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.