THE ROLE OF FINANCIAL INSTITUTIONS IN THE DEVELOPMENT OF MICRO SMALL AND MEDIUM ENTERPRISES (SMEs)

Abstract

Globalization has a positive effect on climate in particular domestic industries for domestic businesses to innovate and compete in a healthy international trade. Small and Medium Enterprises (SMEs) is one of domestic businesses that have recently become the focus and attention of the government because of potential national economic growth. Evidenced by the SMEs during the economic crisis are able to adjust and survive in the business. Until year of 2010, SME sector to absorb labor 77.68 million or 96.77% of the total labor force that works. This has prompted the government launched a package of economic policy that focuses on four issues, namely providing services and facilities for SMEs, SME restructuring, open access to specialized banking services for SMEs and fostering human resources. Along with the development of SMEs, capital and financial problems became the haunting, weak capital structure and difficulty getting loans from credit institutions particularly banks become major problems of SMEs. Government, financial institutions and the banking sector has been struggling to provide funds professionally in microfinance, but not significantly viable SME capital or obtain credit from financial institutions. The facts on the ground nearly 99% of SMEs in Indonesia are not eligible bankable. It is a challenge for governments, banks and financial institutions in the sustainability of SMEs and one of the economic recovery in the real sector. The role of the banking sector and financial institutions have been realized in a variety of programs and policies to promote SMEs. Bank Indonesia plays an active role in the policy of bank credit, technical assistance, research and the provision of information systems for SMEs. Bank Indonesia (BI) and the government as a consultant, promoter and facilitator for empowerment of SMEs.