According to the Ministry of Agriculture, The government of Indonesia anticipates to spend USD 107.1 million in 2008 to set up financial institutions in villages across the country to reduce poverty and unemployment. The move is in line with the pledge of the newly established administration of the president to cut chronic poverty within the country. “We plan to set up financial institutions in poor villages with good prospects in agriculture in 2008,” Agriculture Mininster Anton Apriyantono said.The announcement was made shortly after a speech by Professor Muhammad Yunus, pioneer of micrfinance and founder of Grameen Bank. Speaking before members of the Indonesian Chamber of Commerce and Industry, Yunus insisted that Indonesia needs to establish an independent regulatory body to govern and supervise its microcredit sector if it is to grow in line with its potential. “Rather than leave it to the central bank, it should instead be done by an independent regulatory body created for microcredit. It can’t be just pushed into one of the corners of the central bank,” he added. He said the ultimate solution for the microcredit sector was legal reform that would allow any financial-sector organization to become a microcredit provider. When asked why Indonesia’s microcredit experience had not been so successful, Yunus said the microcredit sector in any country should keep itself as far away as possible from the government, adding that what the government could do was provide a revolving fund to provide start-up capital that would later be managed and used by the sector.
Currently, further information is not available, but is expected to be released at a later date.
–Monica Sharma, Research Assistant
Additional Resources:
Reuters: Indonesia to set up microfinance firms in villages.
The Jakarta Post.com: RI needs microcredit regulator.
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