Ultra-micro holding company to spur new entrepreneurs: Kadin

Jakarta (ANTARA) - The government’s plan to form a state-owned ultra-micro holding company is expected to increase the number of new entrepreneurs in Indonesia, according to the Indonesian Chamber of Commerce and Industry (Kadin).

“The plan to establish an ultra-micro holding company is correct and appropriate. This is the government's concrete move to boost the development of new entrepreneurs, especially in the regions," Kadin’s deputy chairman for national entrepreneurs development, Arsjad Rasjid, said in a statement here on Tuesday.

PT Bank Rakyat Indonesia (Persero) Tbk, PT Pegadaian (Persero), and PT Permodalan Nasional Madani (Persero), or PNM, will be merged to form the ultra-micro holding company, which is expected to be established in the third quarter of 2021.

Establishing a holding company has become a strategic move in many countries, including Indonesia, to accommodate the government's regulations and access benefits, Rasjid said.

An integrated ecosystem of an ultra-micro firm is expected to expedite the recovery of micro, small and medium-scale enterprises (MSME) as well as ultra-micro businesses, the backbone of the national economy, which have been hit hard by the COVID-19 pandemic, he elaborated.

According to data from the Cooperatives and SMEs Ministry, in 2020, loans to MSMEs accounted for just 19.97 percent of the total national banking loans, despite the fact that 99 percent of businesses in Indonesia are MSMEs.

The sector employs 97 percent of the national workforce and contributes 60 percent to the Gross Domestic Product (GDP).

"The ultra-micro holding firm will become a joint umbrella of Bank BRI, Pegadaian, and PNM to accommodate MSMEs and ultra-micro businesses to get funding access and increase the population of national businesses," Rasjid said.

The Indonesian government has assured that the development of a state enterprises ecosystem for ultra-micro businesses and MSMEs would not only be based on business consideration, but also the spirit of improving the welfare of business operators and workers.

Earlier, State Enterprises Minister Erick Thohir had said the synergy among state enterprises in the holding company would provide a bigger chance for MSMEs to get loans at low interest rates.

"Currently, among the hindrances faced by MSME operators is lack of access to funding. Therefore, the ultra-micro business model will focus on the empowerment of business and business development to upgrade the micro businesses," the minister added.

The ecosystem will provide wider product services and cheaper funding to about 29 million ultra-micro businesses by 2024, he said.

Source: Antara News

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