IFC Executive Vice President Lars Thunell was in Indonesia this week to see at first hand how IFC is supporting infrastructure development, fostering the growth of small and medium enterprises, and helping rebuild and revitalize areas affected by recent natural disasters.
Thunell’s visit also included IFC’s 50th anniversary celebrations in Jakarta, talks with Indonesia’s vice president, and the signing of an agreement to establish the country’s first private financing facility for student loans.
The anniversary celebrations focused on Indonesia’s entrepreneurial spirit and how IFC and its partners are fostering the development of a new generation of entrepreneurs. IFC is working with Indonesia Business Links to acknowledge the achievements of these businesspeople through the Young Entrepreneurs Start-Up program, which has been held in the cities of Yogyakarta, Bandung, and Jakarta. The program honors both existing and potential businesses, as well as innovative ideas presented by young entrepreneurs. Winners receive a monetary award to develop their business, along with advice from IFC and Indonesia Business Links on key aspects of business management, including quality control, finance, and marketing.
Supporting Development in Key Sectors
Indonesia has achieved significant political and economic progress over the last five years, with GDP growing steadily at 5 to 6 percent. But job creation remains weak due to lingering problems affecting direct investment. IFC is increasing its activities in the country and supporting government action on key issues, including infrastructure development, financing for small and medium enterprises, and access to education.
In infrastructure, IFC is developing finance and advisory services. “We understand that infrastructure development is a priority for the Indonesian government,” said Thunell. “We at IFC are interested to support and invest in this sector, to be able to develop a dynamic public-private partnership.”
IFC is supporting microfinance and access to financing for small and medium enterprises by working through Indonesia’s banks and other intermediaries. The goal is to provide as many small businesses as possible with the means to expand. During his visit, Thunell signed an agreement to provide technical assistance to Parasahabat Group, one of the country’s largest and fastest-growing microfinance institutions. The project will enable Parasahabat to triple the number of small and medium enterprises it serves. “IFC is committed to providing long-term technical and financial support to microfinance development, both in Indonesia and globally. By supporting this sector, we support the growth of small and medium enterprises, which in turn creates jobs and lifts people out of poverty,” said Thunell.
While in Indonesia, Thunell also signed an agreement to partner with the Sampoerna Foundation and PT Bank Internasional Indonesia Tbk and establish the country’s first private financing facility for student loans. This new financial product will enable contributions from the Sampoerna Foundation to finance a portfolio of student loans. With affordable student loans otherwise unavailable in Indonesia, the risk-sharing facility fills a real void and is expected to help some 15,000 new students cover the cost of tuition and university entrance fees. “Access to education is critical to growth, and supporting the development of private sector education is one of IFC’s strategic goals. We are proud of this model of partnership – of teaming with a philanthropic foundation to help students gain a university education,” said Thunell.
Helping Indonesia Recover and Rebuild
IFC is providing support to Indonesia as it recovers and rebuilds from a series of natural disasters. In Aceh, which was severely affected by the December 2004 earthquake and tsunami, IFC is developing a financing program for small and medium enterprises of up to $60 million. In Yogyakarta, the scene of a recent major earthquake, IFC is looking to provide financing through local banks to help rebuild lost and damaged businesses. IFC has also begun an agribusiness program and trained local consultants and government officials to help local businesses.
IFC in Indonesia |
IFC has provided $2.3 billion in financing towards projects in Indonesia over the past 35 years. Its program for the 2006 financial year totaled $250 million, and in 2007 IFC plans a larger program of some $350 million. Through its Program for Eastern Indonesia SME Assistance, better known as PENSA, IFC provides an extensive program of technical assistance that centers on:
- Increasing access to finance
- Assisting the agribusiness sector
- Improving the business environment at the national and subnational levels
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For additional information contact:
Andrew Mak
Communications Officer
Tel:+ 852-2509-8110
