Indonesia is looking to boost exports in sectors other than coal and palm oil. (B1 Photo/Danung Arifin)

Govt to Offer Cheap Loans to Small, Medium-Scale Exporters

BY :TABITA DIELA

MARCH 29, 2016

Jakarta. The Indonesian government will subsidize micro loans for small and medium enterprises that sell most or all their products abroad,  as part of efforts to boost the country's ailing export sector.

Outbound shipments from the largest economy in Southeast Asia have declined by 7.2 percent over the past twelve months, in line with declining demand for the country's main commodities, like coal and palm oil. As the downtrend on such commodities is unlikely to end soon, the government is looking to boost export in other sectors.

"Micro, small and medium enterprises have the potential and ability to create export-quality products. But they are hindered by the lack of financing choices and the problem in manpower quality, marketing and the high standard of international trade," Coordinating Minister for the Economy Darmin Nasution told a press conference on Tuesday (29/3).

Under the new loan program, called Export-Oriented People's Business Loan, or KURBE, the country's export-import financing agency Indonesia Eximbank will offer working capital and investment loans.

The government will be subsidizing the interest payments, so that Eximbank would be able to offer a rate of 9 percent annually.

State controlled Bank Mandiri, Indonesia's largest lender, is offering its business clients interest rates of 10.5 percent to 19.25 percent.

Darmin said that Eximbank would offer working loans for periods up to three years and investment loans for up to five years. The maximum loan amount available under the KURBE program is Rp 50 billion ($375,000). 

Darmin did not mention the amount of funds ready to be disbursed, but the Indonesian government has earmarked Rp 100 trillion for a similar micro-loan scheme for SMEs known as KUR.

KURBE is part of the government's 11th economic stimulus package that aims to boost the economy by providing incentives for exporters, pharmaceutical firms and property companies.

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