1. FINANCIAL EDUCATION TO INCREASE FINANCIAL ACCESS Mr. Y. Santoso Wibowo Directorate of Credit, Rural Bank and MSME Bank Indonesia Bali, July 2011

2. ACCESS TO FINANCE IN INDONESIA Below Poverty Line Living in Rural Area 13.33%64.25% Without access to bank 60% MSME Entrepreneur 99.91% MSMEs that have not been linked to bank 60-70% 2

3. MSME’S PROBLEMS TO ACCESS TO FINANCE 3 Community who have access to financial services Population who don’t have access Sumber: World Bank (2009) Access to formal financial services still become constraints to majority people in Indonesia, including MSME.  World Bank’s Survey shows that community who have access to formal financial services is 52%.  Communities who lived outside java have smaller access to financial services. Access to Financial Services Sumber: World Bank (2009)

4. BANK INDONESIA HOUSEHOLD SURVEY 2010 : Savings Savings 38,35% Without savings 61,65% Save at Banks 34,60% Save at Non Bank Financial Institution 3,75% BI’S PROGRAMS : 4 LET’S GO TO THE BANK MY SAVING

5. Source of loan BI HOUSEHOLD SURVEY 2010 : Credit With loans 40,92% Without loans 59,08% Non Banks & Non MFIs 66,28% Rural Banks 3,14% Banks 18,25% MFIs 12,33% 5

6. FINANCIAL INSTITUTION FOR MSME MSMEs (52,8 millions business units) Commercial Bank Rural Bank* Saving and Loan Cooperatives Pawnshop Other NBFI such as: leasing company, multifinance, LPDB Non Bank non Cooperatives MFI, Such as BMT/LDKP/LPD/BK K/LPK BANKBANK NonBankNonBank Finance both MSME and corporate 6

7. GAP BETWEEN BANKS AND MSMEs 7 SME Scale Gap Gap between the loan size expected by banks and the loan size needed by MSMEs, especially micro enterprises Formalization gap Gap between bank’s requirements for formal documents, such as formal business license, property ownership, NPWP (tax number) versus the ability of MSME to fulfill the requirements. Information Gap Gap of information between bank products and procedures and the MSMEs knowledge about them. BANK

8. BI’S POLICY IN MSME DEVELOPMENT The purpose of BI policy: At the supply side is to increase bank’s credit to MSME At the demand side is to help increase the eligibility and capability of MSME 8

9. BI’S POLICY IN MSME DEVELOPMENT Training Information Provision Regulation Infrastucture development Demand Side Supply Side Cooperation with Government & Other Institutions SME’s access to finance Growth of SME/Real Sector Research 9

10. DEMAND SIDE POLICY Lending model provincial-based potential commodity Other related topics Research To support BI policy and strategy Training to banking officers Training to business development service providers (BDSP) in assisting MSME Cluster development Training To increase bank’s expertise in MSME lending, BDSP’s skill in assisting MSME and MSME access to finance Online information - DIBI (Indonesian Data and Business Information) Workshop, seminar, road show Information provision To disseminate research output to stakeholders 10

11. TRAINING The purpose of training: – To enhance the knowledge, capability and to encourage bank and Financial Institution for MSME to give loan to MSME – To enhance the knowledge and capability of Business Development Service Provider (BDSP) in order to facilitate MSME access to finance and become Bank’s partner in developing MSME through loan monitoring and evaluation. 11

12. TRAINING cont’d… Participants of training: – Commercial bank and Rural bank officers – Officers from other Financial Institution for MSME – Business Development Service Providers (BDSP) – Government officers involved in assisting and developing MSME 12

13. TRAINING cont’d… Training topic A. For Bank and Financial Institution : -MSME business strategy -Survey of MSME Potential business with Rapid Rural Appraisal (RRA) Method -Credit Analysis for MSME -How to handle non-performing loan -How to disburse loan to group of debtors with Self Help Group scheme B. For BDSP : Financial aspect including business feasibility (credit proposal) 13

14. TRAINING cont’d… Number of Trainings : 41 Number of Participants : 1.221 14 Training performance (as of year 2010) Number of Active BDSP : 585 Number of MSME : 7.935 Number of Banks : 170 Total credit disbursed: 384.8 billion IDR TRAINING : LINKAGE TO BANKS :

15. TRAINING cont’d… Cooperation Bank Indonesia with other ministries: Ministry of Cooperative and SME : BDSP for MSME Ministry of Agriculture : BDSP for Farmer Ministry of Marine Affairs and Fisheries : BDSP for fisher men 15

16. INFORMATION PROVISION DIBI (Indonesian Data and Business Information) www.bi.go.id 16 A. Purpose of DIBI Regional Government Information on research, study and survey of Bank Indonesia on various sector and industry related with potential regional economy development Entrepreneur Recognizing opportunity/expansion, characteristic and business profile in national and regional level and also directing regional industry to grow and develop based on potency and uniqueness BankingTo support Bank Analysis

17. INFORMATION PROVISION cont’d… 17 A. Content of DIBI 1. Information for Entrepreneur : - priority commodity - funding scheme - MSME’s empowerment - bank’s service and MSME data) 2. Information for Exporter : - export commodity profile - export regulation - export data 3. Information for Banker : - MSME credit report - MSME credit statistic - MSME data 4. Information for Public : - regional economy study - real sector study - publication - bank’s service and MSME data) 5. Link to other Website

18. THANK YOU 18