Indonesia's Jokowi calls on banks to expand credits to small businesses

Indonesia's President Joko "Jokowi" Widodo called on banks to diversify their loan disbursement to micro, small and medium enterprises (MSMEs) to help them expand their businesses.

"I see the debtors [ of banks] are the same people over the years. I want more people to have access to banks," he said at a Financial Services Authority (OJK) gathering event in Jakarta Friday.

According to an OJK report, in 2017, the loan disbursement only grew 8.35 percent year-on-year (yoy) to Rp 4.78 quadrillion (US$358.5 billion) while the third-party fund grew 9.35 percent yoy to Rp 5.29 quadrillion. Jokowi said by providing MSMEs with more access to banks, they were expected to be able to upgrade themselves to become bigger business players. "We have to put forth extra effort to help them from micro to medium businesses, etc.," Jokowi said.

Jokowi stressed that several government programs had paved the way for low-income families to have access to banks.

He cited the noncash social assistance that required the recipients to have bank accounts to receive the assistance, and the land certification program that provided free land certificates to people.

The program would help people obtain bank loans by using the certificates for the collaterals, Jokowi added. Meanwhile, University of Indonesia economist Andi Fahmi Lubis said it was not easy for the banks to find MSMEs, particularly in rural areas, whose business was bankable.

He said many banks were "lazy" to find deserving recipients of the government's microcredit program, known as the People's Business Credit (KUR).