Banks should pay more attention on SMEs

JAKARTA (JP): The banking sector needs to boost its lending tosmall and medium enterprises (SMEs) due to the sector’s provenresilience and huge contribution to employment and the economy, aseminar determined Monday. Ali Masykur Musa, lawmaker from House of RepresentativesCommission XI overseeing financial affairs, said that while theloans were on the rise, banks were still not meeting theirpotential when it came to extending loans to SMEs.

So far, the SMEs only take about 40 percent of the annuallending provided by banks, while the other 60 percent goes tolarge companies, he said. That’s not good enough considering the role the SMEs play inthe economy. According to the cooperatives and SMEs ministry, SMEs made up90 percent of the country’s 48.9 million business enterprises in2006. They employed 96 percent of approximately 88 millionworkers that year.

While other businesses are still struggling to get their feetback on the ground around 10 years after the (economic) crisis,the SMEs sector remains resilient and has been showing good performance in supporting the economy, Ali said. Andang Setyobudi, head of research and development at BankIndonesia’s credit and SMEs directorate, said a fully empoweredSMEs sector was the answer to Indonesia’s wide income disparity. Funding accessibility for the SMEs must be increased.

Notonly from banks, but also from non-bank institutions, such ascooperatives, pawnshops and venture capital. Andang said the central bank predicted bank loans to SMEs thisyear would increase by up to 20 percent from last year, on theback of a government program which provides funds to guaranteebank loans to SMEs.