President Susilo Bambang Yudhoyono of Indonesia recently announced the launch of a new microcredit program to help Indonesian migrant workers secure overseas employment and finance their departure process, which involves arranging their legal documents, having medical checkups, receiving training and obtaining competency certificates.
The mechanism of this program is similar to that of the Kredit Usaha Rakyat (KUR) program, which was established in 2008 by the government to provide Indonesian farmers with credit. KUR reduces the risk for commercial banks to provide working capital and investment credit to microfinance institutions by guaranteeing the investments through the state credit program.
Under the migrant worker program, there are two different loan schemes: one with a maximum loan amount of IDR 20 million (approximately USD 2,220) and interest of 22 percent per year, and another for larger loans with interest of 14 percent per year. State-owned banks, including Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI) and Bank Mandiri, will disburse the loans at first with others expected to be added over time.
By Paul K. Kim, Research Associate
ABOUT Kredit Usaha Rakyat (KUR): Established in 2008, the Kredit Usaha Rakyat program aims to provide Indonesian farmers with accessible credit. The KUR program was legally established by Presidental Decree (Inpres) No. 6/2007 which focused on the development of the microfinance sector. The program was spearheaded by the Program of Agriculture but involves the cooperation of many government ministries. Through KUR, working capital and investment credit are provided to microfinance institutions by commercial banks whose investments are in turn guaranteed by the state credit program.
ABOUT Bank Rakyat Indonesia (BRI): BRI is a state-owned bank specializing in microfinance. Some its offerings include small and medium-sized enterprise (SME) loans, personal loans, car loans, housing loans, education loans and savings. As of the end of 2007, it had assets worth USD 6.45 billion, a gross loan portfolio of USD 3.47 billion and approximately 3 million active borrowers.
SOURCES:
[1] Jakarta Post. ?Govt launches micro credit for migrant workers? December 15, 2010 http://www.thejakartapost.com/news/2010/12/15/govt-launches-micro-credit-migrant-workers.html
MicroCapital?s Microfinance Universe Profile: Kredit Usaha Rakyat (KUR): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Kredit+Usaha+Rakyat+(KUR)
MicroCapital?s Microfinance Universe Profile: Bank Rakyat Indonesia (BRI): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+Rakyat+Indonesia+(BRI)
MicroCapital.org Article, January 18, 2010: Indonesian Government Relaxes Rules of Its Microfinance Program, Kredit Usaha Rakyat (KUR): https://www.microcapital.org/microcapital-brief-indonesian-government-relaxes-rules-of-its-microfinance-program-kredit-usaha-rakyat-kur/
MicroCapital.org Article, February 24, 2010: Indonesian Government Adds 13 Banks to Association of Regional Development Banks (Asbanda) to Distribute Microcredit: https://www.microcapital.org/microcapital-brief-indonesian-government-adds-13-banks-to-association-of-regional-development-banks-asbanda-to-distribute-microcredit/
Browse the MicroCapital Universe and add your entry to the wiki at:
https://www.microcapital.org/microfinanceuniverse/
Similar Posts:
- MICROCAPITAL BRIEF: Semaai Raises Equity from Accion, XA Network, Beenext, Surge for Technology Supporting Farmers, Agricultural MSMEs in Indonesia
- MICROCAPITAL BRIEF: ResponsAbility Invests $40m in Equity in eFishery of Indonesia for Technology Helping Fish, Shrimp Farmers with Feeding, Water Quality, Documenting Sustainable Practices, Market Linkages
- MICROCAPITAL BRIEF: Abler Nordic Leads $10m Equity, Debt Investment Round for Ergos, Agtech Offering Crop Storage in India
- MICROCAPITAL BRIEF: Jeevan Bikas, Pula, UNCDF Partner on Index Insurance for Farmers in Nepal
- SPECIAL REPORT: Solar-powered Onions in Senegal, Meso-insurance Against Storms in Nicaragua, Performance-based Interest Rate Reductions for Climate-smart Lending in India
