MSMEs Need Credit Guarantee Funds
The Indonesian Young Entrepreneurs Association (Hipmi) of Bandung Regency has requested the Bandung Regency Government to allocate funding for credit guarantees for micro, small, and medium enterprises (MSMEs). The funds, sourced from the regional budget (APBD), would serve as collateral when MSMEs apply for bank loans.
"This is one solution for capital and MSME development in Bandung Regency. It doesn’t need to be too large, Rp 5 billion is enough. This can either be used as a guarantee for bank loans or to establish a new MSME credit guarantee institution," said Hipmi Bandung Chairman, Nana Mulyana, in Soreang on Tuesday (22/2).
Nana explained that this would make it easier for MSME entrepreneurs to access credit to expand their businesses.
"With this approach, MSMEs can grow further, and it will also eliminate reliance on loan sharks," he added.
Nana observed that many MSME entrepreneurs struggle to secure bank loans due to insufficient collateral. With a credit guarantee scheme, businesses would no longer need to provide valuable assets like vehicle ownership documents (BPKB), land certificates, or property deeds—they would only need a recommendation letter from the credit guarantee institution.
"Currently, MSME entrepreneurs find it difficult to obtain loans from banks because most banks require collateral, which forces them to borrow from loan sharks," he said.
If implemented, the credit guarantee institution would also collaborate with microfinance institutions, cooperatives, and Islamic financing organizations such as Baitulmal wat Tamwil (BMT).
"This way, cooperatives and BMTs can also be empowered, and MSME traders can avoid debt traps from loan sharks," he explained.
Regarding the risk of loan defaults, Nana suggested implementing flexible repayment regulations.
"If defaults occur, regulations should be established to ease repayment burdens, such as extending loan tenures to make installment payments more manageable for MSMEs," he said.
The Bandung Regency Government had previously allocated Rp 10 billion from the 2007 APBD as a credit guarantee fund for MSMEs and traders. However, much of this fund remained idle for years at BRI Majalaya Branch and was only partially utilized, with Rp 7 billion disbursed.
According to data from Commission B of the Bandung Regency DPRD, in 2007, the Bandung Regency Government allocated Rp 10 billion for MSME financing assistance, which was entrusted to BRI Majalaya. Of this, Rp 9 billion was disbursed by BRI Majalaya Branch, while Rp 1 billion was managed by BRI Syariah Unit.
Meanwhile, Head of the Bandung Regency Cooperative, Industry, and Trade Office (Diskoperindag), Bambang Budirahardjo, stated that the proposal to establish a credit guarantee institution could be submitted to the DPRD for approval.
"However, since the 2011 APBD has already been approved, this proposal may be considered during the Revised APBD later," said Budi.
(Source: Galamedia)