Askrindo and SPU set to take center stage

The Jakarta Post, Jakarta

The government is scheduled Monday to officially kick off its SME-empowerment program and allow state-owned credit insurers PT Askrindo and Perum Sarana Pengembangan Usaha (SPU) to start using the Rp 1.45 trillion (some US$149 million) in credit guarantee funds allocated under the program.

Under the program, the two firms are expected to help provide guarantees for around 580,000 small and medium companies seeking bank loans.

"That's assuming that the average bank loan extended to each SME under this program stands at around Rp 25 million," Askrindo director Suharsono told The Jakarta Post in an interview last week.

Bakti Prasetyo, SPU director of Business Development, added: "We know that a lack of financing access for our SMEs has been a major obstacle hampering the sector's growth.

"So, basically what we do is help SMEs become bankable, by sharing the customers' risk of default with the bank."

The program forms parts of the government's intensified efforts to promote a wider role for SMEs, providing them with easier credit and collateral schemes. This is crucial as the sector accounts for most business enterprises here, and contributes greatly to production and employment.

According to a recent joint study by the Cooperatives and SMEs Ministry and the Central Statistics Agency (BPS), over 99 percent of the country's businesses are SMEs. Last year, the sector provided work for 96.18 percent of the country's 85.4 million-strong workforce.

Yet despite being an essential part of the country's private sector, most SMEs suffer from capital constraints and poor management that derail their growth.

Askrindo and SPU have so far guaranteed a combined Rp 130 trillion of bank credit will be disbursed to around 7.7 million small and medium businesses.

"Under this program, the participating banks can only charge interest at a maximum rate of 16 percent," Suharsono said, adding that the two companies have signed a cooperation deal with six banks for the program.

They are Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI), Bank Tabungan Negara (BTN), Bank Syariah Mandiri and Bank Bukopin.

"Keep in mind that, the six banks, Askrindo and SPU, have their own business plans for SMEs respectively. So this (government's) program actually runs separately with our respective programs," added Bakti.

In another program to help empower the country's SME sector, Askrindo, SPU and PT Penjaminan Kredit Pengusaha Indonesia -- a privately owned credit guarantor -- will host the 20th Asian Credit Supplementation Institution Confederation (ACSIC) on Nov. 5-8 in Nusa Dua, Bali.

"In this annual event, we usually share knowledge and learn from each other, mostly about regulations, on how to further promote the sector," said Suharsono.

"We could learn a lot from them. Japan for instance, despite being a developed country, they have in fact a huge number of SMEs and their government is doing its utmost to help them. They now have 54 companies that can guarantee SME bank loans, as compared to three here in Indonesia."

The organizing committee says that 94 participants from 11 countries and 16 regional institutions have confirmed their participation.