Financial Services Asked to Finance Machineries for SMEs

The Capital Market and Financial Institution Supervisory Board
(Bapepam-LK) has asked financial services to provide financing to small
and medium enterprises (SMEs) to buy production machineries.

Bapepam LK Bureau Chief of Financial Service and Guarantee, Freddy R
Saragih, said so far financial services have been stuck to the traditional
products of leasing, consumer financing, factoring and credit card. They
have not touched productive sector of SME.

"They have to develop financing for production equipments for SME. It can
be part of consumer financing," he said in Jakarta yesterday.

He said SME sector is suitable for financial services rather than for
banks. He said IDR5 million - IDR20 million financing is more suitable for
financial services.

"If they can finance two wheelers, why can't they provide financing for
SME? Financial services will get the benefit of broader market and SMEs
will get access to investment goods for their production."

Freddy said he has visited ten venture capitals. They have provided
financing for productive equipments. He hopes financial services will do
the same.

"There should not be new regulation as it can be part of consumer
financing so that it is not against the law."

The Chairman of the Association of Indonesian Financial Services (APPI)
Wiwie Kurnia said that the association welcomes the idea of Bapepam LK.

He said so far the financing to SME is only on means of transportation.

"Actually it is okay to finance production tools for SME, but it must be
supported by the secure financial sources. So far joint financing has been
for means of transportation."

He said banks have to support the plan.

If banks do not provide any money, financial services will not be able to
provide any financing for the productive part of SMEs.

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