The Ministry of Communications and Informatics in Indonesia (KOMINFO), the Government Investment Unit of Indonesia (Pusat Investasi Pemerintah or PIP; a sovereign wealth fund managed by the Ministry of Finance), BP3TI (Central Provider and Financing Manager of Telecommunication and Informatics or Balai Penyedia dan Pengelola Pembiayaan Telekomunikasi dan Informatika; an implementing agency under Kominfo) are collaborating to enhance access to ultra-micro financing (pembiayaan Ultra Mikro or UMI) across the country.
The UMI programme disburses loans below 10 million Rupiahs (~USD 753)per borrower. The funds are sourced from the state budget and state-owned enterprises that have CSR (corporate social responsibility) funds channeled through the PIP as a coordinated fund.
UMI is expected improve the reach of the government’s smart financial inclusion programme and the People's Business Credit (KUR) programme for micro, small and medium enterprises (MSMEs). The press release states that KUR currently reaches 17 million MSMEs, so that there are still around 44 million MSMEs that haven’t been reached by KUR. These will the priority targets of the ultra-micro financing programme.
The local governments will help verify data on the number of SMEs in the region. The verified data will be uploaded into the SIKP (Sistem Informasi Kredit Program or Credit Program Information Programme).
Funds will be distributed through Non-Bank Financial Institutions (NBFIs) and Cooperatives, as well as the Micro Finance Institutions. Cooperatives that will receive and distribute microfinance are verified firstly by the Ministry of Cooperatives and SMEs based on the criteria of a healthy cooperative. The Ministry of Cooperatives and SMEs will also provide assistance and coaching to cooperatives that do not meet the criteria.
The ultra-micro financing system and its transactions can also be accessed via mobile phones with USSD (Unstructured Supplementary Service Data; a protocol used by GSM based mobile phones to communicate with the network operator’s computer. ), so that the transactions are SMS-based for ease of access without the need for Internet.
E-KTP, an electronic version of the national ID number, is used for verification of registration and authentication of borrower’s data, helping control fraud. The authentication ensures that the applicant cannot borrow funds from more than one NBFI. Debtors who have been provided loans from other programmes are also not allowed to access funding from the ultra-micro financing programme.
The control is reinforced by making the Credit Information System Program or SIKP into a database of existing NBFI debtors, thereby ensuring that the financing can be directed towards new applicants.
In addition to supporting the connection of SIKP to NBFIs which are not connected to the system, BP3TI is also providing the platform from PIP to the NBFIs for funding to be channelled to the MSMEs.
At a later stage, this funding program will also have an online market with debtor rating facilities, where applicants can access financing. Information infrastructure and technology is one of the key enablers for the National Strategy for Financial Inclusion (SNKI), launched in November 2016. Currently only 39% of the Indonesian people have access to banking and financial services. The President has set a target of extending access to 75% of the population by the end of 2019.