch for it. You're going to see a total phase-out of old energy dictatorships eventually. The potential is that you're going to see that before 2013.

They're going to fall over, you know, because the energy of the population will not sustain an old energy leader ..."
"Update on Current Events" – Jul 23, 2011 (Kryon channelled by Lee Carroll) - (Subjects: The Humanization of God, Gaia, Shift of Human Consciousness, 2012, Benevolent Design, Financial Institutes (Recession, System to Change ...), Water Cycle (Heat up, Mini Ice Ace, Oceans, Fish, Earthquakes ..), Nuclear Power Revealed, Geothermal Power, Hydro Power, Drinking Water from Seawater, No need for Oil as Much, Middle East in Peace, Persia/Iran Uprising, Muhammad, Israel, DNA, Two Dictators to fall soon, Africa, China, (Old) Souls, Species to go, Whales to Humans, Global Unity,..... etc.)
(Subjects: Who/What is Kryon ?, Egypt Uprising, Iran/Persia Uprising, Peace in Middle East without Israel actively involved, Muhammad, "Conceptual" Youth Revolution, "Conceptual" Managed Business, Internet, Social Media, News Media, Google, Bankers, Global Unity,..... etc.)
Showing posts with label Small-and-Medium Enterprises (SME). Show all posts
Showing posts with label Small-and-Medium Enterprises (SME). Show all posts

Thursday, July 25, 2013

China to suspend VAT for small businesses

Want China Times, Xinhua 2013-07-25

China will suspend the value-added tax and turnover tax for small businesses with monthly sales of less than 20,000 yuan (US$3,220) starting from Aug. 1.

The announcement was made in a statement released Wednesday after an executive meeting of the State Council presided over by Premier Li Keqiang.

The move will benefit more than six million small companies and boost the employment and income for tens of millions of people, the statement said.

VAT refers to a tax levied on the difference between a commodity's price before taxes and its cost of production. Turnover tax refers to a levy on a business's gross revenues.

The State Council also discussed measures to facilitate foreign trade and stabilize exports, such as simplifying customs clearance procedures, cutting operational fees, increasing financial support for profitable companies, facilitating the exports of small and mid-sized private enterprises, increasing imports and maintaining a stable yuan exchange rate.

China's economic growth slowed to 7.5% in the second quarter of 2013, down from 7.7% during the first quarter. Officials attending Wednesday's executive meeting, however, said the economy is still running within a suitable range.

They agreed that more efforts should be made to create a fair, open and convenient market environment, motivate market players and enhance construction in weak areas of the economy, so as to ensure that the economy can develop in a sustainable and healthy way, the statement said.

The statement also said the government will fully open up its railway construction market through reforms and give priority to railway construction in central and west China, as well as poor regions.

Tuesday, July 23, 2013

Indonesia’s Microfinance Industry Faces Overwhelming Demand

JakartaGlobe, Janice Winata, July 23, 2013

Many roadside stall operators in Indonesia have to resort to loans from mobile
 banks (bank keliling) as they are unable to obtain formal banking services.
(JG Photo/Fajrin Raharjo)

A tattooed man briefly interrupted Wastiri as he ducked into her roadside stall, taking a seat alongside the slow-moving traffic that crawled down the narrow Tanjung Priok street. She flashed him a smile as he greeted her, beaming wide and toothless from her perch atop a worn wooden bench.

Colorful bags of instant noodles and potato chips lined the walls of Wastiri’s stall — a tiny plastic-covered shop sandwiched between a ramshackle noodle stand and a large commercial bank in North Jakarta’s roughhewn portside neighborhood.

For some 40 years this stall has been the source of Wastiri’s livelihood, she explained. In that time the woman, now more than 80, has become something of an institution. Customers call her “Emak” (Mother) as they stop by to ask what she has in stock, peering into her small store as they walk down the street.

The bank next door hasn’t been as reliable, she said.

“I would like to borrow from banks, as it is cheaper to do so, but their requirements are complicated,” she complained. “They ask me for an identification card [which I have], but I do not have a family card or the deed to my home for collateral. I don’t own the place.”

For Wastiri, and millions of other low-income Indonesians, the nation’s commercial banking system is a closed door. While lenders like Bank Rakyat Indonesia offer low-cost microloans, lending regulations — which require customers to have proof of a permanent job, income and collateral — shut out the majority of Indonesia’s laborers.

It’s a large segment of the domestic market. Despite Indonesia’s rising middle class, nearly half of the country’s households live at, or close to, the government’s $22-a-month poverty line, according to World Bank statistics. Some 92 percent of Indonesia’s workforce is employed in the informal sector. Most hold semi-permanent jobs but lack an employment contract.

Commercial lenders and microfinance cooperatives have tried to meet the demand, but a combination of strict regulations and too-high thresholds have hampered efforts and given rise to a murky black-market of motorcycle-riding lenders and unscrupulous loan sharks.

The lenders offer loans at high interest rates — nearly 20 percent higher than bank rates — and often collect daily payments from customers. The requirements are loose and the lenders are eager to approach customers, said Wastiri.

“Bank keliling [mobile banks] are more suitable for us,” she said. “Thought they ask for daily or weekly payments, it is easier for us to borrow money from them — I personally don’t even have to give them my identification card.”

Experts have struggled to estimate the real size of the informal market, but from their best estimates it appears to be growing.

“We can expect to see an increase in the number of non-bank microfinance institutions because the non-bankable segment is huge and it is very difficult for the poor to access banks,” said Dewi Meisari, an expert in micro-, small- and medium- sized enterprises at the University of Indonesia (UI).

The Ministry of Micro, Small and Middle Enterprises recorded 55 million MSMEs in 2011 and reported a loan-to-GDP ratio of 33.1 percent in a survey a year later. Some two-thirds of the MSMEs in Indonesia have no access to formal banking services, the ministry found, warning that the lack of access was a threat to Indonesia’s economic growth.

“The lower income population has little or no options when they borrow money,” Dewi said.

Growth potential

Indonesia’s microfinance market can be lucrative if properly tapped, experts believe. MSMEs account for  57 percent of the nation’s gross domestic product, Bank Indonesia (BI) Deputy Governor Halim Alamsyah said during a seminar last June. While MSMEs have historically borrowed outside the formal market, the number of micro business owners receiving commercial loans has grown in the last year, Firman Moeis, head of commercial linkage at CIMB Niaga, added.

“The micro finance market in Indonesia has great potential for growth,” he said. Out of the 56 million MSME owners in Indonesia, only 37 percent of them receive micro banking services. [But] as of February 2013, the MSME industry had an outstanding loan value of Rp. 514.5 trillion — a 14.6 percent jump from last year’s numbers.”

Firman believes the nation’s economic growth is anchored by micro businesses like Wastiri’s food stall. During the Asian economic crisis, the owners of small and mirco businesses emerged unscathed, he said.

“The 1998 crisis negatively impacted big companies, but small-medium businesses thrived,” Firman explained. Today, the economic downturn isn’t as drastic; furthermore, the small-medium businesses are fundamentally sound, so I am certain this situation will leave little or no impact on the microfinance industry.”

While large companies saw their balance sheets reverse into the red, the nation’s informal sector — cigarette sellers, stall owners and street food cart operators — continued to earn a living, said Leonardus Kamilius, founder of Koperasi Kasih Indonesia, a microfinance institution operating in Cilincing, North Jakarta.

“In the 1998 crisis, the companies that were battered by the crisis were the big companies who owed US dollars. For small enterprises, their economies are not as related to the global economy and hence, they are more resilient,” he told the Jakarta Globe.

Financial literacy still a problem

For Said Hendro, access to microloans has been both a blessing and a curse. It’s tempting to borrow too much, he said, adding that many of his friends found themselves neck-deep in debt after taking money from both microfinance cooperatives and mobile banks.

“Many of my friends around here have gone back to their villages as their businesses have gone bankrupt,” Said shared. “They borrow from all these mobile banks and they can’t repay their debt.

“I understand their predicament completely because these people come by everyday offering loans and it is hard to say no. Even though I have loans from both official cooperatives and the mobile banks, I am still tempted to borrow more.”

Experts warn that the lack of financial literacy among low-income residents could undermine out any gains made by offering poor people access to financial services. Borrowers need access to both commercial loans and education for Indonesia’s microcredit industry to make a positive impact, experts said.

“Most people in the low-income population cannot comprehend the whole notion of interest rates — the way the process of borrowing is explained to them is by telling them how much they need to pay in installments per week,” Dewi explained.

Leonardus echoed Dewi’s sentiment.

“People who can afford loans of 5 million rupiah and above, they generally already know how to manage their money and do not require further financial education,” he said. “However, for smaller loans like 500,000 rupiah loans for a banana fritter [pisang goreng] seller, he does not know how to manage his money and will benefit greatly from financial education.”

Saturday, November 24, 2012

Indonesia Earns UN Recognition for Cooperative Success

Jakarta Globe, Anastasia Winanti Riesardhy, November 24, 2012

Indonesia’s minister for cooperatives and small and medium enterprises,
Syarief Hasan. (JG Photo/Safir Makki)
Related articles

Indonesia’s cooperative program was named one of the world’s most successful during a United Nations event in New York earlier this week, according to the Indonesian cooperative minister.

Indonesia, along with Malta, Panama and Trinidad and Tobago, was officially recognized during the closing ceremony of the UN’s International Year of Cooperatives on Nov. 19-20.

Officials from the four nations, including the Indonesian minister for cooperatives and small and medium enterprises, Syarief Hasan, were each given an opportunity to present at the event the strategies used in their respective countries that led to the prosperity of the programs.

“I was given the chance to describe programs we’ve been implementing that have led to Indonesia’s success in the cooperative and SME sector,” Syarief told journalists upon his return to Soekarno-Hatta Airport in Tangerang on Saturday.

“I gave examples of why Indonesia has succeeded. First, we have a large number of cooperatives. They [the audience] were surprised with the figure, especially when I mentioned that our cooperatives have a total of 33.6 million members.”

Syarief said in his presentation that Indonesia was currently home to 192,443 cooperatives, with 7,831 of them offering savings and loan services.

He added that evaluating the performances of cooperatives should not be based on their asset developments, or lack thereof.

“We should value cooperatives not based on their sales revenues, but on the amount of members and whether they feel the benefits of being members of the organizations. That’s the spirit,” Syarief said, reciting his own remarks made at the UN event.

He added that the Indonesian government supported the growth of cooperatives and SMEs since they helped reduce unemployment and poverty rates, which currently stand at 6.3 percent and 11.96 percent, respectively.

“They were surprised when I said our microfinance program can draw 7.8 million customers. ‘No wonder the poverty rate was reduced,’ they said.”

The UN designated 2012 as the International Year for Cooperatives.

Indonesia has organized a number of events and has launched some new programs this year in conjunction with the UN program, including training events for youth cooperatives, as well as seminars and conferences under the banner of “Indonesian Cooperatives Go Green.”

Indonesia’s House of Representatives also endorsed earlier this year the new cooperatives law, a revision of the 1992 version, which is expected to provide more protection to cooperative members and eradicate loan shark practices among cooperatives, among other things.

Suara Pembaruan

Tuesday, June 28, 2011

Ministry channels Rp 12t to micro businesses

The Jakarta Post, Jakarta, Tue, 06/28/2011

The Cooperatives and Small and Medium Enterprises Ministry claims it has channeled Rp 12 trillion (approximately US$1.39 billion) in micro loans for 5 million micro businesses across the country under the credit support (KUR) scheme.

“That is reaching nearly 55 percent of the target,” Cooperatives and Small and Medium Enterprises Minister Syarifuddin Hasan said Tuesday in Surakarta, Central Java.

He said the ministry was targeting to channel Rp 20 trillion in KUR loans this year.

Syarifuddin said KUR loans were expected to support micro business developments, citing there were currently up to 52.1 million micro businesses in Indonesia.

He said, as quoted by, that such businesses could curb unemployment with each micro business employing three people on average.

Sunday, June 19, 2011

Govt needs to facilitate credits for micro businesses

Antara News, by Andi Abdussalam, Sun, June 19 2011 

Jakarta (ANTARA News) - Small and medium enterprises (SME) are in real term the main pillars of the people`s economic development as they provide employment for about 90 million or about 97 of the total workforce and contribute 53 percent to the country`s Gross Domestic Product (GNP).

Considering the roles the SMEs play in the country`s economic development, the government should facilitate and encourage banks to provide credits for them whose number reaches 51.26 million units or about 99 percent of the whole businesses in the country.

"They must be given attention and various kinds of assistance such as access to various information, capital sources and other funding facilities. This should be done based on the people`s economic principles," Maritime Affairs and Fisheries Minister Fadel Muhammad said in West Sumatra recently.

The need to provide financial support for SMEs is also voiced by Djemi Suhenda, vice president director of Bank BTPN, in Bandung on Sunday. He said that the number of small businesses in Indonesia now was recorded at 51 million units, of which 36 million were in the poor productive sector.

"The government support is needed to increase small businesses` access to the funding sources, among others by issuing supporting regulations, loan infrastructure, credits, training and researches," he said.

According to Djemi Suhenda, banks so far have only paid attention to micro banking facilities while they still ignored the poor productive sector because they think it would need huge funds while profit they could gain is not significant.

"The micro and poor sectors need fast and easy access to funding sources in order to accelerate and boost their roles in the development of people`s economy," he said.

The banker however acknowledged that it was not easy and cheap for banks to enter into the micro and poor sectors because they would need a huge investment and a business model innovation in order to adjust it to the characters of micro and small people.

But basically, banks have the potentials to enter the micro and poor sectors because they had the ability to produce innovation and huge amount of funds.

Virtually, the government itself has a credit program called "KUR" or a smallholder credit scheme, to help develop small people`s business. Yet it still found difficulties, particularly in the region in carrying out the KUR program.

Minister for Cooperatives and SMEs Affairs Syarief Hasan said the government still needed time to smoothly carry out and distribute the KUR funds through banks because not all banks shared the same system in the distribution of KUR credits.

"We are still coordinating with a number of banks because large banks usually face difficulties to provide funds for micro businesses rather than for large scale firms," the minister said.

Yet, it seems that the provision of KUR this year could be achieved easily.

The ministry of state enterprises (BUMN) has recorded that the amount of KUR credits provided for micro businesses up to May 2011 has reached Rp11.012 trillion with a number of 771,818 customer recipients.

"The provision of KUR credits has reached 55.06 percent of the target set this year at Rp20 trillion," the minister said.

But he said that the government had not yet decided to revise its 2011 KUR target.

"Although the realization of KUR has reached over 50 percent with the number of recipients reaching 771,818, the target this year remains the same as that already set at Rp20 trillion," Minister Mustafa Abubakar said.

The minister said that the quantitative achievements, including the number of credit recipients showed a progress, so that it was just possible to increase the KUR amounts. "We still keep the target at the amount already set earlier, except if the chief economic minister asked that it should be revised," the BUMN minister said.

Up to May, 2011, the biggest KUR amounts were provided by state-owned Bank BRI reaching Rp6.901 trillion which included retail KUR worth Rp1.307 trillion with 7,259 customers and micro KUR valued at Rp5,593 trillion with 721,470 debtors.

The second biggest KUR provider bank was state-owned Bank BNI with a KUR commitment of Rp1.009 trillion and 8,252 customers. The third largest was provided by Bank Mandiri with KUR credits amounting to Rp1.001 trillion and 10,496 customers.

In the meantime, credit provision of the whole banks up to April 2011 increased to Rp350.8 trillion or about 23.8 percent.

Bank Indonesia (BI/the central bank) Deputy Governor Muliaman D Hadad said if compared with that in the same period a year earlier, the banking credits up to early in June this year had grown by 23.5 percent.

He said that the credit growth was still dominated by investment credits which were recorded at 10 percent year-to-date, followed by consumption credits which accounted for 7.5 percent.

Although there would be steady demand for credits, yet small scale businesses still face difficulties in gaining credits from big banks.

Economic analyst of the Makassar-based Alauddin State Islamic University (UIN) Prof Dr Natsir Mahmud said businesses faced difficulties to borrow money because the interest rates were high namely ranging from 10 to 15 percent.

"The high rate of banking credits poses a problem for small and new business players so that businesses in Indonesia find it hard to develop. In Singapore interest rates are only about six percent while in the United States are five percent, even once three percent," said Natsir.

According to Minister Syarief Hasan, the government still needed time to provide low interest rates and easy access to founding sources for small businesses because it has to build a common perception in the first place with banks.

Djemi Suhenda shared the minister`s opinion, saying that interest rates should not be lowered too far so that banks would be attracted to enter the small business sector.

"Let them enter this sector first. If the number of large banks entering this sector has increased and competition has begun, the interest rates will automatically go down," he said.

Editor: Priyambodo RH

Tuesday, August 03, 2010

Micro-businesses decline while big business blossoms

The Jakarta Post, Debnath Guharoy, Consultant | Tue, 08/03/2010 9:55 AM | Business

Right across the country, millions of self-employed entrepreneurs help to keep the wheels of the consumer economy turning every day. Some of them employ a helper or two. Collectively, they are the single-largest group of employers in Indonesia as they are in most economies. But they are so small in terms of revenue, the banking sector defines them as “micro-businesses”, different from SMEs and corporations.

While Consumer Confidence has been riding high, the collective slide of these micro-businesses has continued unabated for three years now. As costs go up and more jobs become available, people make their choices. Many entrepreneurs have shut shop to successfully join the workforce, working for someone else. In the big cities especially, visible growth of job opportunities and income levels continue to stimulate the switch. But many have been left behind, on the fringe. Affecting the lower half of the country’s socio-economic strata, the toll on micro-businesses is particularly alarming. From the humble kaki-lima to the mom-and-pop grocery store, too many micro-business owners have been too hard-pressed to continue. These are the signs of our times, good news from one perspective and bad from another. The optimists will say that many of these underemployed-self-employed now have more stable lives as members of the workforce. The critics will point to decline and announce the slow death of the entrepreneurial spirit. I think the truth lies somewhere in between.

To be precise, almost 4 million business owners have shut down their modest little businesses in the last three years. The country’s big cities, towns and villages have all seen declines. Worst hit were the smaller cities and rural, though all three geographies have stabilized in the last six months. All of the populous Top 10 Provinces have witnessed declines, with the exception of Jawa Timur, Jawa Barat, Sumatra Utara and Riau swimming strongly against the tide. Among them, the fastest-growing socio-economic strata is household with monthly expenditure in the Rp1.25 million to Rp.2.25 million range.

Perhaps more worrying than the decline in the number of businesses is the slide in the number of bank accounts closed or left inactive by small and micro-business owners. A year ago, 44 percent of business owners had an active bank account. As at March 2010 that number had slipped to 38 percent. Rising fees and minimum monthly balances have taken a visible toll, swelling the numbers of “unbanked” Indonesians dramatically in just three years. In that sense, the country has gone backwards. Considering that small businesses, like small gears, collectively punch much harder than their individual weights, this is a setback of notable proportions.

The damage done cannot be measured accurately, as the yardsticks of success and failure vary. Any ability that the small-business owner may have had to borrow a small amount to grow his business, add a helper, and keep his bank account alive have disappeared. The multiplier-effect of small business growth has in that sense been damaged. But left standing are the more stable, less wobbly businesses that arguably have better prospects of growing, employing, and paying taxes one day. The fact that these declines have been most severe in the villages rather than anywhere else, supports the more positive of the two viewpoints. While household budgets have been under pressure universally, the ability of rural folk to buy goods and services has intensified in the last 12 months in particular. One bad harvest at this time and the consequent influx of villagers looking for jobs in the urban hinterland could create unusual levels of social stress.

The losses in the number of active bank accounts are proportionate to the size of the banks spread across the nation. The Big Four, with the biggest number of branches spread across the country’s cities, towns and villages were the biggest losers, understandably. The second and third tiers of banks lost much less. While the Big Four may well be pleased to see many of these “unprofitable” accounts disappear, the pressure to maintain and grow what’s left will intensify from here onwards. Because what’s left is valuable, the absolute numbers of account holders beginning to climb again. This is especially true of the more affluent members of Indonesia’s burgeoning workforce.

The strengthening of this smaller but more affluent core of bank account-holders augurs well for the country’s financial services sector. The first half of 2010 saw a renewed interest in Indonesia, with foreign direct investments registering a welcome spike once again. With the penetration of the entire gamut of wealth management services at very low levels, there is only one way to go for industries like insurance, personal loans, mortgages, credit cards and managed funds. As banks look to grow the base of savings account holders, cross-selling these relatively new services will ensure profitable growth. At the heart of success lies the bank’s ability to become the account holder’s “main financial institution”.

The opinions are based on Roy Morgan Single Source, the country’s largest syndicated consumer survey with over 25,000 respondents annually. Interviews are conducted face-to-face each week, continuously, with results released every quarter. The findings are projected to reflect over 85 percent of the population, 14 years of age and older.

The writer can be contacted at

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Monday, August 02, 2010

‘Wartel’ falling victim to cellular services

Irawaty Wardany, The Jakarta Post, Jakarta | Mon, 08/02/2010 10:46 AM

Telecommunication kiosks, or wartel, — once flourishing businesses present in almost all neighborhoods in Jakarta — are facing extinction brought on by advances in wireless communications.

Wartel were once very popular among people making frequent long distance phone calls.

However, radical advancements in wireless technology and fierce competition between local cellular network providers have brought high speed Internet and cheap long-distance phone calls to consumers’ fingertips.

“My boss finally decided to close down his wartel business two months ago because we were getting fewer customers. Besides, the equipment had fallen apart too,” Yuli, 19, an employee of Fatima Cell in Empang Tiga, Pasar Minggu, in South Jakarta told The Jakarta Post recently.

She said her boss has begun selling cell phone vouchers to stay competitive.

“Last year we could still earn Rp 100,000 [US$11] a day but three months ago our daily income decreased to less than Rp 50,000,” she said.

“Every one now has cell phones so I don’t think they need wartel anymore.”

Reni, 25, a housewife who helped her husband establish a wartel on Jl. Raya Pasar Minggu, South Jakarta, recently closed down the business because of a lack of customers.

“When we started this business four years ago, we had four booths and they attracted quite a lot of customers,” said the mother of two.

She said that in its heyday, the business earned up to Rp 300,000 a day.

A month ago, no longer able to cover even telephone or electricity overheads, they decided to close down the business.

“You can imagine, what could we do with only Rp 3,000 of income a day or sometimes even no income at all,” Reni said, adding that she had not decided what kind of business she would replace the wartel with.

“We still keep the equipment though,” she said.

According to an urban business scholar from the University of Indonesia, Nining Indroyono Soesilo, 24-hour food stalls and massage parlors were examples of micro businesses that would likely prove resilient.

“Or if they have more capital to invest it is better to have something to do with leisure and social elements like an Internet cafe that can facilitate users of social networking sites,” she said.

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