Indonesia’s major banks are having trouble meeting their microfinance lending targets set by the government due to concerns about borrowers’ ability to repay their microloans.
As of July 2010, only IDR 6.5 trillion of the IDR 20 trillion target has been loaned out by banks. Tatang Tabroni, Vice President of Bank Mandiri admits that most of the disbursed loans focused on entrepreneurs who already have a business instead of those who want to start a business. Ms Aviliani, an economist at the Institute for the Development of Economics and Finance (INDEF), a policy research institution based in Jakarta, urges the government to help develop applicants’ business strategies to improve their ability to repay loans.
[1] About the Institute for the Development of Economics and Finance (INDEF):
The Institute for Development of Economics and Finance (INDEF) is an independent and autonomous research and policy studies institution established on August 1995 in Jakarta. Its main activities are to undertake research and policy studies on a wide range OF economic and finance issues and to generate policy debates and public participation.
By Trevor Kwong, Research Assistant
Sources and Additional Resources:
[2] Source Article: The Jakarta Post: Banks facing difficulties disbursing microcredit:
http://www.thejakartapost.com/news/2010/09/06/banks-facing-difficulties-disbursing-micro-credit.html
[3] Institute for Development of Economics and Finance (INDEF):
http://www.indef.or.id/
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