JAKARTA – Throughout 2010, Regional Development Banks (BPDs) only allocated 40% of their total loans to micro, small, and medium enterprises (MSMEs), while the remaining 60% was mostly directed toward consumer loans, such as car purchases and home renovations.
This situation contrasts with Bank Indonesia's (BI) call in December urging BPDs to act as agents of regional development by increasing lending to productive industrial sectors.
"BPDs have only allocated 40% of their loans to MSMEs, while the rest goes to consumer credit, such as car purchases and home renovations," said Y. Santoso Wibowo, Head of BI’s Bureau of BPR and MSME Development, on Friday (25/2).
He emphasized that BPDs should be the primary driver of microfinance in their regions, rather than national banks like Mandiri or BCA.
To strengthen BPDs as regional champions, Bank Indonesia (BI) has introduced policy innovations to support MSME development at the regional level. One such initiative is a collaboration with the Japan International Cooperation Agency (JICA) to develop Regional Credit Guarantee Companies (PPKD) in provinces with strong economic potential.
However, so far, only East Java and Bali have successfully established PPKDs, as their regional budgets (APBD) can accommodate the funding requirements.
"Establishing a PPKD requires Rp 50 billion, but many regions want to lower the capital requirement to Rp 25 billion," Santoso explained.
Previously, BI had urged BPDs to play a bigger role as agents of regional development, which is the second pillar of BPD reform. BI expects BPDs to increase credit allocation to productive sectors and improve financial intermediation functions, particularly for MSMEs.
To achieve this, BI suggests collaborations between BPDs and local rural banks (BPRs), either through linkage programs or by designating BPDs as APEX banks to support MSME financing.
(Source: kontan.co.id)