To regulate the utilization of fund generated from state debentures issued in 1999 and to ensure the distribution of credit facilities to micro and small enterprises as a means of supporting their sustainability and growth, the ministry of finance recently issued Decision No. T12/PMK.06/2005 on Micro and Small Enterprise Credit Facilities.

A micro enterprise is defined simply as an individual or family owned business either as a sole trader or as a member of a cooperative engaged in production with a maximum sales volume of no more than IDR 100 million per year. A small-scale enterprise is defined as an individually-owned or an incorporated or unincorporated body including cooperatives with assets of no more than IDR 200 million (excluding land, buildings, and fixtures) or sales of no more than IDR 1 billion per year.

All micro and small enterprises would be eligible for the facility on the condition that it does not obtain any credit facility from other financial institution. The Decision reiterated that the facility’s funding sources would be derived from state debentures, which will be channelled in two distinctive ways, namely, from the government through state owned enterprise to financial institution to micro and small enterprises or from the government through financial institution to micro and small enterprises.

The Ministry of Finance will appoint state owned enterprise to manage the funds. The Decision enumerated eligibilities conditions for the state owned enterprise to be appointed.

Micro enterprises may access a maximum of IDR 50 million and small-scale enterprises may access a maximum of IDR 500 million. The maximum term of the credit facilities is 5 years including any grace period that may be granted. The Decision revoked Decision No. 558/KMK.06/2004. (mma)