Review of Selected Credit Programs for SME

REVIEW OF SELECTED CREDIT PROGRAMS FOR SMALL AND MEDIUM ENTERPRISES
Prepared by: Tika Noorjaya

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 Scope of Study
􀂾 This report reviews four credit programs,a namely: (1) Credit for Members of
Primary Cooperatives (KKPA), (2) Credit for Cooperatives (KKOP), excluding
KKOP Pangan (food) and KKOP Pupuk (fertilizer), (3) Working Capital Credit for
Rural Banks (KMK-BPR), and (4) Credit for Small and Micro Enterpreneurs
(KPKM), both for commercial banks (KPKM-Umum) and for rural banks (KPKMBPR).
􀂾 The review centers on: (1) the rationale of credit programs, (2) the development of
credit programs, (3) costs and benefits of credit programs, and (4) the
rationalization of credit programs.
 
Recommendations
􀂾 The number of credit programs should be reduced. Two credit programs should be
offered, namely: (1) a credit program for members of cooperatives, and (2) a credit
program for individuals.
􀂾 Credit program design should be based on national and international best practice.
The program and best practice should relate to: (1) the credit scheme, (2)
government support, including those to credit guarantee agencies, (3) technical
assistance, and (4) Business Linkage Program.
􀂾 The channeling of credit programs needs to be undertaken selectively in that such
credits will have to be allocated for the funding of long-term investments, start-up
investments, improvement of the quality of the environment, and less developed
areas. Program phase-out should be planned accurately well in advance. It is
recommended to consider a credit program with blended Rp/US$ finance to
reduce the nominal interest rate, in particular for long-term projects that generate
foreign exchange.
􀂾 The government is asked to support HRD (human resources development or
training). The capacity and capability of bank officers to analyze the eligibility of
SME should be increased. Technical assistance should also aim at facilitating
partnerships between large enterprises and small businesses, so that business
risks are reduced.
􀂾 Regulations on credit programs managed by PT PNM are related to its agreement
with Bank Indonesia. It is recommended that BI should approve the rationalization
of these credit programs. In this process one should also consider the enactment
of Act on Credit, the draft of which (RUU) is now being debated at the House of
Representatives (DPR).
􀂾 The credit program design should allow adjustments to regional conditions. The
adjustments concern, e.g., decisions on sectors or commodities that should be
supported with the credit program in line with local or provincial development
objectives.

SELENGKAPNYA, LIHAT:  http://www.bappenas.go.id/files/8413/5228/3463/review-of-selected-credit-programs-for-sme__20081123085412__1027__3.pdf