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Appendix B: Profile of the Institutions Visited FIELD 1: MICRO CREDIT SERVICE(‘PULO JAHE’ BRANCH OFFICE, CAKUNG, EAST JAKARTA)
Credit Service:
Since Pulo Jahe Office it was operationalized in November 2002, it has provided credit service to 1,403 persons amounted to Rp 2,100,150,000. With the toal members of 1.449 persons, there are number of members has benefited from the credit facilities up to three times. From the credit delivered, as of 30 July 2005 balance of credit mobilized among the 1,403 members amounted to Rp 1,202,181,400.
Saving Service:
Saving service is designed for the members to be familiar with the saving culture by keeping some of their revenues for future needs, either to be utilized as capital or unexpected expenditures. Every member is obliged to Rp 5,000 per week, and for those in better condition are motivated to increase their savings. The saving interest is 7% per year based on the lowest saving balance per month. Up to 31 July 2005 the saving has reached Rp 149,922,127 from 1,449 members. Credit Write-Off:
Most of the poor people and micro entrepreneur do not want to get credit since they do not want to put burden to their family when they are in difficulties or dead. Hence, there is a programme of credit writing-off to provide safety for their family so they can safely work and optimize the performance to improve their income. This programme is to write-off the credit once the debtor dead. Hence, there is no longer credit balance to be fulfilled by the family.
ASA MODEL Background:
As the first generation of the Indonesian NGO, Bina Swadaya, has been developing number of schemes for micro finance development through various approaches.
The First Approach is called banking of the poor by promoting Self-Help Group (SHG) to encourage the spirit of saving and managing loan based on the capability of the poor people themselves. The second approach is banking with the poor, to promote a mutual benefit relationship scheme between Bank, SHG and the facilitating institution. SHG could obtain credit access from the bank, while the bank and the facilitating institution gain fees for the services provided to SHG members. The third approach is banking for the poor. This is a specific approach for the poor people or micro entrepreneurs in the form of banking institution.
The first two approaches in micro finance service are undertaken by 21 Regional Branches of Bina Swadaya scattered in several provinces in Java, Lampung (Sumatera), Central Kalimantan, East Nusa Tenggara and Papua. While the third approach is carried out by and through Bina Swadaya’s BPR (People’s Credit Bank). The above three approaches have been conducted intensively for more than 2 decades. Two aspects are identified as weakness and also challenge in the micro finance services programme. Firstly, it is inefficiency or cost effectiveness in managing the programme. The second is the slow outreach in serving the target groups. Confronted to such situation, Bina Swadaya has furnished the three approaches to adopt the so-called ASA Model from Bangladesh.
ASA (Association for Social Advancement) in Bangladesh is a one of the biggest as well as the fastest micro finance institution in the world in providing micro finance services for the poor. As being recognized by UNDP, The World Bank and other international institution, ASA has conducted a technical assistance to several countries such as Nigeria, Philippines, Yemen and Afghanistan.
In Indonesia, Bina Swadaya represents the first organization in collaboration with ASA and promotes the model of micro finance of ASA model. Since October 2002, four branch offices have been in operation in Jakarta and Bogor, namely : Pademangan, Cakung, Johar Baru and Cileungsi. They were introduced to the community in the form of saving and credit, group formation, group meeting, application process, and credit appraisal.
Criteria for Target Group:
Target group of micro finance served by Bina Swadaya is community-based groups fulfilling the following criteria: 1. Low wage workers 2. Farmers possessing land 0.25 hectare or smaller, 3. Micro entrepreneurs 4. Household average income maximum Rp 1,000,000/ month 5. Disadvantaged community in terms of social, physical, economic and politics Criteria for Membership:
Those be member of micro finance services of Bina Swadaya are : 1. Women (95%) and men (5%) 2. Age between 18-55 years, flexible if physically is strong enough 3. Married, divorced or widow 4. One member for one family 5. Physically and mentally not disabled persons 6. Socially acceptable by community 7. Permanent resident minimum 3 three years 8. Residents who are still completing their study could be acceptable as member Regulation in Saving:
The micro finance service of Bina Swadaya serves the saving for members weekly. The aims are, among others: 1. To build saving attitude among the members 2. To form capital for borrower and member 3. Useable for other urgent needs 4. Functioning to create alternative source of capital or revolving fund for community
The implementation of saving is managed as follows: 1. Every member is a compulsory to saving a minimum Rp 2,000/week in the weekly meeting, CO (Community Organizer) will book it in the book record of the members by putting a signature 2. The presence in the fourth first meeting along with the paid saving is an important condition for first borrower 3. Members could draw the saving during the group meeting day by setting aside 10% from the primary loan 4. Saving fee 7% per year will be booked in each saving book of the members based on lowest outstanding 5. Members could draw all saving along with the interest if they want it or resign from the membership 6. In weekly meeting, members could draw their saving Rp 50,000. If this is higher than the amount, it would be done at the branch office 7. All saving drawing will be recorded in reference to the loan drawing list 8. It is not permitted if there is any non-performing loan /unpaid from the saving Criteria of Loan:
Members eligible to the loan should meet the following criteria: 1. Average in presence in the group weekly meeting is 90% 2. Members have saved regularly 4 times in the weekly saving 3. Members who still have a loan to bank or other institution are not permitted to get another loan 4. The enterprise activity proposed for financing should be financially available first and socially value and members are accustomed to this scheme 5. The increasing loan from the same borrower depends on the correct and appropriate use 6. Amount of loan is suited to the type of enterprise 7. Weekly installment should be paid from the income resulted from the enterprise Regulation in Loan:
1. Non-collateral 2. One member, one loan for one year 3. Applicant/borrower should apply loan by filling in the standard form and also put the latest photograph. 4. Loan is handed over in the form of cash directly to the borrower at the branch office 5. Interest rate fee 30% flat per year 6. Insurance premium for credit is 1% of the loan. If member of borrower passes away, member is freed from the compulsory to pay back the loan 7. First loan is maximum Rp 1,000,000 and the next loan will be increasing up to Rp 200,000 – Rp 300,000
FIELD 2: BANK JABAR(BANDUNG, WEST JAVA)
Bank JABAR is a state-owned bank belongs to the Regional Government of West Java Province and all cities/regencies throughout West Java and Banten Provinces. It was established by the Decree of the Governor of West Java dated 20 May 1961 with the initial capital of Rp 2,500,000.00.
In 1992 the Bank’s activity was promoted as the Foreign Exchange Bank based on the Decree of the Board of Directors of Bank Indonesia (Central Bank) dated 2 November 1992, as well as the Regional Regulation No. 11, year 1995. The Bank held a new name as ‘Bank JABAR’ since then.
In line with the economic and banking development in Indonesia, the Minister of Justice approved to change the Bank legal status from ‘Regional Company’ to be ‘Limited Company’ in 1999.
Since 12 April 2000, Bank JABAR has become the first bank operating the dual banking system which deals with both conventional and shariah (Islamic) systems. The Central Bank has officially permitted the dual banking system to be operated by Bank JABAR.
Based on the shareholders’ meeting dated 16 April 2001, basic capital of Bank JABAR was projected to Rp 1,000,000,000,000.00 (one trillion Rupiah).
Mission and Function:
As the fast growing bank, Bank JABAR has tried to improve its performance and successful efforts achieved to support the Bank’s vision to become the biggest and the healthiest Bank in 2005.
As a supporting Regional Autonomy, Bank JABAR has significant mission and function as follows: 1. Driving agent for economic growth of the West Java and Banten Provinces 2. Managing financial resources at regional basis 3. Contributing revenues to the regional governments
The Shareholders:
Capitals deposited for Bank JABAR as of December 2004 amounted to Rp 861,342,563,149.84 by the following shareholders: 1. Provincial Government of West Java: Rp 468,398,085,840.88 (54.38%) 2. All Municipal Governments of West Java: Rp 238,850,292,761.45 (27.73%) 3. Provincial Government of Banten: Rp 67,270,854,182.01 (7.81%) 4. All Municipal Governments of Banten: Rp 86,823,330,365.50 (10.08%)
Board of Commissioners:
1. Mr. Setia Hidayat, President Commissioner 2. Mr. Chaeron Mukhsin, Commissioner 3. Mr. Lex Laksamana, Commissioner 4. Mr. Dudung Aulia, Commissioner 5. Mr. Sembur Hoetomo, Commissioner
Board of Directors:
Mr. Umar Sjarifuddin, President Director Mr. Engkos Sadrah, Director Mr. Uce Karna Suganda, Director Mr. Abas S. Somantri, Director Mr. Agus Ruswendi, Director FIELD 3: PUPUK(BANDUNG, WEST JAVA)
Activity Map (1977-2005):
In its almost 30 years of existence PUPUK area of activities covers 166 cities and regencies in 22 provinces throughout Indonesia.
Until July 2005 there are at least 4,900 small enterprises and 81 institutions have become clients of PUPUK, mostly originated from 164 small industrial centers, and the rest are from 47 area outside the industrial centers.
THE ASSOCIATION FOR ADVANCEMENT OF SMALL BUSINESS or PUPUK (Perkumpulan Untuk Peningkatan Usaha Kecil) is an independent and non-political non-profit organization which attempts to channel the aspiration and to stand for small business interests, as well as to develop integrated small business empowerment activities in all economics lines through various integrated efforts. PUPUK was established in 1979 as the result of a cooperation project between KADIN (Indonesia Chambers of Commerce) West Java and a Germany donor agency, Friedrich-Naumann-Stiftung (FNSt), and was legalized by the Department of Justice through SK No. C2-765.HT01.03 year 1988.
Vision:
To channel aspiration and to strengthen small business existence which will generate independent and tough entrepreneurs in encountering economic competition. Mission:
To conduct small business empowerment programs based on small business potentials and needs by using resources available in Indonesia, through approaches in micro, mezzo and macro levels. 1. Micro Level: PUPUK directly works together with the small business in business advancement service field activities, such as technical training, management training, various assistance, consultation, information service, and other activities related to the small business needs and PUPUK resources. 2. Mezzo Level: PUPUK attempts to support the establishment of infrastructure and supporting systems which are conducive for the development of the small business. Together with other institutions PUPUK creates a vehicle for aspiration and intensive coordination by both individuals and small business development institutions, so that partnership programs are created and developed both vertically and horizontally. 3. Macro Level : PUPUK attempts to contribute to efforts to perfect government policies in regional and national level, to create conducive business climate for the development of small business. PUPUK’s contribution is materialized in the form of studies and policy dialogue which involve all stakeholders, as well as other advocacy activities, seminars and campaigns to both executive and legislative bodies. Units of Activities:
In the line with professional human resources possessed PUPUK is equipped with several units of activities as follows:
SBTC (Small Business Training Center):
Small Business Training Center was established to accommodate the needs of more institutions and individuals involved in the development of small business to assist numbers of small business in business development. SBTC is promoted as educational and training institution for small business consultant as well as for players in small business and cooperatives.
CORE-COMPETENCE (Centre for Regional Competitiveness Advancement):
Was established in respond to globalization in decentralization era where reinforcement for local economic competition needs to be more encouraged so that Indonesia can catch up its being left behind from other developing countries. CORE-COMPETENCE is an institution for assessment and development of local economic competition, which facilitates reinforcement for local economic competition through creating artificial competition factors such as qualified human resources, infrastructures, improved business climate and innovation capacity, and technology by stimulating local stakeholders initiatives.
Trade-Promo Division:
Trade-Promo Division with its TRADA Network is a Strategic Business Unit (SBU) which concept of activities is to embrace small & medium enterprises to materialize with an activity unit which is more significant in both capacity and intensity especially in market network promotion and development. With PUPUK’s years of experience in assisting small business and its existing human resources, TRADA Network is projected as a model/breakthrough in increasing small business competition. TRADA Network is expected to encourage business linkage between players of small business as well as with market as one element of business competition.
ISBR (Indonesian Small Business Research Center):
ISBR is a research institution focused in small business especially assessing problems in Indonesian small business. Agribusiness Division:
As a catalyst of the integrated efficient and competitive upstream-downstream agribusiness as to create competitive agribusiness.
COSBIC (Council for Small Business Campaign):
Its main objective is to encourage a policy which supports small business through various small business advocacy activities such as policy dialogue, seminars, etc.
MPB (Mitra Pengembangan Bisnis or Business Development Partner):
Was established in cooperation with YDBA (Yayasan Dharma Bhakti Astra) and IFC (International Finance Corporation), focusing in small business consultant development. Experience:
Since 1988 PUPUK and its activity units have a range of experience in program model implementation, information retrieval, assisting and developing small business, training, research or study, seminar, workshop, model of business unit and activities.
PUPUK also established numbers of cooperation with other institutions, some are as follows : · Implementation of small business development model : with FNSt, European Union, Department of Industry and Trade, Local Government of Banjar – South Kalimantan, Local Government of Karawang – West Java, Indonesian Chambers of Commerce (KADIN) West Java, PT Semen Gresik, PT Aneka Tambang, PT Berau Coal, Garuda Food, Levi’s Corp. USA, WPU, ASPEP, STTB, PiBi Ikopin, Balai Besar Keramik · Training : with FNSt, The Asia Foundation, Department of Industry and Trade, PT Semen Gresik, YDB Astra, IFC, Markaz · Survey, Research, and Study : with FNSt, World Bank, USAID, The Asia Foundation, Indonesian National Planning Bureau (Bappenas), Dinas Indagro JaBar, LP3E KADIN, BRI · Seminar, Workshop, Dialogue : with FNSt, European Union, The Asia Foundation, Swiss Contact, Ministry of State Owned Enterprises, Ministry of Cooperatives and Small Business, Bank Jabar, Indonesian Chambers of Commerce (KADIN) West Java, Markaz, Bina Mesdana, LPK Jarindo, CIDES · Books publishing and publication : with FNSt, USAID, The Asia Foundation, Swiss Contact, Department of Industry and Trade, LP3E KADIN, AKATIGA, Ciungwanara Foundation, LPM ITENAS, IAMF, Sawarung, CESS, PPM · Advocacy and establishment of FORDA-UKM and JNP-UKM : with The Asia Foundation and Swiss Contact · Monitoring and Evaluation of Grant Receiver : with Mercy Corps Map of Activities (1987-2005):
A. NORTH SUMATERA MEDAN : information service center
B. WEST SUMATERA PASAMAN TIGAMUARA : iron craftsmen SUDIRMAN : sandals (kelom) LUBUK BASUNG : embroidery BATU SANGKAR : embroidery PADANG PANJANG : embroidery PARIAMAN : embroidery SOLOK : embroidery, agriculture PADANG : embroidery SAWAH LUNTO : vegetables AGAM : horticultures
C. WEST JAVA PANDEGLANG PANGKALAN : wooden furniture CIANJUR HALIRWANGI : wooden furniture BEKASI CIPAYUNG: roof-tiles CIBARUSAH: iron craftsmen SERANG: red bricks PURWAKARTA PLERED: ceramics CIBATU: wooden furniture CIREBON: Convections, plaited rattan, earthenware, rubber sandals, iron craftsmen, wooden masks MAJALAYA : ATBM weavings TASIKMALAYA GOBRAS : sandals (kelom) RAJA POLAH : stoves GALUNGGUNG : iron craftsmen KARSAMENAK : wooden production CIAMIS HANDAP HERANG : wood PATARUMAN : red bricks BANDARUKA : plaited wood MAJALENGKA LEUWILAJA : plaited rattan BANJARAN : iron craftsmen JATIWANGI : roof-tiles SELAGEDANG : plaited rattan PINARAJA : roof-tiles KARAYUNAN : plaited bamboo INDRAMAYU PAOMAN : batik SUKAJATI KENANGA : crackers LEBAK SEMI : roof-tiles CIGEMBLOG : brown sugar SERANG KETILENG : roof-tiles KARAWANG Agribusiness – Mushroom BANDUNG BANDUNG : metal PASIR JAMBU : iron craftsmen CIBADUYUT : leather shoes MEKARMAJU : meranggi TAGOG : wood furniture LEMBANG : wood furniture RAJAMANDALA : wood furniture SOREANG : textiles PANDEGLANG : potatoes GARUT Leather waste, leather production, dairy cows, wood production TANGERANG CURUG : rattan furniture CUKAGALIH : plaited rattan CILEDUG : convections SEPATAN : iron craftsmen KUNINGAN KUNINGAN : mushroom CIOMAS : convections MANDIRACAN : furniture KAWAH MANUK : onyx SUKABUMI SAGARANTEN : gem stones GUNUNGGURUH : roof-tiles BANTAR KARET : sandals CISAAT : technical products TEGAL PARI : wood production BOGOR CITEUREUP : technical products CIBANTENG : iron craftsmen CIPAYUNG : embroidery CIOMAS : rubber shoes PARUNG PANJANG : red bricks LEUWILIANG : furniture PONGKOR : agribusiness
D. CENTRAL JAVA SEMARANG BUNGARAN : stoves PEDURUNGAN : rattan WONOPOLO : plaited materials TEGAL PEPEDAN : shoes PESAYANGAN : leather KARANGANYAR : weavings TEGAL : technical products TEMBOK LOR : convections PEKALONGAN Batik, embroidery, batik convections, jewelry BANTUL Leather products, ceramics, bamboo products, earthenware MAGELANG Wooden toys, leather shoes, iron craftsmen
E. EAST JAVA SURABAYA Recycled-paper crafts, corn-husk crafts, saving-borrowing service, crackers, convections, embroidery, printing, processed food, liquid soap, soap SIDOARJO Metal crafts, leather products, agribusiness BANGKALAN : crackers, batik MALANG Processed food, cosmetics, training and consultancy service, convections, mushrooms, apples PROBOLINGGO House ware, crackers, mushrooms, sugar-dried tomatoes, dried food, embroidery, earthenware jug, ceramics, agribusiness BONDOWOSO Agribusiness, fermented cassava, tempe, dried food, bullfrog and quail livestock
F. BALI Mitra Pengembangan Bisnis or Small Business Consultant Development
G. WEST NUSA TENGGARA Empowerment of local BDS
H. KALIMANTAN TANJUNG REDED EAST KALIMANTAN Community Development BANJAR Development of Area Competitiveness, empowered through small-business-based industrial cluster
I. SOUTH SULAWESI Consortium of local BDS, seaweed farmers
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