Jakarta | Jamkrindo
Political economy expert Ichsanuddin Noorsy sees that there is still much to be improved in the draft Guarantee Bill (RUU Penjaminan), which will soon be approved as an initiative bill by the Indonesian House of Representatives (DPR RI). One of the concerns is the need to anticipate foreign parties potentially dominating the domestic guarantee industry.
"I see these weaknesses in the philosophical, juridical, and substantive aspects," said Ichsanuddin Noorsy at the "Legislation Forum" discussion at the MPR/DPR/DPD RI Building, Jakarta, recently (09/06/2015).
According to Noorsy, the DPR RI's Legislative Body, which is harmonizing the Guarantee Bill, should make several changes in both the wording and substance. One of the key aspects is that the Guarantee Bill should prioritize empowering micro, small, and medium enterprises and cooperatives (UMKMK), which have proven resilient during Indonesia's economic crises.
"I see four issues faced by UMKMK: financing, management, marketing, and innovation. If the Guarantee Bill only accommodates financing guarantees, it will not solve all UMKMK problems," he said.
Noorsy also pointed out that the Guarantee Bill allows for financing from foreign institutions or individuals up to 49%. He hopes it would be better if UMKMK financing came from national banking institutions rather than foreign ones.
Moreover, Noorsy noted that UMKMK in Indonesia operates independently and is not linked to large industries. "If this situation continues, it will be difficult for UMKMK in Indonesia to grow. Especially since Indonesia will enter the ASEAN free market at the end of 2015," he added.
Noorsy explained that UMKMK in Malaysia, Singapore, and Thailand are already strong and thus ready to face the ASEAN free market.
He hopes that the Guarantee Bill, which will soon be discussed in the DPR RI, can protect UMKMK players once the ASEAN free market is implemented.
Supporting SMEs
Meanwhile, M Misbakhun, a member of the DPR's Legislative Body (Baleg), revealed that the Guarantee Bill currently being drafted in Baleg is still seeking the right model to help around 50,000 small and medium enterprises (SMEs) in Indonesia easily access capital.
“So far, these SMEs have had difficulty obtaining capital to grow their businesses. To support their development, the Golkar Party faction proposed the Guarantee Bill initiative,” he said.
According to Misbakhun, this bill is a priority for completion in 2015.
"Today, we are still inviting several related institutions to synchronize articles in the law so that UMKM can be supported in their role of reviving the national economy," he stated.
The Guarantee Bill is considered essential because UMKM have proven resilient, even during economic recessions, without significant layoffs.
"If this bill becomes law, it will be the first law produced by the DPR’s Legislative Body for the 2014–2015 period," he added.
This bill will also promote the role of regional governments in supporting UMKM development by incorporating regional guarantees at the provincial, district, or city levels.
"Funds for UMKM will be allocated through regional budgets (APBD), making it easier for them to access capital," he emphasized.
7 Key Reasons
Previously, the Golkar Party faction outlined seven reasons for prioritizing the Guarantee Bill in the 2015 National Legislation Program (Prolegnas). Golkar Party faction leader Ade Komarudin said these seven reasons are believed to provide solutions for empowering UMKMK.
"In addition to empowering UMKMK, the Guarantee Law will also serve as a form of attention and access to developing UMKMK," Ade said at the DPR in late February.
The seven reasons include:
- The Guarantee Law will strengthen the legal basis for guarantee activities.
- It will balance the guarantee industry with other industries, promoting healthy competition.
"This will ultimately benefit the public, especially UMKMK," he added.
- The law will promote financial inclusivity, literacy, and education.
- It will create a multiplier effect in various economic activities, boosting state tax revenue and dividends.
- The law will provide certainty to financial institutions in case of financing risks.
- It will increase financing in strategic sectors of the domestic economy by bridging gaps between financial institutions and guarantee agencies.
- Finally, it will integrate all existing regulations governing guarantees.
Ade also mentioned that the success of the People's Business Credit (KUR) program was not due to insurance mechanisms but rather the guarantee mechanism, which supports pro-poor (pro rakyat), pro-growth (kesejahteraan), and pro-job (penciptaan lapangan kerja) objectives.
With the Guarantee Law in place, financing access for business development will have a broader impact—not only for UMKMK but also for other economic sectors like agriculture, fisheries, infrastructure, and housing, which have not been fully supported by the banking sector.
Misbakhun added that guarantees could boost the banking intermediation role, both conventional and sharia-based. Besides supporting UMKMK in accessing financing, guarantee activities could also provide consultancy and management services for UMKMK.
"Additionally, guarantee activities can foster the growth of non-bank financial institutions in Indonesia," said the Golkar Party politician.
UMKMK’s Significant Role
In Indonesia's economic structure, UMKMK holds significant potential, with around 57.9 million business units in 2013. The majority of UMKMK activities involve farmers, fishermen, breeders, miners, craftsmen, traders, and providers of various services for the people.
However, despite this large number, many prospective UMKMK players still lack access to bank financing. Out of 57.9 million business units, only 39.18% (22.15 million) have received banking credit facilities, leaving 34.38 million units without access to bank capital.
"Access to business capital is a crucial factor in empowering UMKMK," said Misbakhun.
The Guarantee Bill is part of the 2015 Prolegnas priority list, as proposed by the Golkar Party faction. Notably, this proposal is not new. In 2006, the government—through the Ministry of Cooperatives and SMEs and the Ministry of Finance—submitted an academic draft and related Guarantee Bill, but it failed to enter the Prolegnas.
In 2011, the Ministry of Finance, involving several ministries and Bank Indonesia, resubmitted a similar draft, but it still did not make it to Prolegnas.
Now, the Guarantee Bill has been included in the DPR’s Prolegnas and is prioritized for 2015.
"We hope the Guarantee Bill can be passed this year, as it is a product eagerly awaited by the government and the public, given its pro-people nature and its role in advancing the national economy," Ade concluded.
(antara/hukum online/sp.beritasatu.com)