Micro Financing Supports RI's New Destinations
The Indonesian Financial Services Authority (OJK) recently announced its funding program for small- and medium-scale industries in the country’s new tourism destinations. Funds will be offered to many grassroots companies working on their own, or those supporting larger businesses in tourism sectors.
OJK has designed a program for 2019-2024 based on lending types and has earmarked a budget of Rp. 228 trillion.
Wimboh Santoso, chairman of the OJK board of trustees, believes the initiative will accelerate the development of countywide tourism. He said the current strategy lacks focus and is not well coordinated, adding that the lack of integration of the tourism industry is the major reason why credit lending in the sector remains low.
The World Travel & Tourism Council has applauded the funding initiative saying innovative organizations all over the world are creating dynamic programs that specifically address the unique demands of tourism. The WTTC says there is no “one size fits all” definition of a social enterprise, and that Micro Small Medium Enterprises (MSME) are pioneering what the tourism sector of tomorrow will look like.
According to auditor KMPG, MSMEs contributed greater than 50% of Indonesia’s Gross Domestic Product (GDP) in 2014. However, many of them do not have adequate access to the bank financing they need to grow their businesses, particularly in rural areas.
Tourism contributed around $16.8 billion to Indonesia's foreign exchange last year, second only to the palm oil sector. The government seeks to increase this by 20 percent to around $20 billion this year.
Businesses such as travel agencies, art studios, souvenir centers, tour guides, tourism transportation services, food and beverage providers, accommodation establishments and handicraft industries all stand to benefit from the program.
At a recent press conference, Iskandar Simorangkir, deputy for macro-economic coordination and finance at Indonesia’s Coordinating Ministry for Economic said: “We expect SMEs in tourism to encourage optimization of the development of the sector, especially in the 10 priority tourist destinations and 88 national strategic tourism areas.”