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Jakarta Pumps More Money Into Microcredit Scheme
October 23, 2009

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The Jakarta administration has doled out Rp 540 million ($57,000) for cooperatives managing microcredits that are disbursed through the Subdistrict Residents Empowerment Program (PPMK), Governor Fauzi Bowo said on Thursday.

Fauzi said the program had incurred Rp 116 billion in losses as a result of unpaid loans in 2008, according to official investigations. He said he planned to investigate delinquent cooperatives within the next two weeks to see if legal action was necessary.

Fauzi noted that last year alone 463 microbusinesses received loans and those with good reviews were eligible to receive more.

City Hall’s trade chief, Ade Suharsono, said that businesses needed to adhere to a number of terms to receive loans, such as transparency, accountability and compliance with regulations.

The microcredit initiative is meant to empower small and medium businesses in Jakarta, as part of the city’s bid to reduce poverty and unemployment levels. The PPMK disbursed Rp 1.175 trillion in microloans between 2002 and 2007.

This year the scheme was planned to run in September, but unexpected delays stalled the process.

The PPMK uses profit-sharing in its repayment system. The mechanism requires businesses to register as members of cooperatives before applying for credit. Businesses that receive the loans are placed under the supervision of the local cooperatives unit.