Public Disclosure Authorized
ReportNo.6917-IND
Indonesia RuralCreditSectorReview (InTwoVolumes) VolumeII:StatisticalAnnexes April29,1988
FOROFFICIALUSEONLY
Public Disclosure Authorized
Public Disclosure Authorized
Public Disclosure Authorized
AsiaRegional Office
Documentof theWorldBank
Thisreporthasa restricted distributionandmaybeusedbyrecipients onlyinthe performance of theirofficialduties.Itscontentsmaynototherwise bedisclosed withoutWorldBankauthorization.
CURRENCYEUIVALENTS !i15
BeforeNovember15, 1978
US$1.00= Rp
AnnualAverages1979-85 1979 1980 1981 1982 1983 1984 1985
US$1.00 US$1.00 US$1.00= US$1.00US$1.00= US$1.00 a US$1.00 =
September12, 1986
US$1.00 = Rp 1,644 /b
Rp 623 Rp 627 f Rp 632 Rp 661 Rp 909 /a Rp 1,026 Rp 1,125
FISCALYEAR Government
-
Bank Indonesia State Banks
-
April 1 to March 31 April 1 to March 31 January 1 to December 31
PRINCIPALABBREVIATIONS, ACRONYMSAND LOCAL TERMS Adat ASKRINDO
-
customary
-
PT AsuransiKreditIndonesia(CreditInsuranceCompanyof
Bank Pasar BAPINDO
-
Marketbank/pettytraderbank Bank PembangunanIndonesia(Development Bank of Indonesia)
BBD BDB BDN BEII BI
-
Bank Bank Bank Bank Bank
BIMAS BKD BKK BKPD
-
BimbinganHassal: "mass guidance" BadanKreditDesa: villagecreditbody BadanKreditKecamatan: subdistrict creditunit Bank Karya ProduksiDesa: villageproductionbank
BNI '46
-
Bank Negara Indonesia 1946
BPD BPR
-
Bank Pembangunan Daerah: regionaldevelopment bank Bank Perkreditan Rakyat: secondarybank
BRI
-
Bank Rakyat Indonesia
Indonesia)
/a
Bumi Daya Dagang Bali Dagang Negara Export Import Indonesia Indonesia
On March 1, 1983,the Rupiahwas devaluedfrom US$1.00= Rp 703 to US$1.00 = Rp 970.
/b
On September12, 1986,the Rupiahwas devaluedfrom US$1.00= Rp 1,125to US$1.00= Rp 1,644.
FOR OFFICIULUSE ONLY
INDONESIA statistical Annexes Annex 1: FinancialSystem in Indonesia Table 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28.
Growthin SectoralValue Added, 1981-86 Real Rates of Interestof Deposits Total Bank Depositsin Nominaland Real Terms Bank IndonesiaLiquidityand DirectCredits Changesin FactorsAffectingMoneySupplyand Liquidity,1983-86 InterestRate of CommercialBanks,1983-86 PriorityLendingPrograms: Bank Indonesia Agricultural CreditSubsidies SubsidiesInherentin BI LiquidityCreditsto Agriculture Sourcesand Uses of Funds of VariousFinancialInstitutions Shareof Groupsof Banks in TotalAssets,Fundsand Outstandiuig Loans Total LoansOutstandingof the FinancialSystem Rural and Agricultural LoansOutstanding Populationper Bank/Office for SelectedCountries Institutional Structureof the CreditMarket Loans Outstanding of Rural FinancialInstitutions Numberof FinancialInstitutions (1980-86) Assetsof SecondaryBanks and Pawnshops Badan KreditKecamatans- CapitalAccumulation Outstanding Bank Creditsin Rupiahand ForeignExchangeby Sector Bank Creditsas Proportionof SectoralGDPs RegionalDistribution of Totaland Agricultural Lending Bank IndonesiaLiquidityCreditsfor RuralCreditPrograms Bank IndonesiaLiquidityCreditsto Agricultural Lending Rural SavingsDeposits,1983-85 Ratio of Quasi-Moneyto GNP in SelectedCountries Sourcesand Uses of Funds in Rural CreditSector CombinedBalanceSheet of NationalForeignExchangeBanks
Annex 2: Scopefor Development of Rural FinancialInstitutions Table 1. BalanceSheet: Bank Bumi Daya and Bank RakyatIndonesia 2. Composition of Bank Bumi Daya Loan Portfolio 3. Comparative Performance of Bank RakyatIndonesiaand Bank Bumi Daya (1985) 4. CondensedIncomeStatements:Bank RakyatIndonesiaand Bank Bumi Daya 5. Performance Indicatorsof Rural FinancialInsitutions
This documenthas a restricteddistributionand maybe usedby recipientsonlyin the performance of theirofficialduties.Its contentsmaynot otherwisebe disclosedwithoutWorldBankauthorization.
-
ii
-
Annex 3: Assessmentof SelectedSpecialCreditPrograms Tree Crops ProjectsS Loan Amount,ProjectCost Table 1. Externally-Assisted CreditComponent and Smallholder 2. Loan Approvals,Outstandingand Arrears- KIK/RMKP 3. KUPEDESLendingProgram 4. Badan KreditKecamatanLoan Types,Maturityand InterestRates 5. Badan KreditKecamatanLendingProgram 6. CreditProgramOutreach 7. Analysisof KIK Arrears- January1985 8. BRI KIK/KMKPArrearsof (August1986) 9. Claimson ASKRINDOInsurance 10. KUPEDESDefaultRatios 11. Badan KreditKecamatanLoss Ratios 12. Sourcesof Funds of SelectedCreditSchemes 13. Cost of FinancialIntermediation Annex 4: FinancialResourceMobilization Table 1. FinancialAssetsAvailableto Saversin Indonesia 2. IndonesianBank Deposits,by Type, 1981-86 of BI LiquidityCreditsby Bank 3. Distribution Annex 5: Women in the Rural FinancialSector in SpecificLendingProgramsand Institutions Table 1. Women'sParticipation of Loans by EconomicClass and Sex of Borrowers: 2. Characteristics West Java Study of ThreeVillages and Employersin Rural Areasby Sex and Industry 3. Self-Employed Group in Indonesia Annex6: FinancialInstitutions Annex7: SelectedCreditPrograms in Indonesia Annex8: SavingsInstruments
ANNEX1 Table 1
INDONESIA RURALCREDIT SECTORREVIEW
Value Added, 1981-86 Growth in Sectoral (X p.a. at 1983 prices)
Average 1981-83
Agriculture Mining and quarrying oil and gas Non-oil Manufacturing LNG and refined oil Other
1.5 -7.5 (-8.0) (4.2)
1984
1985
5.9
3.2
Sectoral shares in 19S6 1986/a (% of GDP)
2.0
24.2
2.7 -9.4 7.0 (7.3) (-10.0) (2.8) (3.7) (1.5) (0.9)
17.1 (16.3) (0.8)
3.8 5.4 (3.4) (3.5) (6.2) (3.8)
13.0 (3.9) (9.1)
16.3 2.1 (4.6) (44.8) (1.4) (5.6)
Construction
2.6
-1.5
-1.3
0.2
5.5
Services
6.3
5.6
3.8
2.6
40.2
Gross Domestic Product (GDP) of which: Oil/LNG sectors Non-oil sectors
1.4
6.6
1.1
2.5
100.0
-6.7 3.9
12.2 5.1
-7.4 3.5
2.9 2.4
20.2 79.8
Memo Items Gross national product (GNP) Groas national income (GNY)
0.5 -1.1
6.1 6.0
1.7 0.5
4.3 -4.6
95.8 86.5
/a Preliminary. Source: Central Bureau of Statistics (CBS) and World Bank staff estimates.
-2-
ANNEX I Table 2
INDONESIA RURAL CREDIT SECTOR REVIEW
Real Rates of Interestof Deposits
Inflation rate /a
Real rates of interest savings deposits /b
Time deposits /c
1975
19.7
-10.7
to -1.7
1976
14.2
-5.2
to 3.8
-8.2
1977
11.8
-5.8
to
3.2
-8.8 to 6.2
1978
6.7
-0.7
to 8.3
-0.7 to 8.3
1979
21.8
-15.8
to -6.8
-18.7 to -6.8
1980
16.0
-10.0
to -1.0
-13.0 to -1.0
1981
7.1
-1.1
7.9
-4.1 to 7.9
1982
9.7
-3.7 to 5.3
-6.7 to 5.3
1983
11.5
0.5 to 3.5
3.3 to -6.8
1984
8.8
3.2 to 6.2
6.2 to 12.2
1985
4.3
7.7 to 10.7
9.7 to 16.7
1986
8.8
3.2 to 8.8
1.2 to
to
-13.7 to 4.3 to 9.8
8.2
/a CPI figures based on a weighted basket of 115 to 150 goods and services. /b Based on the low and high interest rates for TABANAS savings accounts less CPI change. tc Based on the range of commercialbank time deposit rates less CPI change. Source: Bank Indonesia, 1987.
ANNEX 1 Table 3
INDONESIA RURAL CREDIT SECTOR REVIEW
Total Bank Deposits in Nominal and Real Terms (Rp billion)
Nominal bank deposits /a
% growth of nominal deposits
Real bank deposits /b
% growth of real deposits
1981
3,127
-
4,061
1982
3,897
24.6
4,667
14.9
1983
6,983
79.2
6,893
47.7
1984
9,331
33.6
8,250
19.7
1985
12,985
39.2
11,004
33.3
1986/c
13,933
7.3
11,439
4.0
/a Sum of deposit money bank time and savings deposits, and foreign currency deposits. /b Using WPI deflator (excludingoil) end 1983 base year. /c Figures for June 1986. Source: Bank Indonesia,October 1986.
INDONESIA RURALCREDIT SECTOR REVIEW Bank Indonesia Liquidity and Direct Credits (Amounts in Rp billion)
Annual 1986 1985 1984 % disgrowth (x) Z disX disdisAmount tribution Amount tribution Amount tribution Amount tribution Nominal Real 1983 x
Liquidity credit 4,442
68.2
4,759
72.5
7,590
97.2
8,583
99.4
24.6
16.6
Priority
1,996
30.7
2,579
39.3
3,224
41.3
4,199
48.6
28.1
20.0
Nonpriority
2,446
37.5
2,180
33.2
4,366
55.9
4,384
50.8
21.5
13.7
Direct credit
2,073
31.8
1,805
27.5
218
2.8
52
0.6
-70.7
-72.5
6,515
100.0
6,564
100.0
7,808
100.0
8,635
100.0
9.8
2.9
Total Percentage of liquidity credit to total private credit (X)
42
-
33
Source: BI Research and Development Division.
-
43
-
44
-
-
-
-5-
ANNEXI Table 5
INDONESIA RURALCREDIT SECTORREVIEW Changes in PactorsAffectingMoney Supply and Liquidity,1983-86 (Rp blllion)
Changesin
1984
1985
Net foreignassets
2,824
3,553
2,181
4,702
42.3
18.3
33.3
-10.0
Net governmentdeposits
'1,087 -3,255
-626
96
58.8
7.1
-1.0
-21.2
Credit to publicenterprises Credit to privatesector Net other assets Domesticliquidity(M2) Money supply (MI) Currency Demand deposits
1986/a/b 1984
Annual growth (%) 1985 1986/b 1986/c
1983/a
61
t89
513
186
3.8
9.8
3.2
3.2
2,371
3,646
3,333
2,843
34.1
23.2
16.1
14.1
-581
-859
-185
-3,710
21.9
3.9
74.4
11.8
3,588
3,274
5,216
4,117
22.3
29.1
17.8
11.5
448
1,012
1,523
1,157
13.4
17.7
11.5
11.5
(399)
(379)
(728)
(915) (11.4) (19.6) (20.6) (20.6)
(49)
(633)
(795)
(242) (14.9) (16.3)
Time and savingsdeposits (QM) /d 3,140
2,262
3,693
2,960
31.9
39.5
(4.3)
(4.3)
22.7
11.6
tlemoItems M2/GDP ratio
19.9
21.0
25.7
27.3
QM/GDP ratio
9.6
10.9
14.5
16.0
/a Includeseffectof the exch2ngerate changeson March 30, 1983 and September12, 1986 /b Provisionaldata for October 1986. /c Excludesvaluationchangesresultingfrom the Seatember12 devaluation. /d Includesforeign-currency deposits. Source: Bank Indonesia.
-6-
ANNEX 1
Tabl'e"6
INDONESIA RURAL CREDIT SECTOR REVIEW
InterestRates of CommercialBanks,1983-86 (% p.a.) December December December September December 1983 1984 1985 1986/a 1986 NominalDepositRates /b Statebanks
14.8
17.1
14.6
14.3
13.9
Privatebanks
17.4
20.7
15.9
15.1
14.8
Statebanks
2.5
7.3
9.8
10.8
4.4
Privatebanks
4.8
10.6
11.0
11.6
5.2
Statebanks
17-24
17-24
17-24
16-24
16-24
Privatebanks
18-28
24-30
18-27
17-36
16-33
Statebanks
4-10
8-14
12-17
12-23
6-14
Privatebanks
5-14
14-19
13-22
13-32
6-22
1983
1984
1985
1986
LIBP-Le
9.7
10.9
8.4
6.8
Inflationdifferential betweenIndonesia& USA
8.6
6.1
1.3
7.2
Real DepositRates /c
NominalLendingRates _d
Real LendingRates /c
Memo Items
of September12, 1986. /a Ratespriorto the devaluation Nominalrateson three-month time deposits. 77 Deflatedby the ConsumerPrice Indexfor the relevantyear. 7T Nominalrateson workingcapitaland term loans;the amountof lendingundertaken by banksat the maximuminterestratesis generallyquite small. /e LondonInterbankOffer Rate on three-month US dollardeposits.
7W
Source: Bank Indonesiaand World Bank staffestimates.
INDONESIA RURALCREDIT SECTOR REVIW Priority
Lendiai 1 Progras:
(Septeme
Program am
Progra objectives
Date started
Loan celltus (Itp)
Interest rate
*bare A.
fank
30, 1986)
Uquidity A cost Workint
Indonesia
Max. term of loan
Bforover share
fanks Involved
Share
Capital
KREDIT ESPO8R: (Export Credit)
Exporters credit
01/82
KPt KCredit Modal Kerja Permane (Workiug Capital Credlt)
Small eanterprises
01/74
15 m
12X
8I 52 e 3 W.B. 25X 0 10.11
5 yrs
01
11/69
Open
122
St 751
31
I yr
25S
8RI: import distribution
-
92
BI 702 0 31
I yr
ISS
All
banks
ASKRTNDO 851 Si 7.5S
us
Production. dietribution and Import credits for fertilizers a checals for
-
e
Collateral awint/form
rlsks
All
national
dities co cerned
7.51
ASIUINDO 751 He 251
At least lowm
&
RB
100C
Commodities erned
IOS
con-
PS:s Kredit Perkebunan Swasta Hawsonal (Private tr e Estates)
Palm oil. tea, coffee. rubber, cocoa, coSonut
071/78
Open
12X
BE 752 Q 31
Open
30
0EtI, 0BD, 12t BDN. SAPINDO
He
1001
At least loan
IO0
Kits: Credit Modal Kerja (Working Capital Credit)
Naedium prises
05/84
75 a
15S
at 7O1 0 3X
1 yr
g01
All
national
ASKRINDO 701 H8 301
At least loan
1001
KIMt: tEPPBES 29/1984 (Working Capital Credit)
State prises
Enter-
05/84
75 a
15X
81 701 Q 3Z
I yr
302
All
nattional
ASKRINDO 702 H8 302
At least loan
IOO1
CKi: Kredit Candak Kulak
$=1t
traders
04/76
KUPEDESs (Village Credit)
Small borrawers
02/84
At least lo*n
100I
KUt: (Kredit Usdha: Tani) (armer Groups)
Farm production
06/85
UEDItT I/P COPESASI ops Credit)
Priortty purchase
09181
a. (Co-
nter-
goods CODslly BSt
2,000 15,000 1 a 80,000 100,000/ba 00/ Open
121
-
S days7 months
02
KODs
CO0
1001
taX flat
at 75X 0 15S
2 yrs
O0
SRI
BaR
1001
122
GOI 1OOZ e 32
7 months
O
B81 a cha nnel for ItUO o s
Penn SRI
PKtK952 S
Assets
122
8I 902
3 yrs
OX
National
Peru
pxK 902
At least loan
e
31 881
banks
BI
51
created
1o00 Ooa
St Program objectives
Program nnmm
Loan cellings (Op)
Date started
B.
b.
c.
PRPTE
PSN
Paddy Field mation
For-
XI: Investast (Investment Credit) Iredit loperast: (Investment Credit Cooper a. tives) b.
ASKRIX O HB
aos o
31
20 srs
0O
SRI, BBD 811
COt guarantee
e
31
20 yrs
O
SRI, BBD B111
10 yrs
1O0
BAPINDO
1005 8B Small farmer plots are at 00t risk 100 8B Small farmer plots are at 1GO1rk IOS HUB
32
1-2 yrs
-
CO0
001
3S
10 yrs
-
creEdl firect ini. Agri. to SRI
cOt at bIt
601 2t.5S 12.5S
0O0
10 yrs
-
BBI
G0 BI SRI
602 27.5S 12.5S
GOX
All
us
All state banks
Perum PX1 90S SS SRI 5X SI
122
As above plus cocoa, coffee. pepper 6 coconut
1979
Open
121
Large private tea, estates: oil palm, cocoa. coffee, coconut, rubber
06/78
Open
t21
1. Construction riee fields 2. AS above and becomes lIK type loan tn farmer's name 3. An above for 2
09/79
pen
32
-
-
10.5S
ST too1
-
-
121
RI 80X
Nedimi size enterprIses
06/83
122
B
ourPrtority chase priority goods Other activities
09/81
12S
St 9010
e e
BI 552 We 251
SI 801
_
e
BI 851
BI b0010
.
1001
All
Open
.
At Icast luan
ox
08/t0
_
100I
8Byrs
Nacleus estatess tea, rubber 6 oil palm
I_
At least loan
32 10.11
121
-
100
BRI
1I a
73
Collateral amount/form
rtsks
BRI
01/74
t
Sh. .
02
Small entrepreneurs
borrowers
Banks Involved
3 yrs
12S flat
Intredit tIt: (Small vestast Investment Credit) KR130T PZRUKBUNAN: (Tree Crope) a. PIR
BI 1002 0 32
1 m
Small
Borower share
Loans
Investment
02/84
21P19RS
Has. term of loan
Llquloity share & cost
interest rate
Program (continuation)
Credit
e
e
31
31
M801 31
10 yrs
101
31
10 yrs
O0
.
w
Fh~~~~~~~~~~~~~~~~~~~~~
751 251
1001
001 guarantee CD At least IOan
1001
At least 1001 IOaD
-9-
ANNEX 1 Table 8
INDONESIA RURAL CREDITSECTORREVIEW Agricultural CreditSubsidies (Rp billion)
Dec 1983
Dec 1984
Dec 1985
Jun 1986
Total
70.9
75.4
94.5
113.9
354.7
Nationalprivate banks
1.2
2.0
2.6
3.8
9.6
Regionaldevelopmentbanks
1.5
1.7
2.1
2.3
7.6 0.2
Statebanks
Foreign banks
-
0.1
-
0.1
Total
73.6
79.2
99.2
120.1
372.1
Source: Estimatedfrom BI statisticsusinga marketreferencerate of 18%.
-
ANNEX 1 Table 9
10
INDONESIA RURAL CREDIT SECTORREVIEW SubsidiesInherentin BI LiquidityCreditsto Agriculture (Rp billion)
Agriculture liquiditycredits Mar Mar Mar Mar 1983 1984 1985 1986
Mar 1983
Subsidies Mar Mar 1984 1985
BIMAS
139
136
110
29
KUDs
209
208
164
193
0
8
13
13
Import/Distn. fert.
35
130
184
171
KMKP
56
5E
56
57
5.04
5.04
KIK
101
96
90
86
9.09
8.64
Tree crops
134
225
324
513
6
4
9
63
0.54
0.36
Paddy formation
22
23
24
24
1.98
2.07
Total
710
901
Sugar nurseries
KKK/KI/Kelayakan
Note: Referencerate is 12%.
994 1,191
12.51 12.24
Mar 1986
Mar 1983-86
9.90
2.61
37.26
'8.81 18.72 14.76
17.37
69.66
1.17
1.17
3.06
3.15 11.70 16.56
15.39
46.80
5.04
5.13
20.25
8.10
7.74
33.57
12.06 20.25 29.16
46.17
107.64
0.81
5.67
7.38
2.16
2.16
8.37
63.18 79.74 87.66 103.41
333.99
0.00
0.72
INDONESIA RURALCREDIT SECTORREVIEW Sources
and Uses of Punds of Varsous (Rp billionk)
National foreign e chanie baziksa A2nunt X
Forelonbanks/b Anount X
16,204.0 S8.39
2,090.0
87.16
34.01
238.0
9.92
7.59
70.0
2.92
Other cormercial banks AmmAAount 2
Vamcial
Institutions
Development banks Amount X
Savings AAount
banks 2
Secondary banks lc
Sedan kredlt kecanatan
Sources Deposits Borrowings
9.439,0
Equity
2,107.0
Total
2,165.0
77.77
1.101.0
37.77
153.0
9.80
113.0
65.32
2.2
18.33
335.0
12.03
1.330.0
45.63
1,086.0
69.57
16.0
9.25
3.5
29.17
284.0
10.20
484.0
16.60
322.0
20.63
44.0
25.43
6.3
52.50
173.0 100.00
12.0
100.00
27,750*0 100.00
2,398.0 100.00
2,784.0 100.00
2,915.0 100.00
1,561.0
18,817.0 67.81
1,173.0
48.92
2,3S7.0
84.66
2,397.0
82.23
1,282.0
82.13
143.0
82.66
12.0
100.00
100.00
Uses
Loans Investments
6,547.0
23.59
1,093.0
45.58
223.0
8.01
334.0
11.46
207.0
13.26
0.0
0.00
0.0
0.00
Others
2,386.0
8.60
132.0
S5S0
204.0
7.33
184.0
6.31
72.0
4.61
30.0
17.34
0.0
0.00
173.0 100.00
12.0
100.00
Total
/
27,750.0 100.00
2.398.0 100.00
Consist of five state and tea prtvate banks. Consist of ten foreign banks and one joint bank. Consistof bank pasar, village and production banks.
2.284.0 100.00
2.915.0 100l.0
10561.0 100.00
[3!
- 12 -
ANNEX 1 Table Tl
INDONESIA RURAL CREDIT SECTOR REVIEW
Share of Groups of Banks in Total Assets, Funds and OutstandingLoans (Percentage)
State banks National private banks
Assets 1983 1984 1985
Loans 1983 1984 1985
Funds 1983 1984 1985
77 74.8 73.4
78.4 74.4 73.9
70.7 69.5 66.6
11.2 13.9 15.3
11.9 15.5 17.5
13.2 16.5 18.5
Local development banks
3.2
3.5
3.5
3.2
3.1
2.9
Foreign banks
8.6
7.8
7.8
6.5
7.0
5.7
Source: Bank Indonesia.
3.5
3.6
3.9
12.6 10.6 11.0
- 13 -
ANNEX 1 Table 12
INDONESIA RURALCREDITSECTORREVIEW Total LoansOutstandingof the FinancialSystem (Rp billion) Loans outstanding 1985 June 1986 Amount % Amount % Banks/a Bank Indonesia(directcredits) Statebanks Other commercial banks Foreignbanks Development banks Savingsbanks Subtotal
964.0 15,145.0 4,106.0 1,073.0 640.0 1,005.0
4.07 63.95 17.34 4.53 2.70 4.24
1,103.0 15,586.9 4,715.0 1,060.0 666.0 1,325.0
4.36 61.61 18.64 4.19 2.63 5.24
22,933
96.83
24,455.0
96.67
Nonbankfinancialinstitutions
162.0
0.68
182.6
0.72
RuralFinancialInstitutions (RFIs) BRI Unit Desa
229.0
0.97
285.1
1.13
214.3 193.0 19.0 2.3
0.90 0.81 0.08 0.01
233.0 209.8 20.7 2.5
0.92 0.83 0.08 0.01
Pawnshop
64.8
0.27
61.4
0.24
Other ruralnonbankfinancial institutions BKKs,KURKs,etc. KUDs
81.0 31.0 50.0
0.34 0.13 0.21
81.0 31.0 50.0
0.32 0.12 0.20
589.1
2.49
660.5
2.61
Secondarybanks BankPasar Villagebanks Paddybanks
SubtotalRFIs TotalCreditOutstanding /a BI statistics.
23,684.1 100.00 25,298.1 100.00
INDONESIA RURALCREDIT StCTOR REVIEW Loans Outstandlng and Agricultural (In Rp billions)
Rural
by ComaerCredit Agrleultural ci-l and Development BanksLa State banks banks private National banks development Regional Foreign banks credit credit
BBD rural nonagricultural EfK/RNgp nonagricultural Subtotal
Total In constant
la
1983 Pdees
June Loans
1985 Loa-s
Loans
of
llinl
44.19 0.75 0.94 -
1,256.00 34.00 28.00 2.00
43.52 1.18 0.97 0.07
1,575.00 45.00 35.00 1.00
44.32 1.27 0.98 0.03
1,899.00 63.00 38.00 2.00
46.93 1.56 0.94
208.00 778.00
11.03 41.25
279.00 942.00
l1.8k 39.88
302.80 918.00
11.30 34.35
275.90 994.00
9.56 34.45
393.40 960.00
1L.0? 27.01
467.20 960.00
11.55 23.72
1,799.00
95.40
95.10
2,246,00
2.65 n.a. 0.48 0.02 aas n.a. n.a. 1.45
75.00 n.e. 11.60 0.70 28.50 n.a.
3.18 n.a. 0.49 0.03 n.a. 1.21 n.a.
86.90
4.61
1154.0
4.90
1.885.90
1OP.00
100.00
U.&.n.a.
2,361.80
2.446.00
91.53
89.75
2,589.90
3.009.40
84.68
BL statistics
/d
Using WPI deflator
(excluding
before
of Finance o11):
January
estimates 1981 - 77.0;
1984 and thereafter of the
distribution
1982 - 83.5;
3.429.20
0.05
84.75
3.48 2.36 0.51 0.05 0.75 1.32 n.a.
89.00 121.00 16.10 1.80 27.60 40.30 n.a.
3.08 4.19 0.56 0.06 0.96 1.40 n.a.
229.00 193.00 19.00 2.30 28.20 42.10 31.00
6.44 5.43 0.53 0.06 0.79 .18 0.87
285.10 210.00 20.60 2.50 28.00 39.90 31.00
7.05 5.19 0.51 0.06 0.69 0.99 0.77
226.30
8.47
295.80
10.25
544.60
15.32
617.10
15.2S
2.672.30
100.00
100.00
3.SS4,00
100.00
93.00 63.00 13.60 1.30 20.00 35.40 n.a.
2,885.70
3,011.86
2,551.46
2,672.30
2,828.50
2,449.23
and Nidl Credits
and Ministry
/c
x
1,181.00 20.00 25.00 -
B1 statistics.
lb Consisted
1986
41.75 0.59 1.06 -
27.40
/d
I
986.00 14.00 25.00 -
50.00 n.a. 9.10 0.40
Credlt
Loss
S
41.57 0.64 0.90 -
(RFIs) Rural
Loans
784.0'1 12.00 17.00 -
Institutions Rural Financial BRI unlt disa lb Bank Pasars banks Village Paddy banks KUDs /cu Pawnshops Ic l Us, KURKs,etc. Subtotal
S
1984
1983
1982
1981 Loans
KUPEDES loans. of credit.
1983 - 100.0;
1984 - 113.1;
1985
-
118.0;
and 1986 - 121.8.
4.046.30 3,322.08
100.00
ANNEX1
- 15 -
Table 14
INDONESIA RURAL CREDIT SECTOR REVIEW
Population per Bank/Office for Selected Countries
Population per bank office Urban Rural
Indonesia
18,287
40,220/a
Philippines
5,900
18,100
Thailand
9,826
20,278
India
6,910
23,449
-
22,497
Pakistan
/a Outside Java. Note: 1983 data from M.H. Agabin, "Rural Savings Mobilization, Asian Perspective and Prospects,"September 1985, Technical Board for AgriculturalCredit, Manila, Staff Paper 2-85.
ANNEX
TabJle
- 16-
M*St CuSSlt nstltatien
L1wl/ type of tosttua
etios _etso
p
stop
toa siz (3'000)
opstloi
)V,tW
l Steetutei of tbe Cdilt
tetotlyt
"Mrket
Coll.t@tI)
ifettati 10t55 t lM
lo
26.In30 p..
ole.t
In
typ
Stbur of loea saotoi boitowtr. to 1"S V(
0t bertat
V11las. UKs. VLS, 520,
etc.
510.
Ptow. Sow
tJI
Los
ots
toermtu
otuteoeplww"top *My
UIbt bank; calloty
sewlap
cotelwen
KlOs
Sten oxty
Crndt
6 s
o
100o As. *S7 20 mu.
Short-tax, not sucsdt I it alums of
mtlb
tor 10-
Ae. * 30
10 was"
0..
son-tore
lb"
13t p.&.
up to S tr
1r05. buildog. oip-
2t-2
VAs posIeSot
rtowl troders62
Mwetly te
tedtr
CoopotI"s
esebetr
7)0
U3 b
SubdIStrict de"
811 cut
tak
ste-amse
Ureca itwu "rp 0esUg
sn 7 de best
priets*
Pses
omnweat Coerptstive
p!a_shop
*3
oIle eO- I O10 000 Awf. - 460
wooary
sawlp
I0 MO_O.
bAir_
of
I It
Awe. * 735
Uit
beki
so neip
2.-300
?teIe isVeStnr0.
up to I
1ntre
etly sotel oatre prosre" sod treder
991
t*"
262
with tollat4tel MeuiWA32Pet
tI*ndorT
wombha
_omee-
Coerm
malmall
per
Pilon
dussbls". jlx1"v
ot" looe eds^ this Up 20.,01
-a
P_.htm_o Intel ctade (bet
fid
ox
State
p.s.
mmt
seetm
sits dosit of St of 1loss aff*ctti* . 48.402paw.
* 362 * 62 eX -
34t
Wpea"ot lI"" ffsfe*r
this
ft 20.000; District end ProvInce fterw.soiarnust
sm
Iracwl, of com_rclil 6 de. beak
ftttoos) M2ftta breec
sd of s_oe-
is
Ste
I ptiwtte
Wench etork; volunsary dilgp 6 ethet OVIten
lb lund eIltlg
Shont-, sidi& long-tsrs
lead. flzed Sssets
lKl bak * 5-24 p.s. Ptivate
tblic ettptle. 0 t* - 6 litge-stle M at*pi
6 PrIvet
grsm% utoxkg full bea 6 Itsi"el
Me t(ud eiiugt
Shout-. rnlm
load, tflud
State beak 12t2 p.s
twhlt 55151p1is5.
enebeak I itiecUl lSS Jeitituttfoes ts Jkiorts lTt"
to
t
4*WM*
5W30-470, fott-. modive- Lend. fluid loneg-term sial
dcal Ad5w. banks.
4-bIstloste
_
Stescb unetwos volestory servi*etrP|s tW ewvisg 6 other,
e.2U9.
of sumber of cooperstiwewen
servites
WM24p.s.
Psvetse
lmll- 6 wdie-$c*I* sotrpreour
ltrs.-.cel,
ars" 6 torsig
lePrt-
4.00
ANNEX 1 Table 16
- 17 -
INDONESIA RURALCREDITSECTORREVIEW LoansOutstanding of RuralFinancialInstitutions (Rp billion)
December1985 Amount %
June 1986 Amount
BRI unit desas
229.0
42.0
285.1
46.2
Bank Pasars
193.0
35.4
210.0
34.0
19.0
3.5
20.6
3.3
Paddybanks
2.3
0.4
2.5
0.4
Pawnshops
42.1
7.7
39.9
6.5
BKKe,KURKs,etc.
31.0
5.7
31.0
5.0
KUDs
28.2
5.2
28.0
4.5
544.6
100.0
617.1
100.0
Villagebanks
Total
%
TAe
- 18 -
I 17
INDONESIA RURALCREDITSECTORREVIEW (1980-86) Numberof RuralFinancialInstitutions
BRI unit desas
Secondary Pawnshops banks
BKKs
KUDs
Total
Growth rate (%) -
1980
3,432
5,833
N/A
486
4,752
14,503
1981
3,610
5,792
463
486
5,254
15,605
7.6
1982
3,617
5,808
471
486
5,254
15,636
0.2
1983
3,626
5,811
473
491
6,141
16,542
5.8
1984
3,626
5,825
474
496
6,579
17,000
2.8
1985
3,626
5,835
479
496
N/A
N/A
1986
2,272
5,820
479
497
6,786
15,854
-
-
19
ANNEX 1
Table 18
INDONESIA RURALCREDITSECTORREVIEW Assetsof SecondaryBanks and Pawnshops (Rp billion)
1981
1982
1983
1984
1985
60.3
79.9
103.5
177.3
292.4
32.5
29.5
71.3
64.9
95.7
103.5
156.8
247.8
22.2
8.2
51.5
58.1
0.23
0.24
0.24
0.32
0.44
59.2
78.6
81.4
90.9
105.2
32.8
3.6
11.7
15.7
94.1
81.4
80.4
89.2
22.4
-13.5
-1.3
10.9
0.24
0.19
0.16
0.16
SecondaryBanka Totalassets In currentprices - Value % growth
In constantprices- Value % growth
2 of assetsto totalassetsof financialinstitutions
-
78.3 -
Pawnshops Totalassets In currentprices - Value % growth
In constantprices- Value X
growth
% of assetsto totalassetsof financialinstitutions
-
76.9 -
0.22
Note: SecondarybanksincludeBank Pasar,villagebanksand paddybanks. Source: Bank IndonesiaEconomicand StatisticsDivision.
- 20 -
ANNE I INDONESIA
RVRAL CREDIT SECTORREVIEW 8adan Kredit Keeamatans- Capital
Accumulation
tKIp)-
End of year
1972
Loans outstanding minus paymentoverdue-currentassets (1)
1974
1975
38,389,316
(-8,694,086)
408,468,208
306,012,388
110,699,534
(-8,243,714)
857,929,870 -181.271941 -a7.b37,!2
446,091,673
220,101,512
10,464,744
463,616,242
285,392,121
101,936,687
462,236,249
338,350,749
178,715,334
1,058,:30,601
422,038,972
356,273,056
280,218,573
1,581,211,393 -374 974 308 1,206;Z37,n
394,354,418
385,466,791
426,415,876
1,886,175,896 -454 046 228 i,43Z,T s9,668
397,568,712 435,743,355
598,817,601
500,336,759
565,943,347
880,491,057
572,179,840
733,837,997
1,337,851,148
498,256,179 -89,787971
1,096,294,184 -245.349134 1,305,824,896 -326.514564
79,31U,332 1977
1978
1979
1980
1,420,097,129 -361.566 528
2,507,736,077 -560 964 914
T77T~T~ 1981
3,319,535,051 -675,666066 z,643,868,985
1982
1983
4,817,822,677 -808,176519 4,009,T 46.TW
1,001,204,9791,002,394,497 2,006,046,082
6,598,388,679 -1.000.930309 393V7,4377
1984
Equity (retalned earninse) (1-2-.
152,263,500
GDU,94.3#U3U
1976
Savings (3)
213,428,597 -31,469,685
T1G13,5$V1z 1973
Borrowed capital (2)
1,325,447,7101,372,403,983 2,899,606,677
9,421,244,181 -1.359 965 022 1,982,926,3251,794,062,852 4,884,289,982
1985
1986 (Sep)
11,943,055,206 -1 904 443 023 10 038 612 183
2,478,087,4612,156,831,874 5,403,692,848
14,097,265,491 -2.073.838225 1z,2Z3,4z/!7,
3,465,895,0512,246,781,275 6,310,750,940
ANNEX 1 Table 20
-21 -
INDONESIA RURAL CREDIT SECTORREVIEW OutstandingBank CreditsIn Ruplahand ForeignExchangeBy Sector (Rp billion) Annual change X
1980
1981
1982
1983
1984
1985
1986
Agriculture Mining Industry Trade Services other
526 1,866 2,563 1,977 482 466
813 1,693 2,763 3,062 1,385 444
1,025 1,472 3,923 4,129 1,867 606
1,226 807 5,207 5,132 2,276 651
1,318 384 6,667 6,344 3,169 931
1,656 258 7,592 7,255 4,183 1,213
2,071 357 8,022 8,277 3,834 1,985
26.9 -25.0 21.9 28.3 43.4 28.7
Total
7,880
10.159
13.022
15,299
18,813
22,157
24,546
21.8
28.9
28.2
17.5
23.0
17.8
14.6
750 2,662 3,656 2,820 688 665
1,056 2,199 3,588 3,977 1,799 577
1,228 1,763 4,698 4,945 2,236 726
1,226 807 5,207 5,132 2,276 651
1,165 340 5,895 5,609 2,802 823
1,403 219 6,434 6,148 3,545 1,028
1,700 293 6,586 6,796 3,148 1,630
15.3 -31.9 10.8 16.5 30.3 16.9
11,241
13,196
15,299
16,634
18,777
20,153
10.7
Sector CurrentPrices
Annual Change
7
n)-
1983 ConstantPrices /a Agriculture Mining Industry Trade Servtices Other Total
15,596
Annual Change 17.4
18.2
-2.0
8.7
12.9
9.9
PercentageDistributioa Agriculture Mining Industry Trade Services Other
6.7 23.7 32.5 25.1 6.1 5.9
8.0 16.7 27.2 30.1 13.6 4.4
7.9 11.3 30.1 31.7 14.3 4.7
8.0 5.3 34.0 33.5 14.9 4.3
7.0 2.0 35.4 33.7 16.8 4.9
7.5 1.2 34.3 32.7 18.9 5.5
8.4 1.5 32.7 33.7 15.6 8.1
Total
100.0
100.0
100.0
100.0
100.0
100.0
100.0
/a Using WPI deflator(excludingoil): 1980 - 70.1; 1981 - 77.0; 1982 - 83.5; 1983 - 100.0; 1984 - 113.1; 1985 - 118.0;and 1986 - 121.8. Source: BI Statistics,Decemberyears except 1986 which is in September,World Bank Base Data.
ANNEXI Ta-b 2
- 22 -
INDONESIA RURALCREDITSECTORREVIEW Bank Creditsas Proportionof SectoralGDPs
Sector
1980
1981
1982
1983
1984
1985
4.5
6.0
6.8
6.9
6.4
7.3
Mining
16.6
12.8
12.1
5.8
2.4
1.7
Industry
40.3
39.1
52.4
63.4
58*8
58.5
Trade
27.0
34.2
40.6
42.7
45*4
49.0
All sectors
16.1,
17.4
20.8
20.7
21.5
23.1
4.6
6.1
7.1
6.9
6.2
7.3
Mining
16.6
13.5
12.7
5.8
2.3
1.6
Industry
50.0
45.5
58.9
63.4
62.1
64.0
Trade
27.9
36.3
42.1
42.7
45.6
50.0
All sectors
16.9
18.4
21.9
20.7
21.3
23.6
CurrentPrices Agriculture
1983ConstantPrices Agriculture
- 23 -
Table 22
INDONESIA RURALCREDIT SECTORREVIEW ReglunalDistrlbutionof Total and AgriculturalLendins (March1986)
Province
Per I discapital tribution Total Agric. agric. total Total population lending lending agric. lending (1000) (Rp bln) (tRP) lending (Rp bln)
Aceh North Sumatra West Sumatra Riau Jambi Banxkulu South Sumatra Lmpung West Java DKI Jakarta Yogya CentralJava East Java Bali West Kalimantan CentralKalimantan South Kalilantan East Kalimantan North Sulawesi CentralSulawesi East Sulawesi SouthSulawesi Maluku NTB NTT Timor Timur Irian Jaya
2,999.9 9,452.0 3,779.6 2,513.4 1,755.3 946.9 5,423.1 6,089.7 31,142.0 7,873.2 2,891.1 27,387.2 31,266.7 2,672.0 2,771.5 1,123.9 2,285.5 1,603.0 2,359.0 1,549.8 1,091.9 6,574.7 1,617.4 3,045.1 2,999.3 608.4 1,332.0
17.5 672.6 19*4 38.8 5.2 1.4 12.0 49.2 140.6 182.7 15.2 177.0 325.5 16.0 34.3 1.3 30.3 33.0 12.0 3.6 1.1 22.2 4.6 6.7 2.3 0.1 0.6
5,834 71,160 5,133 15,437 2,962 1,479 2,213 8,079 4,515 23,205 5,258 6,463 10,410 5,988 12,376 1,157 13,257 20,586 5,087 2,323 1,007 3,377 2,844 2,200 767 164 450
1.0 36.9 1.1 2.1 0*3 0.1 0*7 2.7 7.7 10.0 0.8 9.7 17.8 0.9 1.9 0.1 1.7 1.8 0.7 0.2 0.1 1*2 0.3 0.4 0.1 0.0 0.0
Total
165;153.6
1.825.2
11.052
100.0
Per capita S distotal tribution Agric. lending total lending (Rp) lending I total
166.9 55,635 1,431.5 151,449 307.0 81,226 246.6 98,114 98.9 56,344 34.9 36,857 349.9 64,520 315.1 51,743 1,618.3 51,965 10,644.4 1,351,979 167.2 57,833 1,249.1 45,609 2,309.1 73,852 180.0 67,365 350.0 126,285 56.6 50,360 288.3 126,143 352.7 220,025 131.7 55,829 66.5 42,909 33.1 30,314 341.6 51,957 245.1 151,540 67.6 22,200 41.2 13,737 3.8 6,246 39.2 29,429 21,136.3
127.980
/a Outstandingof all bankingcredits,excludingInterbankand foreignresidentsloans. Source: Bank IndonesiaEconomicsand Statistices Department.
0.8 6.8 1.5 1.2 0.5 0.2 1.7 1.5 7.7 50.4 0.8 5.9 10.9 0.9 1.7 0.3 1.4 1.7 0.6 0.3 0.2 1.6 1.2 0.3 0.2 0.0 0.2
10 47 6 16 5 4 3 16 9 2 9 14 14 9 10 2 11 9 9 5 3 6 2 10 6 3 2
100.0
9
eX I Table 23
- 24 -
INDONESIA RURALCREDITSECTORREVIEW Bank IndonesiaLiquidityCreditsfor RuralCreditPrograms (Rp billion)
Ruraland SmallLoans WorkingCapital BIMAS MIDI/KUPEDES KMKP PSN
Cooperatives Total Term Investments MIDI/I KUP%ESKIK PIR PRPTE PSN Cooperatives Total TotalRural Shareof total (X) Nonrural and Large Loans Other Prog rams import, procuction of fertilizers Exportcredits KMK/KEPPRES
Investment credits(KI) National contractors
House purchase Teachers,studentcredit Total Nonrural Shareof total Total BI PrioritzProgram LEIUldty uredith Source: BI, Divisionof GeneralCredits.
1983
1984
1985
1986
139 32 620
136 56 621
109 70 621
29 142 634
3
2
-
-
136
157
165
204
927
970
968
1,011
6 360 43 75 15 30
12 343 73 112 40 43
23 323 119 122 80 41
51 307 211 124 176 29
529
623
708
898
1,456
1,593
1,676
1,909
73
62
52
45
35 172
130 389
184 635
171 981
-
-
53
122
30
6
31
63
-
-
13
41
245 58
398 63
558 74
764 148
540
986
1,548
2,290
27
38
48
55
2,579
3,224
4,199
1,996
INDONESIA RURAL CRFDtT SECTOR REVIEW Bank Indonesia
Estimated agriculture (1)
Liquidity
Credits to Agticultutal (Rp billion)
Programtotals March March 1985 1984
March 1983
*. Current BDIMAS KUDs /a lb Sugare-rseries Midi/Kupedes /c Import/distn.lFertilizer KHKP /d KIK /7Tree crops KK/ I/KtELAYAKAN/a Paddy formation
100 70-90 100 22 100 9 28 100 10-15 100
139 306 0 37 35 620 360 134 40 22
1.795
1.693
Total
136 212 8 68 130 621 343 225 29 23
Mar 1986
Lending
Estimatedtotals for agriculture March March March March 1986 1985 1984 1983
Annual change (O
Market Prices 110 205 13 93 184 621 323 324 58 24
29 241 13 193 171 634 307 513 658 24
139 209 0 8 35 56 101 134 6 22
136 208 8 15 130 56 96 225 4 23
110 164 13 20 184 56 90 324 9 24
29 193 13 42 171 57 8S 513 63 24
-40 -3 18 74 70 1 -5 56 219 3
1.955
2.783
710
901
995
1.191
19
62
69
72
65
24 198 11 158 140 52t 252 421 540 20
139 209 n 8 35 56 101 134 6 22
120 184 7 13 115 49 85 199 4 20
93 139 It 17 156 47 77 275 8 20
24 158 11 35 140 47 71 421 52 20
-44 -9 25 64 158 -6 -11 46 205 -3
2.285
710
797
843
978
11
Credits Llquldity 8I Agricultural Credlts as y or total Agrncultnral II. 1983 ConstantValues BIMAS KUDa /a Sugar nurseries/b Midi/Kupedes/c Import/distn.7-Fertilizer KMKP /d KIK tr Tree-crops /a KMK/KI/KELAYAKAN Paddy formation
100 70-90 100 22 100 9 2R 100 10-15 100
Total
139 306 0 37 35 620 360 134 40 22 1.6V3
/a Share estimatedfrom BRI statistics. 7-b From BRI statisticsfor Decemberyears. 77 Based on BRI loans outstandingproportionsDecember1985. 7R Based on nationaldata August 1986. 7e From Bank IndonesiaWeekly StatisticsReport. Source: RI Researchand DevelopmentDivision.
120 187 7 60 115 549 303 199 26 20 1.587
93 174 11 79 156 526 274 275 49 20 1.657
ANNEX 1 25 Tab'le
-26 -
INDONESIA RURALCREDIT SECTORREVIEW
Rural SavingsDeposits,1983-85
1983 % Rp bln BRI Demanddeposits Time dztosits Savings Subtotal Rural FinancialInstitutions Unit Desas Demand deposits Time deposits
Savingsdeposits TABANAS SIMPEDES of deposit Certificates other Subtotalunit desas Secondarybanks KUDs BKK-type institutions Savings and loan associations
Total % totalbank deposits
1984 % Rp bln
1985 z Rp bln
910.5 705.2 256.4
41.2 31.9 11.6
602.4 194.4 148.8
58.8 1*004.4 59.2 364.1 21.5 19.0 8.7 147.7 14.5
945.6
92.2 1,516.2 89.4 1,872.1 84.7
79.7
7.8
180.0
10.6
337.5
15.3
-
2.0 0.7
0.1 0.04
13.8 2.0
0.6 0.1
-
-
38.6 -
-
-
0.8
-
-
0.8
2.3 5.04 0.05 0.05
63.6 5.1 0.1 0.2
2.9 0.2 0.01
_
-
42.9
2.5
86.8
3.8
113.5 23.6
6.7 1.4
212.3 28.2
9.6 1.3
-
-
-
59.7 20.0 n.a. n.a.
5.8 2.0 -
n.a. n.a.
-
5.1 7.1
0.2 0.3
1,025.3 100.0 1,696.2 100.0 2,209.6 100.0 8.5
10.8
10.8
ANNEX I
Table 26
- 27 -
INDONESIA RURAL CREDIT SECTORREVIEW
Ratio of Quasi-Money to GNP in Selected Countries
Indonesia
Malaysia
Philippines
Thailand
1980
0.07
0.34
0.12
0.27
1981
0.07
0.38
0.14
0.29
1982
0.09
0.42
0.16
0.35
1983
0.10
0.43
0.17
0.41
1984
0.13
0.44
0.15
0.47
1985
0.14
0.48
0.15
0.50
Source: InternationalFinancial Statistics,December 1986.
ANNEXI Tbe2
- 28 -
INDONESIA RURAL CREDIT SECTOR REVIEW
Sources and Use of Funds in Rural Credit Sector
1983 Rp bln %
1984 Rp bln %
1985 Rp bln %
Sources BI rural liquidity credit /a 1,456.0
56.7 1,593.0
46.8
1,676.0
41.4
Internallygenerated funds
1,112.0
43.3 1,814.0
53.2 2,373.0
58.6
1,025.0
39.9 1,696.0
49.8 2,210.0
54.6
Rural savings deposits /b Equity
87.0
3.4
118.0
BRI Unit Desas
59.0
-
85.0
-
117.0
-
Secondary banks
26.0
-
31.0
-
44.0
-
2.0
-
3.0
-
2.0
-
BKKs
TotalRural Funds
3.5
163.0
2,568.0 100.0 3,049.0 100.0 4
0
Uses Rural credit /c Surplus (deficit) Ratio of rural credit to rural funds (%)
/a Annex 1, Table 22. /b Annex 1, Table 24. /c Annex 1, Table 12.
2,672.3 (104.3)
104
2,885.7
3,554.0
1,521.3
495.0
85
88
4.0
1.0
-
ANNEX1 Table 28
29 -
INDONESIA RURAL CREDITSECTORREVIEW CombinedBalanceSheetof NationalForeignExchangeBanks/a Percentage Rp Distribution billion (Z) Assets
Reserves Cash Demanddepositswith BI Foreignassets Claimson publicsector Centralgovernment Officialentitiesand publicenterprises Claimson privateenterprises and individuals Otherassets Total Liabilities Demanddeposits Time and savingsdeposits Foreign-currency deposits Foreignliabilities Government deposits Importdeposits Borrowingsfrom BI Capitalaccounts Otherliabilities Total
430 1,901 5,442
1.6 6.9 19.8
638 4,232 13,495 1,331
2.3 15.4 49.1 4.9
27,469
100.0
3,906 7,904 2,392 272 1,743 281 6,293 2,018 2,660
14.2 28.8 8.7 1.0 6.3 1.0 22.9 7.4 9.7
27,469
1.00
/aNetforeignexchangepositionis estimatedby subtracting the sum of foreign-currency depositsand foreignliabilities from the amountof foreign assets.
-30
-
ANNEX2 Table 1
INDONESIA RURALCREDIT SECTORREVIEW BalanceSheets: Bank Bumi Daya and Bank Rakyat Indonesia (in Rp billion)
Bank Bumi Daya Assets Currentassets Term deposits Loans Foreignassets Other assets Total Assets Liabilities Currentliabilities Demand deposits Savings/timedeposits
Borrowings Foreignliabilities Other liabilities Capital Total Liabilities
322 2 1,978 459 76
1982 X disBank X disBank tribu- Rakyat tribu- Bumi tion Indonesia tion Daya
11.35 0.88 69.70 16.17 2*68
349 1,945 52 32
2,838 100.00
2,378
25 747 328 1,064 476 16 162
0.88 26.32 11.56 37.49 16.77 0.56 5.71
69 426 257 1,391 101 78 56
2,838 100.00
2,378
14.68 477 0.00 127 81.79 3,783 2.19 1,259 1.35 156
1985 disBank % distribu- Rakyat tribution Indonesia tion X
8.22 55.95 65.20 21.70 2.69
697 4,199 363 393
12.33 0.00 74.29 6.42 6.95
100.00 5,802 100.00
5,652
100.00
2.41 15.72 26.22 35.04 14.68 1.31 4.62
169 942 974 3,053 87 310 117
2.99 16.67 17.23 54.02 1.54 5.48 2.07
100.00 5,802 100.00
5,652
100.00
2.90 140 17.71 912 10.81 1,521 58.49 2,033 4.25 852 3.28 76 2.35 268
- 31 -
ANNEX 2 Table 2
INDONESIA RURAL CREDIT SECTOR REVIEW
Composition of Bank Bumi Daya Loan Portfolio
1983 Rp bln
Z
1984 Rp bln
z
1985 Rp bln
%
Estate Agricultural Other
818.80 516.00 302.80
34.25 21.58 12.66
937.90 662.00 275.90
29.93 21.12 8.80
1,305.40 912.00 393.40
34.30 23.70 10.60
Production (manufacturing)
453.80
18.98
572.20
18.26
609.50
16.00
Services
678.60
28.38
1,145.20
36.54
1,369.50
36.00
Trade
255.80
10.70
271.30
8.66
242.70
6.40
Working Capital & Investment Credit Agriculture Other sectors
121.60
5.09
117.40
3.75
132.90
3.50
11.30 121.60
0.30 3.20
139.10
3.70
Large investment and working capital Total Loans Outstanding
62.40
2.61
2,391.00 100.00
89.90
2.87
3,133.90 100.00
3,799.40 100.00
- 32 -
ANNEX 2 Table 3
INDONESIA RURAL CREDITSECTORREVIEW Comparative Performance of Bank RakyatIndonesiaand Bank Bumi Daya (Amountsin Rp billionand ratiosin percentage)
1982 BRI BBD Averagetotalassets Averageloansoutstanding Averageborrowings Loansoutstanding/total assets Total assets/net worth Borrowings/total assets Deposits/total assets As a % of loansoutstanding Arrears Provisionfor bad debts Cost of bad debts/average loansoutstanding Profitability As a % of averageloan outstanding Interestincomeand fees Interestexpenses Interestmargin Personnelexpenses Other expenses As % of averageassots Interestincomeand fees Grossincome Interestexpenses Personnelexpenses Otherexpenses Profitbeforetaxes Profitaftertaxes
2,216 1,831 1,913 81.8 42.5 58.5 28.7
2,431 1,727 932 69.7 17.5 37.5 37.9
1985 BRI
BBD
5,417 4,205 4,832 74.3 48.3 54.0 33.9
5,159 3,458 1,803 67.8 22.1 35.5 41.9
10.8 3.5 1*6
19.3 5.0 0.43
10.7 3.4 7.3 4.0 4.0
13.9 7.6 6.3 1.6 5.4
13.0 7.3 5.7 3.4 2.9
10.1 8.4 1.7 1.3 1.8
8.8 9.8 2.8 3.3 3.3 0.3 0.1
9.9 11.2 5.4 1.2 3.9 0.8 0.45
10.1 11.4 5.6 2.6 2.3 0.8 0.43
6.8 9.4 5.6 0.9 1.2 0.4 0.26
ANNEX 2 Table 4
INDONESIA RURAL CREDIT SECTOR REVIEY
Condensed Income Statements: Bank Rakyat Indontoia and Bank Bumi DaYa (Current Rp billion)
1982 Bank X dis- Bank Rakyat tribu- Bumi Indonesia tion Daya
Rievenue Interest, commissions ,Foreignexchange transaction Other Total expenses Interest Forelgn exchange transaction Personnel Other Total Net Profit Before Taxes
1985 I disBank I dis- Bank tribuRakyat tribu- Bumi tion Indonesia tion Daya
I distribution
196 6 14
90.7 2.8 6.5
240 18 1S
87.9 6.6 5.5
549 38 28
89.3 6.2 4.5
349 122 11
72.4 25.3 2.3
216
100.0
273
100.0
615
100.0
483
100.0
63 0 74 73
30.0 35.2 34.8
131 28 94
51.8 11.1 37.1
306 0 143 124
53.4 25.0 21.6
289 67 46 61
62.4 14.5 9.9 13.2
210
100.0
253
100.0
573
100.0
463
100.0
6
20
43
Sources: Annual Reports, Bank Bumi Daya "The Development of State Commercial Banks in Indonesia."
20
INDONESIA
RURALC0DIT Indicators
Performance Bank Dagang Bali 1986
BRI Unit Desa 1986 Loans outstanding(Rp billion) lumber of loans outstanding/ guaranteed ('DM) Percentage of villages serviced (S)
Arrears/loansoutstanding(2) (X) to. of debtors In arrears/debtors Ratio of interest income/loans outstanding(2) loans Savings/outstanding Operattonalexpenses/ (2) loans outstanding worth (2) Net profits/net worth Net savings/net Number of units
313
25.3
Secondary banks Bank Pasars Private banks Total 1986 /c 1986 193
_
-
-
I6
-
-
-
-
28.0 0.29 16.2/a 15.7 1.35 2,272
0.4
7.0Lb
5.1 -
-
33.5 1.47 4.8
23.4/b 1.07b 3.67-;
22.5 1.11 2.9
26.7 9.6
25.2/b
21.8 8.9 122
7.47E
t
175
for bad loans. /a Does not tnclude proviston BRI sa ple of 26 Bank Pasar for First Quarter 1986. C9 BRI sample of 10 private Bank Pasar. 7d Sample of 10 BKD for year 1984. income from BKK sinus to After deductingnet subsidy of BPD (BPO operational are the same. since loan conditions Estimatedfrom BoR Statisttes gF aegls. Based on 11 model KUD under Dutch Government
Institutions
of Rural Financial
1,198 4.3 10.5
SECTORREVIEW
Vll-age BKD W 1984
Banks KPi W. Java
20.6
Pawnshops 42
4.96
m 1985 C. Java 11.9
Nonbank R1ns LPN URK 1985 1986 W. Sam. e. Java
LPK 1986 V. Java
2.5
1.2
0.95
14
398
38
14.0
-
-
31.0
13.0
18.0
-
-
16.0
20.0
-
-
34.0
41.0
42.0 33.7
26.0 0.18 10.4
26.0/f 0.29 15.0
8.3
30.0/ 0.35 497
-
-
-
-
6R -
34.3/t
62
30.0
0.27 MMS970
13.007dw 37.01
~-:6 3.S64
-
23-7 0.82 217
16,500
-
479
2.8 _
1.067
-
32.0
26.0 0.45 -
250
-
Kw//& 198V 0.36 4 -
37.0 -
-
29.0 0.17 -
V0.O 0.69 90
21.1 0.26 23.00 -
1.02 -
7n
operational
expenses)
wbich amaounts to 1.72 of the net worth.
I.!
35 -
ANNEX 3 Table 1
INDONESIA RURAL CREDITSECTORREVIEW ExternallyAssistedTree Crop Projects: CreditComponent Loan Amount,ProjectCost and Smallholder (US$ million)
Source/project IBRD NES I NES II NES III NES IV NES V NES VI NES VII SRDP I SCDP NES Sugar SRDP II Subtotal CDC Cofinanced with IBRD CDC-NESVI CDC-NESVII CDC-SRDPII Subtotal SFD Cofinanced with IBRD NEs sugar Subtotal ADB "-MS Besitang NES Cotton NECPP NES Oil palm Subtotal
Smallholder % distri- Total projLoan creditcomponent amount bution ect cost
65.00 50.50 92.00 30.00 134.00 55.50 138.90 27.00 25.00 79.20 131.00 828.10
73.11
134.00 79.60 152.50 64.50 268.00 118.70 244.00 70.50 95.20 130.20 221.00
35.5 81.5 50.2 35.0 159.7 77.8 198.0 69.1 93.8 5.2 190.9
1,578.20
996.7
38.70 37.70 105.60 95.00
7.9 19.9 105.6 31.2
277.0
164.6
28.00 30.00 20.00 78.00
6.89
9.35 9.35
0.33
21.00 23.00 63*00 57.00 164.00
14.88
KFW
"--1FRSB NES Ophir Subtotal Total
22.00 31.30 53.30
4.71
1,132.75 100.00
29.30 63.00
29.3 32.6
92.30
61.9
1,947.50
1,223.2
ANNEX 3 Table 2
- 36 -
INDONESIA Rl'RALCREDIT SECTORREVIEW
Loan Approvals,Arrears and Outstanding- KIK/KMKP (No. in thousands,Rp in billions)
KIK No.
Approvals KMKP Rp Rp No.
Rp
Outstandings KMKP KIK Z growth % growth Rp
1974
9.6
15.3
14.5
15.5
13.0
1975
7.1
12.8
9.6
13*2
22.0
69.2
19.0
1976
11.2
21.5
142.0
38.4
36.0
63.6
1977
11.9
24.6
156.2
47.9
50.0
1978
15.2
31.6
98.1
62.2
1979
17.1
57.3
223.5
1980
42.4
150.9
1981
35.0
1982 1983 1984 1985 1986
-
13.0
-
Growth rate in amount of loan approvals KMKP RIK
(X) -
-
-
-
46.2
-16.3
-14.8
41.0
115.8
68.0
190.9
38.9
62.0
51.2
14.4
24.7
65.0
30.0
84.0
35.5
28.5
29.9
127.3
99.0
32.3
154.0
83.3
81.3
104.7
245.8
264.6
210.0
112.1
321.0
108.4
163.4
107.9
147.0
277.0
351.0
353.0
68.0
647.0
100.5
-2.6
32.7
26.6
130.1
97.5
303.2
405.0
14.7
803.0
24.1
-11.5
-14.0
16.0
84.7
78.7
259.9
393.3
-3.0
856.0
6.6
-35.0
-14.0
57.4
39.5 169.9 336.~
928.0
8.4
-32.0 -35.0
90.9
83.0
36.3
24.1 124.5
8.5 12.5 4.7
398.9
337.6 -
-14.0 0.5 -
885.0
-4.6
-
-
58.4 -
134.8 -
~~ 37
~~~~~~
ANNEX 3 ~Tabl 3
INDONESIA RURALCREDITSECTORREVIEW KUPEDESLendingProgram (AmountsIn Kp 31111on) No. of loans 1984: Jan Feb Mar Apr May Jun -Jul Aug Sep Oct Nov DeC Total 1984 1985: Jan Feb Mar Apr may Jun
-
Jul
Aug Sep Oct Nov DeC Total 1985 1986: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Total 1986 TOTAL GRAND
Amount loaned Average Total loans No. of borrowerswith duringperiod loan size outstanding loans outstanding
11,848 33,795 65,400 66,331 60,645 64,300 34,516 49,728 52,913 68,032 *75,429 56,476
2,905 10,425 16,501 16,803 16,443 18,009 9,577 13,720 14,352 15,900 18,592 18,036
0.245189 0.308478 0.252309 0.253320 0.271135 0.280078 0.277546 0.275901 0.271238 0.233714 0.246483 0.319357
639.403
171,263
0.267848
67,978 78,656 76,693 85,284 94,116 71,636 70,577 81,518 83,247 95,422 99,945 86,891
19,337 24,348 25,449 28,956 32,086 25,932 25,465 28,271 28,966 32,142 35,929 31,956
0.284460 0.309550 0.331830 0.339524 0.340920 0.361997 0.360812 0.346807 0.347952 0.336841 0.359488 0.367771
991,963
338,837
0.341582
94,149 102,899 93,362 101,251 112,644 67,804 93,385 91,037 97,827 99,596
33,136 38,329 37,818 41,165 46,734 28,549 37,641 38,836 43,168 45,764
0.351953 0.372491 0.405068 0.406564 0.414882 0.421052 0.403073 0.426596 0.441269 0.459496
953.954
391,140
0.410020
2,585,320
901,240
0.348599
2,917 13,472 29,621 44,492 57,817 71,584 75,369 82,645 88,957 95,526 103,960 111,063
13,104 57,447 161,406 224,519 296,783 359,981 398,974 450,553 498,277 533,971 598,521 640,746
118,772 131,129 142,769 157,076 171,906 180,140 186,215 194,058 200,281 209,028 219,658 228,964
676,646 709,395 743,722 773,909 819,346 854,029 883,584 909,064 931,510 959,545 1,000,705 1,034,532
237,414 250,196 260,071 270,407 285,978 284,944 290,356 297,071 302,517 312,823
1,059,729 1,095,161 1,116,112 1,129,054 1,150,775 1,163,891 1,176,839 1,183,037 1,191,722 1,198,455
-38-
ANNEX 3 Table 4
INDONESIA RURALCREDITSECTORREVIEW BadanKreditKecamatanLoan Types,Maturityand In#-erest Rates
Loan type
Nominal ComrTotal Effective Interest monthly pulsory interest monthly rate for interest savings & savings interest Maturity period rate rate rate rate
Hlarian (daily)
22 days
3.5
4.8
6.5
10.0
10.8
Pasaran(every5 days)
60 days
8.0
4.0
12.0
20.0
6.9
Minguan(weekly)
12 weeks
10.0
3.6
10.0
20.0
6.9
Bulanan(monthly)
3 months
10.0
3.3
10.0
20.0
5.3
Lapanan(every35 days)
175 days
20.0
3.4
20.0
40.0
5.6
Musiman(seasonal)
6 months
12.0
2.0
10.0
22.0
2.2
Source: BPD,CentralJava.
~~~~~~~ANNE 3
39 -
Table 5
INDONESIA RURALCREDITSECTORREVIEW Badan Kredlt Kecamatan Lending Program
No. of units
No. of Growth loans in no. Growth Average during of loans Amount in amount size year annually loaned loaned of loan (X) (Rp mln) (%) (Rp)
1972
200
119,870
-
1973
350
277,860
131.80
1974
432
377,059
1975
465
1976
Cumulative no. of loans
CumuTotal lative loans amount outloaned standing - (Rp million)-
-
3,692
119,870
443
213
1,179
166.14
4,241
397,730
1,622
498
35.70
2,032
72.35
5,390
774,789
3,654
858
360,352
-4.43
2,480
22.05
6,881
1,135,141
6,134
1,096
486
304,909
-15.39
2,632
6.13
8,632
1,440,050
8,766
1,306
1977
486
232,044
-23.90
2,726
3.57
11,748
1,672,094
11,492
1,420
1978
486
212,988
-8.21
2,994
9.83
14,059
1,885,082
14,486
1,581
1979
486
213,746
0.36
3,597
20.14
16,829
2,098,828
18,083
1,886
1980
486
212,391
-0.63
5,437
51.15
25,598
2,311,219
23,520
2,508
1981
486
267,933
26.15
7,70,
41.71
28,758
2,579,152
31,225
3,320
1982
486
311,455
16.24
10,893
41.38
34,973
2,890,607
42,118
4,818
1983
491
385,196
23.68
15,630
43.49
40,576
3,275,803
57,748
6,598
1984
496
475,468
23.44
22,115
41.49
46,512
3,751,271
79,863
9,421
1985
496
533,578
12.22
26,993
22.06
50,590
4,284,849
106,856
11,943
1986
497
398,584
-25.30
22,642
-16.12
56,A06
4,683,433
129,498
14,097
443
ANNEX 3 Table 6
INDONESIA RURAL CREDIT SECTOR REVIEW
Credit Program Outreach
No. of loans/borrowers/ participants('000) Cumulative since inception 1985
Bank-assistedtree crop projects /a
Average loan size (Rp)
105
-
553,000 - 4.5 million
KIK/KMKP
1,707
96
5.2 - 7.7 million
KUPEDES
2,585
942
459,496
BKK
4,683
534
56,806
Total
9,080
/a Number of participatingsmallholders.
41-
ANNEX 3 Table 7
INDONESIA RURAL CREDIT SECTOR REVIEW
Analysis of KIK Arrears - January 1985 (Amounts in Rp million)
Loans affected by arrears Amount X
Arrears Amount
Over 3-6 months
22,487
11.8
2,008
2
Over 6-12 months
33,543
17.5
7,513
7.6
Over 12-24 months
58,919
30.8
28,885
29.2
More than 2 years
76,406
39.9
60,464
61.2
191,355
100.0
98,870
100.0
Total
- 42 -
ANNEX 3 Table 8
INDONESIA RURALCREDIT SECTORREVIEW BRI KIK/KMKP Arrears - August 1986 (Amounts in Rp million)
Loans outstanding Number Amount
KIK KMKP
Arrears Number Amount
Arrears ratio (Z) On number On amount
53,961
113,290
43,516
57,230
80.64
50.52
227,311
442,402
137,024
133,258
60.28
30.12
Total 281,272
555,692
180,540
190,488
64.19
34.28
Source: BRI.
- 43 -
ANNEX 3 Table 9
INDONESIA RURALCREDIT SECTORREVIEW Claims on ASKRINDOInsurance (Amount in Rp million)
Year
Number of claims
Amount of claims
1973 and 1974
69
27.4
1975
166
15.3
1976
12,064
894.9
1977
6,403
2,062.5
1978
6,183
2,445.8
1979
8,030
4,682.1
1980
14,644
6,316.4
1981
15,614
8,599.7
1982
18,173
20,412.3
1983
40,523
58,966.7
1984
70,874
99,288.9
1985
72,816
101,432.6
265,659
305,144.7
Total
Source:
ASKRINDO*
- 44 -
ANNEX 3 Table 10
INDONESIA RURALCREDITSECTORREVIEW KUPEDESDefaultRatios (Rp million)
Loss ratio Amount Amount Amount Loans out- Long- Short- Default loaned repaid overdue standing term /a term /b ratio /c 1984
171,263 60,200
597
111,063
0.98
1.36
0.54
1985
510,100 281,136
4,856
228,964
1.70
3.02
2.12
1986
948,196 623,291 14,042 324,905
2.20
2.94
4.32
/a Totaloverduepaymentsto totalpaymentsdue. /b Paymentsmissedin a month to paymentsdue in thatmonth. ,c Overduepaymentsto totalloansoutstanding.
INDONESIA RURAL CREDIT SECTOR REVIEW Badan Kredit Kec*aatan Loss
Cum.
Repay-
Amount
amount
ment
Amount
loaned
loaned
due
repaid repaid overdue overdue outst. outst. (Rp million) ---
-…-
1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986
Ratios
443 443 1,179 1,622 2,032 3,654 2,480 6,134 2,632 8,766 2,726 11,492 2,994 14,486 3,597 18,083 5,437 23,520 7,705 31,225 10,893 42,118 15,630 57,748 22,115 79,863 26,993 106,856 22,642 129,498
261 953 1,763 2,306 2,504 2,647 2,846 3,371 4,922 7,008 9,527 14,043 19,651 25,015 20,658
Cum.
amount
230 230 894 1,124 1,672 2,796 2,242 5,038 2,422 7,460 2,612 10,072 2,833 12,905 3,292 16,197 4,815 21,012 6,893 27,905 9,395 37,300 13,850 51,150 19,292 70,442 24,471 94,913 20,488 115,401
Incr.
amount
31 59 91 64 82 35 13 79 107 115 132 193 359 544 170
Total
Incr.
Total
amount
amount
loans
31 90 181 245 327 362 375 454 561 676 808 1,001 1,360 1,904 2,074
Long Short term/ term/
bad
bad
debt
debt
---
213 213 11.88 285 498 7.41 360 858 6.08 238 1,096 4.64 210 1,306 4.20 114 1,420 3.47 161 1,581 2.82 305 1,886 2.73 622 2,508 2.60 812 3,320 2.37 1,498 4,818 2.12 1,780 6,598 1.92 2,823 9,421 1.89 2,522 11,943 1.97 2,154 14,097 1.77
-
Default rate
(%)-
11.88 6.19 5.16 2.78 3.27 1.32 0.46 2.34 2.17 1.64 1.39 1.37 1.83 2.17 0.82
14.55 18.07 21.10 22.35 25.04 25.49 23.72 24.07 22.37 20.36 16.77 15.17 14.44 15.94 14.71 941
ANNEX 3 Table 12
- 46 -
INDONESIA RURALCREDITSECTORREVIEW Sources of Funds of Selected
Credit
Schemes
(%)
External Internalsources Total Total Equity and sources World retained Savings external internal GOI/BI Bank earnings deposits sources sources Tree Crops NES projects
100
0
6
94
6
65
7
93
7
55
25
20
80
20
KUPEDES
53
-
19
28
53
47
BKK
22/a
-
64
14
22
78
100
-
SRDP I and SCDP
24
70
SRDP II
28
KIK/KMKP
.a
Borrowings from BPD.
-
-
- 47 -
ANNEX 3 Table 13
INDONESIA RURAL CREDITSECTOR REVIEW Cost of Financial
Intermediation
Operating
Nominal lending rates (2 p.a.)
Effective lending Cost of rates funtds (2 p.a.) (X)
NES I-VI PhaseI PhaseII PhaseIII
0.0 10.5 10.5
6.4
0.no
NES VII PhaseI PhaseII PhaseIII
0.0 12.0 12.0
7.7
0.no
SRDP I -PhaeI PhaseII PhaseIII
0.0 12.0 12.0
6.5
1.42
3.02/b
0.0 12.0 12.0
Intermediation margin (X)
expensest loans outstanding (2)
Handlingfee 12 of loansoutstanding 6 2.52 of loansunder repayment
Intsirest rate subsidy to borrower (2 p.a.)
n.e.
0
n.a.
0
5.08
n.a.
PhaseI - 14.5 PhasesII & III - 3.5
1.62
1.38
n.a.
Phase I - 3.85 Phase II - 7.35 PhaseIII - 1.35
6.5
8.30
-1.8
n.a.
PhaseI a 14.5 PhasesII & III - 3.5
12X for 8 years., 4-yeargraceperiod
12.0
7.20
6.3jd
n.a.
0
12Xfor 4 years, 1-yeargraceperiod
12.0
7.20
6.31/d
n.a.
0
22.0 32.0
5.80 12.20
14.2 19.8
26.0 c 129.6 82.8 82.8 63.6 67.2 26.4
12.20
13.8 117.4 70.6 70.6 51.4 55.0 14.2
SCDP
PhaseI & II PhaseIII 8RDP II PhaseI PhaseII PhaseIII RIK/KMKP K1K KMKP
0.0 6.0
RUPEDES Basedon orig.ant. Investment 12 per month Workingcapital 1.5Zper month BRK /a DaT1Ty Every5 days Weekly Monthly Every35 days Seasonal
57.6 48.0 43.2 39.6 40.8 24.0
/a Includesforcedsavingsfesturein the estimation of effective rate. /b 20 yearswith 8-yeargraceperiod. /c Ratiosof actualinterestincometo loansoutstanding In 1985. /d Including 1.52 p.a.GOI subsidyto the banks.
1f.2
0
10.4
0
INDONESIA
RURALCREDIT SECTORREVIEW FinancialAssets Available to Savers in Indonesia Rp minimum
Maturity
Rates
of Return 'taxability Withdrawal
0 to St p.a. 12 to 15% p.a. 12 to 151 p.a. 9% p.a. 0 to 12% p.a.
500,000 250 50 250 1,000
on demand on demand on demand 12 months on demand
1,000 /a 1,1M
1 to 20 yrs loan period on demand
Time deposits
100,000
I to 24 no
10 to 17% p.a.
Cert. of deposits
100,000
I to 24 no.
10 to 17.4% p.a.
5 years n.a. n.a. n.a.
15.75 to 16.52 15.75 to 16.5% 17% p.a. 13 to 14% p.a.
Demand deposits TABANASgeneral TABANASspecial TASKA SINFEDES savings Contractual Compulsory savings Other savings
Bonds (b) DanareksaIncome (b) Danareksageneral (b) Shares (b)
1 million 1 million I million I million
12 to 15% p.a. 0 to 10% p.a. 12 to 212 p.a.
Availability
Other features
Cheque writing All banks anytime Lottery { State banks { per no. eI guaranteed ( BRI unlt desas B I per mo. { No tax investigation Post offices penaltv Lottery aRI unit desas anytime Gov't bank protected Some lotteries Some banks emergencies Exempt Condition of loan Rural lenders /a Exempt Some lotteries Some banks anytime Exempt Secondary banks All banks emergencies Exempt Secondarybanks 8I guaranteed Some banks resalable Exempt No tax investigatlon InterestA capitalrisk Varles Ac resalable Interest& capitalrisk resalable Taxahle Dividend& capitalrisk resalable Taxable Dividend& cavitalrisk resalable Taxable
Taxable Exempt Exempt Exempt Exempt
/a The minimuma'-ountdependson the size of the borrower'sloan. Most require10% of the initialloan amount be wetd on deposituntil In some cases,mainly cooperatives,not all the funds are then withdrawable. Interestmay o may not the loan Is repaid in full. be paid on these deposits. /b The minimumamount varieswith each Investment. Figuresbased on an averagesecurityprice of Rp 10,000 and a minimumtrading lot size of 100 shares or certificates. It could be possibleto purchaseone share but it would not be easy to resell. The first bond issuewas fully tax exempt,and the second and third issueswere subjectonly to a flat 10% Interestwithholding Tc tax. Interestpaid on all subsequentissues have been fully taxable.
@
X
INDONESIA RURALCREDIT SECTORREVIEW
Indonesian Rsak Deposits.by Type.1981-86 'I81 Rp bln Demanddeposits/b
1982
1983
1984 Rp bln
IRp bMn
384.20
/c
0.20
SIIPROES /d
-
Othersavings/e
693.10
4.84
445.90
-
3.08
0.30
-
-
6.74
994.50
540.70
4.50
935.60
-
0.50
-
0.40
-
98la
I
Rp bHn
Is Xg982
-
-
0.30
-
5.13
4.55 0.02
1,094.00 13.79
691.00
7.933.60 100.00 8.776.10
4.89
0.40
-
15.54
0.07
3,212.80 20.52 5,107.80 24.84 5,507.30 25.78
1,406.00 16.02 2,289.00 19.05 2,944.00 18.82 3,378.00 16.43
11.52
1,044.90
1983 7.00
7.87 100.00
778.00 12.013.20
6.48
t,397.00
100.00
15,643.20
8.93
1,884.00
100.00 20.562.70
9.16 100.00
3,369.00 15.77 1,849.00 21,366.70
50.00 -
1.00 15.00
33.00 -
65.00
25.00 -
19A6
15.00 -3.00 40.00 -20.00
12.00 -
1,600.00 203.00
58.00
42.00
13.00
1
20.00 134.00 24.00
59.00
7.82
4P
29.00
15.00
-1.00
13.00 80.00
35.00
-2.00
37.00
31.00
8.65 -24.00 100.00
Growth rate 1984 1985
16.00 21.00 24.00
11.33 1,641.70 13.67 2,602.00 16.63 3,691.77 17.95 4.174.56 19.54 43.00
Foreign currency deposits
914.00
4.28
0.40
1,001.10 12.62 1,104.40 12.58 2,586.40 21.53
Governmentdeposits
669.60
-
Time depositsIf
Total Deposits
18 Rpbln J
3,847.00 48.49 4,134.00 47.11 4,177.00 34.77 4,817.00 30.79 5.560.00 27.04 5,406.00 25.30
TAANAS /c TASA
Rpbln
X
11.00
63.00
29.00
30.00
4.00
/a Figures are for end of June 1986. b
Demanddeposits
e
Inetudes
all
with deposit
moneybanks.
commercial and savings bank deposits.
/d Deposits with SRI Unit Deaes. Net of TASANAS,TASKA. SINPEDES and state tf Time deposits Sources
bank time deposits
subtracted from deposit
n state banks only leas government and nonresident
Sank Indonesisa, Indonesia Ftnancial
Statistics,
moneybank time and savings deposits
plus savisgs banks savings.
deposits.
October1986.
II!9
- 50 -
ANNEX 4 Table 3
INDONESIA RURAL CREDIT SECTOR REVIEW
Distributionof BI Liquidity Credits by Bank
March 1983 March % distribuRp bln tion Rp bln
State commercial banks 3,550
1984 March % distribution Rp bln
1985 March % distribution Rp bln
1986 % distribution
80.0
3,565
75.0
5,916
78.0
6,640
77.4
BAPINDO
326
7.3
445
9.4
510
6.7
564
6.6
National Savings Bank
245
5.5
398
8.4
561
7.4
767
8.9
Regional development banks
110
2.5
117
2.7
138
1.8
158
1.8
other banks
208
4.7
232
4.8
463
6.1
455
5.3
4,439
100.0
4,757
100.0
7,588
100.0
8,584
100.0
Total
INDOlISIA RURALCUEDIT StCTOR REVw Iboen's
Progr*m or lnstitution
2 of loans to noavI (by no. of loans)
.
Approximate ave. loan size (in Rp)
80X
Pawn shop
in Credit
Participation
5.000
Proaram
Collateral required Y
and institutions Effecttve monthly Interest rate 3-42
Level of operation Kabupaten
Sources at one Gomernment Pawn Observatlons Shop, Pandaan, E. Java; Ministry of
Finganc Credit to Goldmark and Rosegard, euiTlAITsessEntrepre Indonesian went of cue aaan HreMPt leeauatan D.C. Developwasnington, lypgrcpu. 1983; BMMrecords. 3iietAlternatives.
N
571
n.a.
N
291
736.000
Y
2.5-3.0S
Provincial city
Limted
251 loans to woen women 75 of coseineus
330,000
Y
1.7-2.62
Keeaatan
CPIS (Center Iuplemetation
23.41 30.RX) (transport 30.51) (other services
5,000
Y
Kabupaten
CPHU "Economic Impact of UIKRW Bank (SEOP I and II)" Jakarta: 1966. Indonesia.
approximately population (Denpasar Largely urban clientele is not In rural areas. Much of KIK/IWCP lending
150,000).
Bank Pasar
Usaha takyat
(Denpasar)
KUPEDES (SRI Unlt KEI/UlKP (state banks) lb
/a
Kecamatanl vlllage
55,000
KUMI (Kredit East Java
7t
2.G-4.8S
602
Keeanatan)
MMK(Sadan Kredit Java Central
/a
Desas)
and private
Kecil)
3.31
3-4S
Village
Dirk van Book, 14; Evaluation. records. sauple
1USEand Iadura IUSEIsPD Java
from Dank Pasar for Policy Studles),
and Jakarta
Timor
books
L
- 52 -
ANNEX 5 Table 2
INDONESIA RURALCREDITSECTORREVIEW Characteristics of Loansby EconomicClassand Sex of Borrowers: West Java Studyof Three Villages
No. of loans Women Low Medium
% of loans % of used for loansin consumption cash
11
63.6
27.2
20
60
15
High
0
All
31
61.2
Men Low
25
64
35
31.4
High
5
All
65
Medium
-
Average loan amount (Rp)
39,555
281
32,325
136.5
-
19.4
Averageannual effectiverate (Weightedby no. of loans)
-
34,510
187.8
68/a
24,788
34.7
65.7/a
110,616
151.5
0
80
840,000
58.8
41.5
67.7
161,989
99.6
/a Includesone loan in gold. Source: Jensen,Karl F. "RuralCreditin Banten,W. Java: A. Shapshot, "1986 , mimeo.
- 53
ANNEX 5 Table 3
INDONESIA RURALCREDITSECTORREVIEW Self-Employed and Employersin RuralAreas by Sex and IndustryL-ruX ---
Men Women Total Womenas % of total
00-0)-
Agriculture
Secondary
Tertiary
12,566
1,317
3,054
16,937
3,648
842
2,196
6,686
16,214
2,159
5,250
23,623
72.5
39.0
41.8
Source: 1980 Censusof Population, Biro Pusat Statistik,Jakarta.
Total
28.3
-54
ANNEX 6 Page 1
FINANCIALINSTITUTIONS IN INDONESIA 1. Bank of Indonesia(BI). The financialsystemin Indonesiaoperates under the supervision of BI, the centralbank. BI howeveris not exclusively a centralbank; it also operatesas a governmentbank, receivingfunds from centralgovernment, and depositsfrom state banks,and othergovernmentor privatenonbankdepositorsand lends these resourcesthroughits liquidity loans to banks. At the end of 1985,BI fundsamountedto 39% of all bank credit. 2. StateCommercialBanks. There are five largebanks that control about 73% of the assetsof commercialand development banks. Althoughall five banksoperateas commercialbanks,they have specificareas of responsibility: Bank Bumi Daya - estate financing; Bank Dagang Negara - trade
financing; Bank Expor ImporIndonesia- export credits;Bank NegaraIndonesia 1946 - industrialfinancing; and Bank Rakyat Indonesia - credit for agricul-
ture,fisheriesand cooperatives.The government(BI)subsidizedcredit programsflow throughthe statebanks accordingto theirareas of specialization.In additionthe governmentoperatesa NationalSavingsBank that collectsdepositsthrough14 branchofficesand approximately 2,700 of Indonesia's 3,000post offices. 3. PrivateBanks. Privatebanks accountfor 23Z of all commercialand development bank assets. There are 10 nationalbanksauthorizedfor foreign exchangetransactions, and 11 foreignbanks. Additionally there are 59 small and medium-sized banks that operateat the localprovinciallevel. BI restrictstheirexpansiondependingon theirabilityor willingnessto merge with otherbanks. No bank licensesare being grantedunder the present bankinglaw. With few exceptions,privatebanks operatein urban centersat the provincial level,althoughthere is some bank activityat the district level. 4. Development Banks. These are 27 regionaldevelopmentbanks (BPDs) ownedby the provincialgovernments, one publicnationaldevelopmentbank, and one privatenationaldevelopment bank. These banks specializein project financing.In some regionsthey operateas coordinators and supervisors of BKK-typecreditnetworks. 5. Non-bankFinancialInstitutions.Of the 14 non-bankfinancial institutions, threedeal with developmentfinance,9 with investmentfinance and two with other activities.Their assets,which weve over Rp 2,000billion in June 1986,are comparableto thoseof the foreignbanks (7% of bank assets). Most operatein Jakartaand are not involvedin rural lending. 6. Pawnshop. Thereare 479 government-run pawnshopswhich operateat the districtlevel. They lend amountsrangingfrom Rp 2,500 to Rp 300,000, againstthe securityof householdgoods such as bicyclesand TVs or valuables such as gold and jewelry. For loansunder Rp 20,000the interestin 3% p.a. with maturitiesup to six months;largerloansare given at 4% with up to sevenmonths. Loan amountsare 84% and 89% of the value of the collateral. The borrowersare farmers(36%),fishermen(6%),rural traders(24%)and
- 55
~
ANNEX6 Page 2
others (34Z). Althoughpawnshopsare very active (in FY85/86they processed 16.5millionloans),theirtotal assetswere only Rp 61.4 billionin June 1986,barely0.2X of totalassetsof the moneybanks. Pawnshopsare managed directlyby the Departmentof DomesticMonetaryAffairsof the Ministryof Financeand fundedby BI and the centralgovernmentbudget. They do not mobilizesavings. 7. Petty-Trader Banks (BankPasar). These are market banks,specializing in trade loans. Of the 175 Bank Pasars,about 56% are private(99) mostly ownedby commercialbanks, 10% are cooperatives (17)and the remaining34X are public(59). They are limitedto one branchand may receivedemand or time deposits,with a maximumperiodof threemonths. Lendinginterestrates are subjectto a ceilingof 5% per month and loansare boundto a 12 monthmaximum maturity. However,the currentmarketrate for Bank Pasarlendingis only 3.3-4%per month. The three-monthlimiton depositsis not honored,and the bankersenter agreementsto extenddepositsto periodsup to one year. Borrowersmust make a compensation depositof 5% of the loan which is placed in a specialsavingsaccountand receivesno interest. Despitethe 12-month maximummaturity,Bank Pasarmay lend for longertermsby rollingover the facility. Loans are basedon collateralwith a minimumvalue of 150% of the loan amount. This collateralmay be tradinginventory,fixedassets,such as a market stall,or even durableconsumergoods. The Bank Pasarsare supervised and auditedonce a year by BRI underdelegationfrom BI. This supervision usuallyconcentrates on the accountingsystemand proceduresof the Bank Pasar. 8. Villageand Paddy Banks. Thereare 3,338 villagecredit institutions (BKD - Badan KreditDesa), an institution inheritedfrom the Dutch government, with survivinghealthyremnantsin some regions(EastJava) but ailingin others. There are also 2,065paddy banks (lumbungdesa), 26 village banks (BankDesa) of which 23 are private,and 217 productionbanks (BKPD-Bank KaryaProduksiDesa). With the exceptionof the BKPD, these institutions are locatedat the village(desa)level and are supervisedby BRI on behalfof BI. The BKPD are basedat the subdistrict(kecamatan) level,and operate weeklyposts at the desa level to conductcredittransactions.The BKDs, at the end of 1985,had outstandingloans amountingto Rp 19 billion,only 0.08Z of the totalcreditmarket. They are operatedby the villagechief, and have two staffmembers(komisi),a cashierand an accountantwho earn salariesamountingto 2.5% of the valueof the loans disbursed. The resources of the BKD are kept with BRI in a giro (demanddeposit)accountthat earns 1.6% interestper year. Loans are grantedfor trader'sworkingcapitalup to 10-weekperiods,at 23% for the 10-weekperiod (whichimpliesa 194% p.a. effectiveinterestrate). BKDs operateout of the villagepublicbuildingone day per week and are ownedby the localgovernments.They reportmonthlyto the BRI branches. Paddybanks are similarbut are also authorizedto lend rice in kind. 9. BRI-UnitDesa. At the end of December1986 therewere 2,272unit desasand 1,226villagepostsoperatedby BRI. This systemoriginatedunder the subsidizedrural creditprogram(BIMAS). When theseprogramswere phased out, BRI undertookthe pioneeringstep to offermore standardbankingservices at the kecamatanlevel. Throughthe unit desa system,BRI operatesprograms
- 56 -
ANNEX 6 Page 3
for rural credit(KUPEDES)and mobilization of savings(SIMPEDES)aimed at a segmentof the market that is not being servedby the largefinancialinstitutions. At end 1986,loans outstandingof the unit desa systemwere Rp 325.0billion,and savingswere Rp 165 billion. Given the broad coverage of the unit desa networkand the institutional strengthderivedfrom its dependenceon a largenation-widebank, it will undoubtedly have a crucial role in the development of rural financialmarkets,and serveas a model for the expansionof the bankingsystemto the rural sectors. 10. BKK-typeinstitution.Since 1972,the provincialgovernmenthas been operatingsubdistrict credit institutions (BKK-BadanKrtditKecamatan)in CentralJava throughthe regionaldevelopment banks (BPDs-BankPembangunan Daerah). Similarinstitutions have been established in East Java (KURK-Kredit UrusahanRakyatKecil),West Sumatra(LPN-Lumbang PitihNegara),Bali (LPDLumbangPerkreditan Desa),and in West Java (LPK-Lumbang Perkreditan Kecamatan).USAID has providedtechnicalassistanceto the BPD for the development and expansionof this program. Under theseprograms,the loan typesare usuallybased on the maturityof the loan and has a forcedsavings provision. Effectiveinterestrates rangedfrom 29% p.a. for a 48-weekKURK loan and 1302p.a. for a 12-weekBKK loan. The provincialgovernmentusually providethe capitalfor these institutions and additionalfunds are secured from governmentfundsor soft loansfrom the Ministryof Finance,throughBI, or the BPDs. The BKK-typeinstitution are supervisedby a representatives of the provincialgovernment, and at the technicallevel,by the BPD.. In general,localpeopleidentifywith these institution and their loyaltyis seenas a factorthat may help containbad debts and increasesavings,given propermanagementscheme. 11. Rural CreditCooperative(KUDs). The KUD (KoperasiUnit Desa) is the basicunit of the rural cooperative system. Over 6,000KUDs operateat the subdistrict levelunder a provincialcooperative(PUSKUD-Pusat Koperasi Unit Desa) that offerstechnicalservicesthroughcenters(PKK-PusatKelayanah Koperasi).The purposesof KUD are: (a) to organizemembersfor financial self-helpthroughsavingsand loan (Simpam-pinjam); (b) to providecommercial marketsto member'sproducts;and (c) to buy inputsand materialsfor members. The Departmentof Cooperatives statedthat 36.7%of ruralfamilies were affiliatedin 1983while the CentralBureauof Statisticsplacesthe coverageat 13.3%. In eithercase, KUDs have largemembershipsorganizedinto groupsof 30-50members. The servicesof the cooperative are primarily offeredto its members. The usual staff is five peoplebut may go as high as ten. Most of the staffare employedby the government. 12. BRI providesthe resourcesfor the creditfunds of KUDs and is also responsible for supervision and auditing. The loansof BRI to KUDs are funded with BI resources(100% for food procurement loans to KUDs) and other governmentsources(90% of the loans to KUDs for other programs).Loans from BRI to KUDs are insuredby the Cooperative DevelopmentFund Corporation(PPKK) for about 90% of theirvalue. Most of the creditprogramsrun by the KUDs are conceivedat the centralgovernmentand imposedon the KUDs, as is the case of food procurementfor BULOGor cooperative creditfor buyingof dairy cattle. Theseprogramshave very high arrears. In October1986 BRI estimatedthat Rp 72.2 billionof their Rp 289.2billionoutstanding loans to KUDs are bad
- 57 -
ANNEX 6 Page 4
debtsthat must be coveredby PPKK. Fundsobtainedfrom BI at 3% p.a. are lent by BRI to KUDs at 9X p.a..which are then onlentat 12% p.a. to KUD members. 13. Thereare three classesof cooperatives basedon performance.Class "A" KUDs which are self-sufficient and financiallysoundnumberonly 922. Class "B" KUDs,which are consideredsolvent,but are deficientin termsof profitability or management,and are dependenton governmentfundsnumber 2,930. Also, there are 1,272class C KUDs, which cannotbe considered solvent,but are not entirelyhopeless,and 1,658unclassified KUDs, which may be consideredcandidatesfor dissolution or liquidation.The savingsand loan programsof the KUDs (simpam-pinjam) had loans outstanding at the end of 1985 of Rp 28.2 billion. Their governmentsponsoredcreditprogramfor very small borrowers(KCK-Kredit CandakKulak)had loansoutstandingof Rp 14.3 billion in September1986 and arrearswere 291 of loansoutstanding.The total loans of KUDs fundedby BRI exceptthe simpan-pinjam, amountedto Rp 266 billionat the end of 1985,and arrearswere 22%. InformalCreditMarkets 14. Informalprivatecreditmechanismsoperatingin Indonesiainclude: (a) money lenders,(b) savingsand loansassociations; (c) trade-linked lending;(d) land relatedcredit;and (e) labor relatedcredit. Institutions and associations of particularinterestare brieflydescribedbelow: 15. Arisan (rotatingsavingand creditassociations).A numberof individuals regularlycontributea fixedamount to a commonfund which is then allocatedas credit to each member in a rotationdeterminedby drawinglots. In Indonesiathe arisanarrangementis commonlycomposedof women who use part of theirhouseholdsavingsto contributeto an arisan. The amount can vary from a few thousandrupiahstotal to Rp 100,000each, dependingon the economicstatusof the participants.Arisansare importantelementin the villagesociallife in Indonesiawhere self-help(gotong-royong) traditions are deeplyseated. They are indigenousin origin,flexibleand simplein operation, and capableof evolvinginto valuablelinks with formalbanking institutions.
16. Simpan-Pinjams (savingsand loan associations). Simpan-pinjams are arisansthathave takenon lendingfunctionsbut credit is givenat explicit interestrates and vary accordingto demandat a point in time. Furthermore, lendersand borrowersdo not coincideas in the arisan. Simpan-pinjams can be for a particularpurposedependingupon the activitiesof the village. Thus farmers,tradesmenand cottageindustryoperatorsform simpan-pinjams.One variantof the simpan-pinjams is for emergencies(for example,to defray funeralexpenses). A committeeof villageeldersor other economicleaders administerthe association, in contrastto formalinstitutions that dependon the villageheadmanappointedby the government(lurah). The most significant attributeof theseassociations is that group pressureand communityspirit ensurea degreeof successnot found in the formalarrangements.They are thereforeindigenous,closeat hand and run by the villagesthemselves.The availableevidenceindicatesthatmost villagesdo not have simpan-pinjams, since they requiresophistication, disciplineand organization beyondthat of
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ANNEX 6 Page 5
an arisan. Yet, simpan-pinjams offer good prospectsfor futuregrowthof financialintermediation, given the increasingmonetization of the rural economy,and the need to hold savingsand to apply them profitably.The fast turnoverof funds is an importantsourceof liquidresources. 17. An advancedsimpan-pinjam is the veteransloan fund,Koperasi simpan-pinjam (KOSIPA),found in Java. It lends in the village,but the savingsare generatedin both urban and rural areas. Loans vary in maturity from 4 to 30 days and carry interestratesup to 4-52 a month. KOSIPAagents operatein many locations,thus diversifying the risk by village. One distinguishing featureis that it is externalto the village,but the army's influencein the village(fromwhich the KOSIPAcadre is ultimatelydrawn) ensuresgood organization and ease of collection. 18. Usaha Bersama(self-reliance group). The usaha bersamaarrangement is a step above the simpan-pinjam in the ladderof informalrural financial arrangements.About 300 usaha bersamasare known to exist in Java. In additionto savingand lendingactivities,these arrangements functionas a jointentrepreneurs for production,processingand marketingof products. A uniqueattributeis that creditlimitsare set at a multipleof the savings held by the borrower. Repaymentsratesare high among the usahabersamas, well above90%. Loans are made only to membersand guaranteedby another member,and group pressureis broughtto bear for promptrepayment. 19. The usahabersamaand sinpim-pinjam have come underpressurefrom the Departmentof Cooperatives to registeras KoperasiUnit resas (KUD)but many of theseassociations are resistingin order to keep the voluntary association from becominga bureaucracy and to avoid the regulations which governKUDs. To date they have resistedinspiteof some benefitsof KUD statussuch as an automaticcreditguarantee. 20. Grumpjungan(laborrelatedcredit). Found in Centraland West Java, grumpjungans are groups of landlesslaborerswho had primarilyjoined to negotiatecollectivelabor contractswith landowners.Usuallyeach grumpjungan consistsof about 15 households.Out of the earningsof group activities, at least 15% is saved in a commonfund. These fundsare then used to financeoff-farmactivitiessuch as trade,the productionof household goods,and purchasesof animalsfor improvingthe productivity of joint labor leasingoperations.Grumpjungan are voluntarysavingassociations that permit the use of fundsfor financingworkingcapitalof off-farmactivitiesand investments in animals. In this function,they substitutefor both formaland informalfinancialintermediaries.While as individualstheyare not eligible for formalcredit,they combinea labormarketoperationwith a savings function,which is the basis of the group savingand investmentactivity. This couldbe extendedto collectiveor joint liability.At present,land is the most importantcollateral; thereforethe landlesshave littleaccess to credit. Substitution of jointor group liabilityfor land collateralcould improveaccessto creditfor the landlesspoor.
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SELECTEDSPECIALCREDITPROGRAMS A. WORLD BANK ASSISTEDTREE CROP PROJECTS Background 1. Many of the GOX specialcreditprogramsinvolvetree crops as part program. Some overalltree crop planting/rehabilitation of the Government's to loans amounting with tree crop projectshave been externallyassisted totaling US$828 million, represent over 73Z US$1.1billion. World Bank loans, of the totalwhile the Asian DevelopmentBank providesUS$164millionor 14X. The Commonwealth Development Corporation and the Saudi Fund (SFD), with the World Bank, and KfW (Germanbilateralagency)are the cofinancing other externalfinanciers. The Bank projectsfall under two major schemes,the nucleusestate 2. unit (PMU)systemsof implementa(NES)and projectman4igement and smallholder of both schemeshave been camponents smallholder credit While the tion. through BRI, under the NES scheme BRI acts as a channelingbank implemented and as an executingbank in the PMU projects(SRDPI, SCDP,and SRDP II). The have differencesin the sourceof channelingversusexecutingarrangements affect the incenlocal (nonbank)fundsand risk sharing. These differences in achievingthe goalsof the and effectiveness tivesfor BRI participation project. Objectives The main objectivesof the GOI tree crop projectsinvolvingsmall3. holdershave been to increaseIndonesia'sforeignexchangeearningsfrom tree many of whom cropsand to raisethe incomeand welfareof the srallholders, are poor. GOI uses a handlingbank, BRI, to deliverand collectthe credit throughits extensivepresencein the ruralareas but also to use some of its own resourcesespeciallywhen GOI's resourcesare constrained.It has also been argued that the creditis more efficientfor cost recoverythan taxesor cesses. CreditFeatures of the tree crop projectsare brokeninto three 4. The implementation phases: Phase I is the construction or plantingperiod(about3 years);Phase II is the loan conversionperiod(2-4years);and Phase III, the repayment period. NES Under the NES schemes,the publicenterprise(PTP/PNP)plantsan 5. employedas laborersfor Phase I. At area in blocks,with the smallholders enter into a credit the beginningof Phase II (after3 years)the smallholders agreementwith BRI after they have provisionaltitleto theirtwo hectare by the PTP/PNPduring farms. The agreementincludesall creditexpenditures
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Phase I, and provisional estimatesduringyear four after planting,for oil palm and coconutestablishment and duringyears four and five for rubber establishment.The agreementsare amendedbetweenyear 5 and 6 to includethe actualcredit expenditures to bring the trees to maturity. 6. As a channelingbank,BRI does not have any of its resourcesin theseloans. The fundsare from the Bank (and cofinancing institutions, when applicable), and OI counterpart funds from the budget. Until early 1984 these fundswere channelledthroughBRI to the PTP/PNPs,but sincethen they have been given ("dropped") directlyto the PTP/PNPSby GOI. As mentioned above,BRI's activitiesbeginafter conversion, at which time it is paid a 1% fee of the loan converted.BRI also receives2-1/2Zof the loansactually collected. The Ministryof Financebears 100X of the repaymentrisk. 7. The smallholder loan term and conditionsvary with type of crop and/orproject. The maturityof the loans for rubbervariesfrom 20 years (NES VIII) to 23 years (NESVI); most of the other orojectsare for 21 years. The rubbeV/loan; have a grace periodof six years,exceptunderNES VII with 5 years.- Oil palm loans (NES IV and NES V) are for 17 yearswith 5 years of grace,exceptfcr thoseunder NES VII whichare 20 yearswith 5 years grace. 8. The interestchargedto the smallholders is 0% for the first three years (PhaseI) and 10.51from year 4 (afterconversion) to maturityexcept for loansunderNES VII which bear 12% (Table2). The interestcharged betweenconversionand the repaymentperiodis capitalized and added to the principaland is paid duringthe repaymentperiod. 9. In contrastloansunderprojectsfinancedwithoutexternal assistance(PIR)had shortermaturitiesfor oil palm and coconuts(10 years with 3 years grace). Rubberunder PIR has 10 yearswith 7 years'grace. The smallholder interestratesunder the PIR projectsare higherat 121,but under the old schemethe grace periodinterestwas paid by governmentwho also shouldered 4.51 duringthe repaymentperiod. The smallholder paid no interest for the first 3 years (non-rubber) or 7 years (rubber)and thereafterpaid 7.51 for 7 years (non-rubber) or 13 years (rubber). Under the new schemethe smallholder pays the total121 after conversionwith interestcapitalized betweenthe conversionand repaymentperiod,as in NES projects,exceptthat the interestcharge is higher (apartfrom thoseunderNES VII). 10. BRI activitiesunder the NES projectshave beenminimalto date becauseof the lk of the physicaland, therefore,financialconversionunder almostprojects._ As of November1986,only two of the projectswere shown on BRI'sbooks. They were 387 loansfor aboutRp 1.4 billionunderNES I, and 224 loansfor Rp 1 billionunder NES V. None of these loanswere due for
1/
Grace from paymentof interestand principal.
2/
The conversionissuesare detailedin a separatepaper,CreditConversion Issuesin NES Projects,AEPA4.
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repaymentsince they had been recentlyconverted.About Rp 7 millionin handlingfees was due BRI from MOF on NES, but had not been paid. PMU 11. BRI acts as an executingBank underthe PMU schemes(SRDPI, SCDP and SRDP I1) with its own resourcesbeing part of the smallholder loans,and bearingpart of the defaultrisk. Funds for the smallholder creditare providedto BRI throughfinancingarrangements betweenGOI and BRI. Under SRDP I and SCDP, 70% of these loansare from the World Bank at 0. cost, 24% from liquiditycreditsat 3%, and only 6X from BRI's own resources. Under SRDP II, however,the ratiosbetweenthe Bank,BI, and BRI, respectively, were 65% at 9.9%, 28% at 3X and 7%. 12. DuringPhase I, the creditfor the tree crop developmentis technically in the form of a loan from BRI to the Directorate Generalof Estates(DGE),the governmentagencyresponsible for treecrops. At the end of the three years,the loan to DGE is supposedto be convertedto individual smallholder loanaccountswith 8RI. 13. The interestchargedon the smallholder loansand the portionborne by the smallholder vary. Under SRDP I and SRDP II, the interestrate to the smallholder is 12% p.a. for 20 yearswith sevenyearsof grace. The interest is waivedfor the firstthree years,compoundedin years 4-7 (PhaseII) and capitalized at the end of the grace period. MOP pays BRI an interestsubsidy (on behalfof the smallholders) of 14.5%from year 1-3 and 3.5% from years 420, which bringstotal interestpaid to BRI of 14.5%in years 1-3 and 15.5% untilmaturity. Under SCDP,however,the smallholder interestrate is 6X p.a. for 10 to f0 yearswith a grace periodof 3 to 8 yearsdependingupon type of activity.3 The lower interestrate is waivedfor Phase I and II, during whichGOI pays an interestsubsidyof 3.85% (PhaseI) to 7.35% (PhaseII). The GOI subsidyis reducedto 1.35%duringthe repaymentperiod. Total interestpaV to BRI under SCDP then is 3.85%in Phase 1, and 7.35% for Phases II and III.Z' GOI (MOF)bears 100% of the risk on loan principaldefault duringPhase I, and 75% (splitequallybetweenMOF and BI) for Phases II and III. BRI's risk is 0% for Phase I, 25% for Phase II and III on principaland 100% on interestthroughoutthe life of the loan. The risk sharing arrangement is the same for SRDP I and II, exceptthat underthose projects, the 75% sharefor PhasesI and II are bornedisappropriately by MOF (70%)and BI (5%).
3/
Plantingtalls: 20 yearswith 8 yearsgrace;developingtallsand planting/replanting with hybrids: 15 yearswith 6 yearsgrace;and rehabilitation:10 yearswith 3 yearsgrace.
4/
MOF on September6, 1985 changedtermsof SRDP I to the same as undeSRDP II, with effectfrom April 1, 1986. Until then SRDP I terms were the same as SCDP terms.
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14. There is quite an elaborateset of proceduresfor the flow of funds from the differentsourcesthroughBRI to DOE and finallyto the PMUs. The proceduresunder SRDP II bear this out. For a particularyear'sactivities, on the WorldBank's65X of the smallholder borrowings: (a) (b) (c) (d) (e) (f) (g) (h) (i)
DGE appliesto MOP; MOP givesWorld Bank shareto DGE (Prefinances); DGE "drops"to PMU; PMU reports to DOEafter use of funds; DOEreports to MOP; MOF appliesto World Bank for reimbursement; World Bank "drops"to MOF; MOP debitsBRI accountat BI; and BRI debitsDOE account.
For the BI and BRI portionof 35%: (a) (b) (c) (d) (e)
DOE appliesto BEI for the 35Z; BRI appliesto BI for its 28% share; 8I drops its 28X to BRI; BRI adds its 7Z and drops the 35X to DCE and debitsDOE; and DOE drops to PHU.
The droppingto the PMU from DOE from all sourcesare supposedto happen simultaneously; however,the ProjectCompletionReport(PCR)of SRDP I by the governmentreportsthat under that project,"the releaseof BI/BRIfunds to the projecthave generallybeen much delayed." 15. The PCR also reportsthat due to some technicalproblems,therehas been no accountconversionand, since conversionis a precondition for farmer repayment,the cost recoveryfunctionof BRI has not yet begun. As of November1986,only SCDP (underthe BRI executingarrangement) showsloans outstanding to 94 smallholders of Rp 52 million. These loansare not yet in the repaymentperiod. Of the COI interestsubsidiesdue of Rp 348 millionand Rp 93 millionfor SRDP I and SCDP respectively aboutRp 302 millionand Rp 52 millionhave been paid. Interestsubsidyand handlingfee paymentsto BRI were reportedto be not as promptas BRI would want. B. KIK/KMKPCREDITPROGRAMS Background 16. BI, in 1969,established a KreditInvestasiBiasa (KIB)to provide investmentcreditof up to 10 yearsmaturity(15 years in the case of BAPINDO) at interestrates of between10.5%and 13.5% (depending on loan size)through all the commercialand developmentbanks. The loansunder the programcarried a BI rediscounting facilityof 65% to 80% at 4% p.a. The KIB programwas originallyintendedto coversmall,medium,and large scaleenterprises.The statecommercialbankswere, however,reluctantto lend to small-scale enterprises due to the higher risk and administration costs,and the lack of collateralrequirements and requiredoperational/financial data. Consequently, BI introducedtwo new creditprograms--KIK and KHKP--in1974 specifically designedfor small-scale enterprises.
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Objectives 17. The objectiveof KIK (KreditInvestasiKecil- Small-Scale Investment Credit)and KMKP (KreditModalKeria Permanen- PermanentWorking CapitalCredit)was to provideterm financingto indigenoussmall-scale enterprises in any sectorengagedin labor-intensive activities, but incapable of raisingtheirown funds. As theirnames imply,KMKP providesshort-term financing, while KIK provideslongerterm financing.Specificobjectives include:(a) creationand sustenanceof employment;(b) geographicdispersion of productiveinvestment, development of entrepreneurial opportunities and technicalskills;and (c) provisionof marketsfor local smallscale enterpriseproductsand raw materials. Participating Banks and Sourcesof Funds 18. The implementation of the two programsis handledby the five stateownedcommercialbanks,BAPINDO,selectedregionaldevelopmentbanks (who enter into co-financing arrangements with BAPINDO),and certainprivate nationalcommercialbanks (whichenter into cofinancing arrangements with the statecommercialbanks). Banksare allocatedsectorsfor programlending operations, but these allocations are flexibleto take into accountparticular localconditions. 19. The participating bankswere requiredto financefrom their own resources20% of KIK loansand 25% of KMKP loans. The remainingfundscome from BI liquiditycreditsat 3% p.a. Thesearrangements have been revised since 1979under the World Bank fundedSmall EnterpriseDevelopment Projects (SEDPI to III). Under SEDP I and II the World Bank loansand credits financedpart of only KIK loans,while it coveredboth KIK and KMKP under SEDP III. Under SEDP I World Bank fundswere used to replacepart of the BI 80% of KIK loans. Under SEDP II (1981-1984), however,the World Bank loan was to financethe 20% participating banks'contribution at 9.6% p.a.,while BI continuedto provideliquiditycreditsfor 80% of the KIK loansat 3% p.a. This meant 100% financingby GOI at a blendedcost of funds Lo the banksat 4.32%. Under SEDP III (since1984)World Bank fundscover both KIK and KMKP. It replaces25% of the BI liquiditycreditsat 10.1%. Therefore,the currentsourcesof funds for KIK and KMKP are: BI, 55% at 3% p.a.;World Bank,25% at 10.1%p.a.;and Participating Banks,20%. The currentblended cost of fundsto the handlingbanks for 80% of the KIK/KMKPloans is about, 4.175%p.a. Terms and Conditions 20. Thereare two eligibility criteriafor participation in KIK/KMKP. The enterprises financedmust have "pribumi"or indigenousmajorityownership and be registeredwith the authorities with less than Rp 40 millionin net worth (excludingland and buildings).KIK loansare for eightyears at 12% p.a. with a grace periodof four years on the repaymentof principal. The maximumloan amount is Rp 15 million. The handlingbank holdsa lien on the assetspurchasedwith the loanand requiresan additional50% of the loan as collateral.KMKP loans are for five yearsat 12% p.a. with a one-yeargrace period. The loan ceilingand collateralrequirements are the same as under
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KIK loans. The handlingbanks receivean additi3nal1.5%annualdirect subsidyon the totalamountof KIK/KMKPloansfrom the Ministryof Financeto increasetheir spread. InsuranceCo erage 21. KIK/KMKPloansare insuredagainstthe risk of defaultby P.T. Askrindo,the governmentowned insurancecompany. A 3Z up-frontpremium, sharedequallyby BI and the handlingbank,covers75% of potentiallosses. On loansexceedingfive years (KIK loans),the insurancepremiumis 5Z, twothirdsof which is paid by BI and the remainderby the handlingbank. KIK/KMKPLending 22. The KIK/KMKPprogramsgrew emarkablyfrom their inceptionin 1974 to 1980,with a period*Inualgrowthratesof 582 for KIK and 732, respectively, for KMKP._ Since then,however,both programshave declinedin numberand valueof loansexceptfor 1985. The valueof annualKIK loan approvalshad a perioddeclineof about 30% from Rp 130 billionin 1982 to aboutRp 91 billionby the end of 1985. AnnualKMKP approvalswent down 442 from Rp 303 billionin 1982 to Rp 170 billionin 1984with a big increaseof more than 1002 to Rp 399 billionin 1985. The averagesize of KIK loans increasedfrom about Rp 4.9 millionin 1982 to Rp 7.3 millionin 1985. Consequently, the growth in KIK/XMKPloansoutstanding has declinedover the period. The 1985 loansoutstandingfor KIK and KNKP were Rp 338 billionand Rp 885 billionrespectively. 23. BRI is the largestlenderfor both KIK and KMKP,accountingfor 38% of KIK loans outstanding in 1985,18% of the 1985KIK loan approvalsm, 44Z of the 1985KMWP loan approvals,and about 54% of the KMKP cumulativeapproval. 24. The sectoraldistribution of the 1985 approvalsshowstradeas the major sectorbenefitingfrom the KIK and KMKP programswith sharesof 412 and 71%, respectively.The next major sectorfor KIK/KMKPloanswas industry, with agriculture accountingfor only 8% of KIK and 62 of KMKP approvalsin 1985. C. KUPEDESCREDITPROGRAM Background 25. The KreditUmum Pedesaan(KUPEDES)or GeneralRural CreditProgram, run out of the villageunits (UnitDesa)of Bank RakyatIndonesia(BRI),has its originsin the now defunctBIMAS creditscheme. BIMASwas part of a GOI programaimedat improvingagricultural productionand practicesthroughthe provisionof physicalinputs,technicalassistanceand short-termcredit facilities.The BRI unit desaswere set up to facilitatethe creditpart of the programat subsidizedinterestrates (12%p.a.). The sourceof fundsfor
5/
World Bank, "Indonesia: Rural CreditStudy,1983".
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the BIMAScreditprogramwas BI liquiditycreditsat 3% p.a.;GOI/BIbore up subsidyto BRI to to 75X of the creditrisk and providedan administrative cover the operatingcosts of the Unit Desas. GO announcedthe collapseof the programdue to massivedefaultsin 1984with effectfromApril 1985. 26. BRI throughthe Unit Desas,established the KreditMini (1973)and KreditMidi (1980)programsprovideterm financeto borrowersoutsidethe BIMAS programbut too small for the KIK/KMKPprogram. The loanswere for all productiveactivities, but mainly for off-farmeconomicactivities.Loan sizeswere betweenRp 10,000and Rp 200,000for Mini and Rp 200,000and Rp 500,000for Midi credit. Bothprogramswere financed100% by BI liquidity creditsat 0% for Mini, 3% for Midi investmentloansand 4% for midi working capitalloans. Mini and Midi workingcapitalloanshad maturitiesup to 3 yearsat 12% p.a., and Midi investmentloanshad up to 5 yearsat 10.5%p.a. Unlikethe BIMAS program,BRI Unit Desa staffwere solelyresponsible for the selectionof borrowers,and BRI bore 1001 of the risk. These two features plus the fact that the mini schemegave BRI its biggestspread(121)of all the GOI programswere responsible for the good repaymentperformance of these programs. 27. The collapseof the BIMASprogrammeant that BRI would lose the administrative subsidyfor the Unit Desas. BRI had the optionof abandoning the Unit Desas or making them profitable.The Mini and Midi creditschemes had shownthat therewas a largedemandfor workingcapitaland, to a smaller extentfor investmentcapitalfor ruralenterprises.The problemwas the interestrate ceilingwhich requireda largeloan volumeto break even and make profit. With the financialsectorreformsof 1983,the banksare able to chargemarketrates on their non-priority loans. BRI with the supportof the MOF replacedthe Mini and Midi creditschemes(andBIMAS)with KUPEDES,a new genera-purposecreditprogramas the main creditfunctionof the Unit viable Desas.Y BRI'sgoal was to developthe Unit Desas into financially entitiesto mobilizesavingsand make loans in the ruralareas of Indonesia. A decisionwas also taken then that the Unit Desas wouldno longerparticipate in administered creditprograms. Termsand Conditions 28. Eligibility.KUPEDESloansare made for any productiveactivity (non-targetedas long as a letterfrom the borroqvers' villagehead (kepala desa)certifiesthat the activityis productive._>With the knowledgethat most ruralfamiliesderive theirfamilyincomefrom severalactivities, and that loanscan be repaidfrom activitiesotherthan the one specifiedby the borrower,the enterpriselistedfor the loan is mainly to provethe borrower's abilityto repay. The Unit Desa staffreviewthe cash flow of the listed activityand recommenda repaymentschedulethat fits the activity. All loan
6/
KreditMini and Midi were terminated at the end of 1984and KUPEDES operationsbegan in February1984.
7/
Borrowingfor consumptionis not permitted.
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applications requirea cosigner,usuallythe applicant's spouse,and collateral. 29. Collateral.The value of the collateralmust be at least 1001 of the loan in the form of land,buildingsor any property. Tks experienceto date is that most KUPEDESborrowersuse land as collateral.- Since the legal systemfor foreclosure and collateralis complicated and expensive,collateral documentation is reallyto establisha borrower'sabilityand willingness to repay. 30. Loan Types and Sizes. KUPEDEShas two typesof loans,working capitalloans and investmentloans. While the minimumis Rp 25,000,very few loansgf less than Rp 100,000have been made. The maximumloan of Rp 2 million,.9is availableonly to repeatcustomerswith good repaymentrecords. All borrowersare classifiedon the basis of theirrepaymentrecords,which determinestheir limit for subsequentloans. A borrowermay use the same collateralfor subsequentloansprovidedthe value is 100l of the new loan. 31. Term Structure. Variousmaturitieswith or withoutgrace periods availableunder KUPEDESfor workingcapitalloansrange from 3 to 24 months, and thosefor investmentloansgo up to 36 months. Singlebaloonpayments for 3 to 12 month maturitiesare also availablefor workingcapitalloans. Possiblerepaymentschedulesare shownin standardillustrative tablesfrom which the Unit Desa loanofficerand the borrowercan read corresponding installment paymentsfor any loan sizeup to Rp 2 million. These tables eliminatethe need to calculateloan termsfor each borrower,speedup the lendingprocessand minimizescalculation errors. The averagetimebetween loan application and disbursement is about two weeks for first-timeloansand about two days for repeatloans. 32. InterestRates. The interestrate on KUPEDESworkingcapitalloan is 1.5% per month,and 1% per month for investmentloans. Both are calculated on the originalloan amountnot on the decliningbalance. The corresponding annualeffectiveratesare about 32Z for workingcapitalloansand about22% for investmentloans. In additionto these interestrates,thereis an InsentifPembayaranTepatWaktu (IPTW)or Incentivefor PromptPaymentof
8/
Any proofof land ownershipsuch as a statementsignedby local governmentofficial may be used for loansup to Rp 400,000. Land certificates are requiredfor loansabove Rp 400,000.
9/
UntilApril 1986 the maximumfor KUPEDESloanswas Rp 1 million.
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0.5Z, which is collectedalong with the monthlypaymentand E6turnedto borrowersif they pay all installments in full and on time.' 33. Unlikeits predecessors (BIMAS,MINI, MIDI) and other government creditprogramswhich emphasizedcheap creditto the finalborrowers,KUPEDES focusedon two tenets: (i) promptdeliveryof credit,and (ii) the financial viabilityof the Unit Desas. The underlyingassumptionis that accessto creditis more importantto small borrowersthan the interestrate charged. To achieveits goalswithoutrelyingon governmentBRI had to mobilize voluntarysavingsand set depositrateshigh enoughto attractsavings. The higher cost of fundsalso meant that the Unit Desashad to set lendingrates high enoughto cover theiroperatingcostsand risksand earn a reasonable profit. With the TABANASinterestratesthen set at 15% p.a. (for amounts less thanRp 1 million),the aboveKUPEDESrateswere set at levelsto give the systema spreadof 15X p.a. betweencost of fundsand onlendingrates) and to breakeven when total loanslotstandingreachedaboutRp 200 billionwhich was reachedin.September1985, LendingOperations 34. Volumeof Lending. The volumeof KUPEDESlendinghas grown remarkablyfast. The numberof loans increasedfrom about640,000in 1984 to about 992,000in 1985,an increaseof about 552. With almost100,000loans added from Januaryto October1986,the total was about Rp 2.6 millionat the end of October1986. The value of these loans increasedeven fasterfrom fp 171 billionin 1984 to Rp 339 billionin 1985,or 98% and over 15% from 1985 to October1986.The valueof loansfor the 10 month periodwas Rp 391 billion. Cumulativeloans from the beginningof the programto end October1986was aboutRp 901 billion. The averagesizeof a loan, therefore, has increasedfrom aboutRp 268,000in 1984and Rp 342,000in 1985 (a period increaseof 28%) to Rp 410,000by end October1986 (20%from 1985). The contrastwith the maximumloan limitof Rp 2 millionpossiblyreflectscaution on the part of the Unit Desas. The volumeof loans outstanding was at about Rp 111 billionby the end of 1984, increasedby 1062 to Rp 229 billionby the end of 1985and by 372 to 313 billionfrom 1985 to end October1986. 35. Type and Maturity. Workingcapitalloans accountfor about 932 of loansoutstanding as of June 30, 1986. Surveyfindingsshow that for the periodJanuary-June 1986workingcapitalloanswith a 12 month maturity accountedfor 57% of the numberof loansand 45% of the value. Eighteen monthworkingcapitalloansaccountedfor another162 of the numberand 18% of
10/ Where the loan is for more than one year, the IPTW is refundedat the end of each year. In all cases it iq depositedin the borrower'ssavings accountto be withdrawnat will. 11/ The risk cost or loan lossesassumedwithin the spreadwas 4.5% or approximately twicethe loss ratioof the KreditMini.
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it
the value and, respectively, month workingcapitalloansfor 142 of the numberand 212 of the value.- At mid 1986,69Z of the loans outstanding were listedfor tradingand only 271 for agriculture. 36. Geographicand GenderDistribution.At end June 1986, 751 of KUPEDESloans outstanding were in Java, which has 622 of Indonesia's population and 641 of BRI Unit Desas. (BRIhas Unit Desas in 14 of the 15 provincesin which it has branches.) Samplesurveyshave also fouytthat 251 of all borrowersand 75% of cosignersare women., approximately Sourcesof Funds KUPEDESfundscome froma governmentgrant,BI liquiditycredits, 37. and savingsdeposits. The Governmentgrantto BRI for the KreditMini program at the end of 1983was Rp 66.7 billion. When KUPEDESreplacedKreditMini in early 1984,GOI turnedthis grant over to KUPEDESto distributeequallyamong the Unit Desasas equitycontribution of Rp 19.0millioneach. This grant represented about 19% of KUPEDESresourcesat the end of June 1986. 38. Total BI creditsto BRI for KreditMini at its termination, were Rp 43 billion. BI agreedto converttheseto generalliquiditycreditsfor KUPEDES. MOF directedBI to give an additionalRp 100 billionin liquidity creditsto supportthe programat 151 for those onlentas workingcapital loansand 31 for the fundsonlentas investmentloans. With an assumed blend of 75/25,the averageinterestrate on BI workingcapital/investment of MOF) liquiditycreditswas 12X. From February1986 BI (at the instruction agreedto supplyadditionalliquiditycreditsof Rp 50 billionfor each Rp 75 billionincreasein KUPEDESloansoutstanding.The agreementensuresthat BRI resourcesrequiredfroi its own providesat leasta thirdof the incremental funds. The KreditMini and otherBI liquiditycreditsaccountedfor about 531 of KUPEDESresourcesat the end of June 1983. Undera proposedWorldBank project- BRI/KUPEDESSmallCredit 39. Project- Bank fundswould replacethe BI liquiditycredits(fromJuly 1987 to September1989). Bank fundsof US$100millionwould be onlentto BRI at an interestrate equal to the averagecost of BRI's customerdeposits(excluding non-interest - bearingdepositsfrom GOI or GOI owned entities). 40. SavingsMobilization.The Unit Desas mobilizesavingsunder the (BI)TABANASsavingsprogramand theirown SIMPEDES(Village Government's SavingsProgram). TABANASaccountedfor about 19X and SIMPEDESfor 4.5% of KUPEDESresourcesat the end of June 1986. With other depositsrepresenting about 4% of resources,the totalof savingsand otherdepositsaccountedfor 27% of the June 1986resourcesof KUPEDES.
Small CreditProject. 12/ IDF, YellowCover SAR, BRI/KUPEDES 13/ Ibid.
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RepaymentsPerformance and Sustainability 41. The defaultratio,totalamountoverdueas a percentageof total loansoutstanding, was 4.31 at the end of November1986. While relatively small,it has been increasingover time, from 0.5% in December1984 to 2.1Z for the sameperiodin 1985. More relevantare the long term bad debt ratio which is totalamountoverdueas a percentageof all paymentsdue aridshort termbad debt ratiowhich is paymentsmissedin a particularmonth as a percentage of paymentsdue in thatmonth. Thesewere low at 2.2% for the longterm and 2.9% for the short-termin November1986. These ratioshave also been increasingfrom less than 1% and 1.41, respectively, in December1984. The 2.2% long term bad debt ratio is less thanhalf the 4.51 risk cost assumed in the initialderivationof KUPEDESinterestrates. Despitethis good repaymentperformance, BRI has been concerned. A reviewshowedthat over 50% of all arrearsare concentrated in 22 branches. SpecialBRI teams,with both head officeand regionalstaff,have been formedto examinethe 22 branchesto identifythe reasons. The teams'findingsare expectedto be instrumentalin identifying and adoptingstandardized proceduresfor futureoperations. 42. If KUPEDEScan maintainthis repaymentperformance, Indonesiahas a model for a non-subsidized, self sustainingcreditprogram. This point needs emphasizing becausethe KUPEDESprogram,whileclearlya success,is only threeyearsold. D. BADAN KREDITKECAMATAN(BKK) Introduction 43. The BadanKreditKecamatan(BKK)141programwas begun in 1972 by the CentralJava ProvincialGovernment(CJPG)in order to make capitalavailable to the ruralpoor to raisetheir incomesand standardof living,protectrural dwellersfrom usuriousmoney lenders,createemploymentopportunities in the ruralare, and educatevillagersabout the benefitsof financial savings. At presentthereare 497 BKKs, coveringall Kecamatansand 2,69 villageposts,where the BKK employees(threeyoung schoolleaversper BKK)_H/ lend and collectloan repayments, usuallyon marketdays. Organization 44. The governorof CentralJava is the titularhead of the BKK program, with coordinating functionsof the programinvestedin a ten memberprovincial BKK Coordinating Body and a four memberDistrictBKK Coordinating Body at the
14/ Sub-district CreditBody. 15/ The BKK programhad a projectstatusuntilwhen the CJPG and the Central Java ProvincialAssemblyturned intoa CJPG institution via Decree No. 11 of 1981. 16/ Consistingof a unit chief,bookkeeperand a cashier.
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ANNEX 7
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70
12 ~~~~~~~Page
head (c..mat) of the sub-district districtor Kabupatanlevel. Operationally, for the BKKs in his Kecamatan. The Central each kecamatanhas responsibility Daerah (BPD),advisesthe Bank, Bank Pembangunan Java RegionalDevelopment functionsof the BKKS for the BKKs and performsthe technical/supervision provincial government.The programalso receivestechnicalassistanceunder the USAIDProvincialDevelopmentProject(PDP),throughwhich 65 BKKs in five poorerdistrictshave receiveddirect support(includingcapitalinjections) have receivedindirectsupport The remaining30 districtsand municipalities includingtrainingand equipment(computers). Sourcesof Funds 45.
The external,sources
of funds for the BKKs, outside the PDP funds,
from the CJPG throughthe BPD, loans from the have been initialcapitalization from borrowers. Each BKK, which is financially BPD,and forcedsavings receivedRp 1 millionloan from CJPG at one percentper month with autonomous, a one year grace periodon principalrepayment. The one percentmonthly and supervisory interestwas to go to the BPD to cover its administrative expenses,with the principalrepaymentgoing into a provincial/development budget. Subsequentto this, ten BKKs receivedadditionalloansof' while some of the weakerones, througha Rp 1 millionfor good performance, program,receivedRp 350 millionbetween1981and 1983. As rehabilitation and upgradingexercise,in 1981,GOI throughthe part of this rehabilitation MOF made an interestfree Rp 3 billionloan to the CJPG throughthe BPD which were then lent to the BKKs at the usual one percentper month. Unlikeother funds,however,only 0.6% of this interestwent to the BPD for administrative expenses. The other 0.4% was to go into a BKK programdevelopmentfund. It shouldalso be noted that unlikethe funds from GOI and CJPG, the USAID PDP fundswere grantsset up as a revolvingfund withinthe BPD which enablesthe BPD to relendthe principalrepaymentsto the BKKs. Funds lentby the BPD to any BKK dependsupon the BKKs performance 46. classification.For this, BKKs are classifiedby the BPD into five categories on the basis of six factors,namely: total equity,a ratioof semi-annually villagesto villageposts,numberof new borrowers,portfolioquality,total savings,and capitalcirculation.Fifty percentof the totalweight of the performance classification is placedon the BKKs'equity,which is definedas minus loansoverduemore than six cash on hand plus total loansoutstanding, months,loans to the BKK and borrowersavings. The remainingfive factorsare weightedequally(10%each) in arrivingat the weightedaverageof the six which determineseach BKK'sabsorptivecapacityfor workingcapitaland profitability.The currentcreditceilingsfor BKKs in class I to V, respectively, are Rp 12 million,Rp 10 million,Rp 9 million,Rp 7 million, and Rp 5 million. Regardlessof class or category,BKK borrowingsfrom the head (Camat),who signs BPD are releasedin tranchesthroughthe subdristrict for all BKK borrowings.BKK borrowingsfrom governmentand the BPD about 20 percentof BKK sourcesof funds at the end of 1985, and represented 22 percentin September1986. The thirdexternalsourceof BKK funds is the forcedsavingsfrom 47. borrowers.A portionof a BKK loan to a borrower(6.5% to 20%, dependingupon the typeof loan - is retainedby the BKK as forcedsavingsfor the borrower
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ANNEX7 Page 13
to be paid back to him after full repaymentof his or her loan. It has, however,been reportedelsewherethatmany BKKs do not allow or encouragesuch withdrawals.The BPD informedthe missionthat whilethe purposeof the forcedsavingelementwas to encouragevillagers'financialsavings,they plan to replaceit with voluntarysavingsmobilization.Borrowersavings constituted about 161 of BKK sourcesof funds in 1985 and 141 in September1986. 48. More than 501 of BRK loanablefundscome from the BRRs' own internal retainedearnings. The BKK system'sannualprofitplus accumulatedearnings have increasedfrom less than 601 of sourcesof fundsin 1984 to 62Z in 1985 and 1986 (September). Loan Typesand LendingProcedures 49. The BKKs onlendthese fundsthroughone of six differenttypesof loans. The maturityof these loans range from 22 days (Harianor daily repayments) to a six month seasonal(musiman)repaymentwith nominalinterest rates for the periodsof 3.51 and 121, respectively, or nominalmonthly equivalents of 4.5Z and 21 respectively.The above nominalinterestratesare on the originalloan amounts(not on a decliningbalance)and, with a commitmentfee of 11, yield effectivemoyiglyinterestrates of 10.81 (on 22 day loans)and 2.21 (on seasonalloans). 50. The weekly repayment(minguan)systemis the one used by most of the BKKs. Under this systemthe borrowerrepays 10% of the amountborrowedeach week for 12 weeks. The firstpaymentgoes towardsinterestrepayment,the secondfor forced savingsand the remainingten paymentstowardsprincipal repayments. 51. BKK lendingproceduresare designedto be simpleand fast to minimizecost and risk. A borrowerpicksup an applicationform at the nearestBKK officeor villagepost,whicheveris convenientfor him or her. After the borrowerreceivesthe requiredcharacterreferencefrom his village chiefthe form is returnedto the BRK for approval. The BKK staffcan approve loansunderRp 25,000;amountsover Rp 25,000requirethe approvalof the subdistrict head. No collateralis requiredfor BKK loans;however, subsequent loansare basedon a borrowersrepaymentrecord. Each borrower beginswith a small loan and graduallyincreaseshis loan size as he repays and demonstrates that he is a good risk. 52. The only departurefrom the above BKK procedures,termsand conditions was in the mid 1970swhen a special(Khusus)programwas initiated throughwhich the BKKs actedas collectionagenciesfor the Provincial Government's specialtechnicalserviceagencies.
18/ One percentof loan principalis usuallysubtractedfrom each loan as a commitmentfee.
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Performance 53. Coverage. The numberof BKKs has grownfrom 200 in 1972and 486 between1976 and 1982 to the current497 BKKs. With a BRK in every Kecamatan and over 2,6001village posts,the BKK systemcoversabout312 of the 8,455 villagesin CentralJava. 54. Loans. The numberof loansgrantedhas increasedfrom about 120,000 in 1972and 300,000in 1982 to over 500,00 in 1985. Growth in the valueof theseloans have been evenmore spectacular fromabout Rp 400,000in 1972 to Rp 11 billionin 1982 and more than doublethis amount,Rp 27 billionby the end of 1985. The averagesize of loan,consequently, has increasedgradually to aboutRp 50,000in 1985;this is still smallcomparedto othercredit programs. Total loans outstanding which were about Rp 200,000in 1972 and thenmore than doubledfrom aboutRp 5 billionin 1982 to 1985when it stood at aboutRp 12 billion. 55. RepaymentPerformance and Sustainability.The defaultratio, definedas all loans overdueover total loansoutstanding appearshigh at about 16% by the end of 1985. The rate actually started out high - 151 - in
1972,increasedto more than 251 in 1978 and has declinedto the 1985 level of 16%. However,given the very shortterm natureand high turnoverof BRK loans thismeasuredoes not accuratelyreflectthe repaymentperformance of the BRK system,especiallyin the lateryears of the program. 56. Other indicatorsof repaymentperformance are the long term and shortterm bad debt ratios. The long-termbad debt ratio is definedas the totalamountof loansoverdueover the totalamountdue and the shortterm is the increasein amountoverduein any year over the repaymentsdue in that year. The shortterm bad debt has declinedfrom 121 in 1972 to about 2% in 1985. The long term bad debt ratios,which can be lookedat as long term loss ratiosunder the assumptionthatall loansoverduewould not be repaid,has declinedfrom 12% in 1972 to lessthan 2% by the end of 1985. 57. In fact, the repaymentperformance of the BKK systemhas been remarkable.The bad debt is mainlyfrom the early yearsunder the RKK Khusus program, The BKK systemdoesnot have a write off policyyet. The supervisors of the programreportedthat an estimated40% of the loansoverdue are deemedunrecoverable, and that plansare underwayto find a mechanismto writeoff the bad debts. 58. The viabilityand therefore,self-sustainability of the BKK program is evidentin their profits. The BKK net profitfor 1985 was about Rp 2 billion (revenuesof Rp 3.5 billionand expensesof Rp 1.5 billion). If the interestexpenseis increasedfrom the statedRp 228 millionto Rp 841 million (thelatterbeing 12% of liability), personnelexpensesincreasedby 50% (to almostRp I billionto reflecta thirdof staffbeing civil servantsand paid slightlyhigherby the CJPG),and bad debt of Rp 239 million,(2% of loans outstanding) added, then totalexpenseswould increasefrom fp 1.5 billionto Rp 2.6 billion. This stillleavesa systemwide profitof aboutRp 900 million.
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SAVINGSINSTRUMENTS IN INDONESIA 1. This sectionprovidesdetailson the varioussavingsinstruments availablein Indonesia. These includedemanddeposits,TABANAS,TASKA, SIMPEDES,contractual or goal savingsplans,compulsorysavingsaccounts, othersavingsaccounts,time deposits,certificates of deposit,foreign currencyaccounts,and securities. A. DemandDeposits(Giro) 2. Demanddepositsare interestbearingaccountsavailableat all commercial and development banks.Most banks requirea minimumdepositof at leastRp 500,000for accountswith a checkwriting facility,but requireno subsequent minimAmbalance. However,interestis dependenton the lowest monthlybalanceand, in some cases,fees may be chargedon smalleraccounts. Some examplesef the interestrate scalingincludet Bank DagangNegara,no intereston balancesof less than Rp 1 million,then 4% p.a. on Rp 1 up to 10 million,5% on Rp 10 up to 50 million,6% on Rp 50 to 500 million,and 8% p.a. on balancesover Rp 500 million;Bank NegaraIndonesia1946,no intereston balancesof less than Rp 1,000,000and 6% p.a. on largeraccounts;and the regionaldevelopment bank of East Java,no intereston balancesof up to Rp 250,000,then 1.8% p.a. on Rp 250,001to 50,000,000, and 3% p.a. on over Rp 50,000,000.Unlikea savingsor time deposit,any interestearnedon demanddepositsare subjectto normaltaxation. B. TABANAS(TabunganPembangunan Nasional) 3. TABANASwas introducedby BI on August 20, 1971 to promote individualsavings.It has traditionally offereda high interestrate for smalldepositorsand accountbalancesare guaranteedin full by BI. Conditions 4. In recentyears interesthas been paid on a slidingscalewith a higherrate paid on lowerbalances. The currentrate is 15% p.a. on balances of Rp 1,000to 1,000,000and 12% p.a. on any additionalamounts. This interestis calculatedon the minimummonthlybalance,paid annually,and exemptfrom taxation. Since 1977,accountholderswith activeaccountsand balancesof Rp 1,000or more have also been eligiblefor lotterydrawingsat both the nationaland regionallevel. Balanceswith less than Rp 1,000,if inactive,may be subjectto specialserviceschargesand eventuallyclosed. 5. NormalTABANASaccountsrequirea minimumdepositand balanceof Rp 250 and subsequentdepositsof at leastRp 50. Withdrawalsare not availableduringthe account'sfirstmonth and then are limitedto twice monthlyexceptin an emergency. The minimumwithdrawalis Rp 250. Both withdrawals and depositscan be made only at the branchthat opened the account. 6. As shownin Table 1, a number of specialTABANASsavingsschemesare availablefor children,studentsand scoutingorganizations.Specialaccounts
!
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74 -ANNEX 74
8 Page 2
~
requireonly Rp 50 to open,have a minimumdepositof Rp 25, and allow only one withdrawalper month. The youth and cub scout schemesmay also allow a depositor's parentor guardianto withdrawthe funds. These programsare activelypromotedin the schoolsand at scoutmeetings. Table 1: TABANASACCOUNTCLASSIFICATIOYJS
Type
Purpose
TABANASUmum TABANASPelajar TABANASPramuka TABANASPegawai
Generalaccounts Students ] Scouts 1 Employeror group savings
Total
Numberof accounts '000
Deposits Rp million
13,258 1,340
1,002,370 12,029
1,327
44,567
15,925
1,058,966
Source:Bank Indonesia,January,1987 7. The employeror group savingsaccountsare a form of payrollsavings deductionsand are organizedby eitherthe employeror the employees themselves.They differfrom a generalTABANASaccountin that the deposits are set for a fixedamounteach pay period. Then the scheme'scoordinator depositsall of the fundsat the same time with a list of the respective accounts. Althougheach depositorhas his own passbook,any withdrawals must firstbe approvedby the scheme'scoordinator.These plansare used primarily by governmentdepartments/agencies and in practiceparticipation is almost mandatory. Indeedin someagenciesthe paymasterroundsthe pay down to the nearestthousandrupiahand depositsthe extraamountdirectlyinto the employee's account. While the schemesensurea high numberof accounts,such frequenttransactions of less than Rp 1,000are hardlyprofitablefor the banks. Mandatorygroup savingsmay also explainwhy governmentowned banks have loweraverageTABANASbalanceparticularly at the provinciallevel. Lottery 8G Each passbookreceivesan accountnumberand a lotterynumber. However,accounts,are not eligiblefor the lotteryif the balanceis under Rp 1,000or with Rp 1,000but with no transactions for two years. The TABANAS lotteryis conductednationallyevery six monthsand at the regionallevel oncea year. The nationallotteryhas one firstprize of Rp 5,000,000,nine secondprizesof Rp 500,000,ninety thirdprizesof Rp 100,000,nine hundred fourthprizesof Rp 25,000and one thousandfifth prizesof fp 5,000each. The regionallotteriesin each of TABANASsix regionshave one first prizeof Rp 2,000,000,nine secondprizesof Rp 200,000,ninetythirdprizesof Rp 25,000,nine hundredfourthprizesof Rp 2,500 and one thousandfifth prizes of Rp 1,500. Thesewinningsare automatically creditedto the winner's
_ 75 _ -
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i~~~~~NNEX 8 -5AM ~~~~~~~Page 3
TABANASaccount,providedit was eligiblefor entry. Not all prizesare awarded,and in 1986/87Bank'Indonesia budgetedonly Rp 1,274millionfor the lotteryprizesand drawings. Availability accountsand 9. Banksmust be speciallylicensedto offerTABANAS/TASKA applications are currentlylimitedto Class I or II institutions under BI's five prudentialcategories.As of January,1987,therewere only 38 handling bankswhich includethe five statecommercialbanks,the NationalSavingsBank banks, 9 private and its Post Officeagencysystem,20 regionaldevelopment banks, and 3 private non-foreign exchange banks. The foreign exchange relative importance of these institutions is shown in Table 2. Table 2:
BY TYPEOF BANK TABANAS/TASKA DEPOSITSANDACCOUNTS JUNE 1986
No. of accounts Statebanks Privatenationalbanks Development banks Totals Source:
Amount Billion Rps
Average Account Balance fp
13,293,000 1,085,000 1,000,000
888.7 110.5 46.1
66,854.74 101,843.32 46,100.00
15,378,000
1,045.3
67,973.00
Bank Indonesia, IndonesianFinancialStatistics, October 1986,pp. 82-83.
It is surprisingthat more privatebanksare not active in TABANAS as thereis no chargefor the governmentguaranteeon TABANASdeposits. The freeguaranteeprovidesan effectivesubsidyfor privatenationalbanks; all depositswith the state banksare alreadygovernmentguaranteed. In privatebankersindicatedthat this guaranteewas not importantin interviews, depositraising. Promotion 10. The TABANASsavingspromotionis organizedat the nationallevel by the NationalSavingsDrive Committee(GerakanTabunganNasional)which is made up of representatives from the Ministriesof Home Affairs,Education,amd Information, BI, Bank NegaraIndonesia1946,BRI, PrivateNationalBanks Association, and nationalscoutingorganizations.The NationalCommitteeis then duplicatedat the provinciallevelwith the provincialcounterparts from BI, BRI and/orBankNegara Indonesia Home Affairs,Educationand Information, 1984,regionalscoutingbodies,and sometimesthe provincialdevelopment bank at this for that area. The privatenationalbanksare not represented
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ANNEX 8 Page 4
level. There are also similarcommitteesat the districtlevelwith local governmentrepresentatives. The BI (or BRI where there is no 8I Branch) representative chairseach of thesecommittees. 11. In termsof promotion,the NationalCommitteeuses a range of methodsincludinga 15 to 30 minuteTV drama shownnationallyon the 4th Sundaymorningof each month.These playshave a simplestory line that emphasizesthe value of savingsand typicallyends with the hero winninga major TABANASprize. This TV show is supplemented at the nationallevelwith a rangeof bookletsand other promotional materials. The NationalCommittee also operatesa specialstandat the annualJakartaFair and major scouting events,sponsorsa floatin the Independence Day parade,and is active in other similareventsat the regionallevel. It also broadcastsTABANASdramas on regionalradio in locallanguages. All of these promotionalexpensesare paid by BI and amountedto an estimatedRp 800 millionin 1986. The National SavingsDrive Committeealso meets with the TABANAShandlingbanks at least once a year to considerchangesto TABANASand betterpromotionalefforts. The handlingbanksalso activelypromoteTABANASfollowingthe Committee's directions.These instructions are usuallyvery specificand includeeven the sizeand exactwordingfor banners. While the Committeeto date has concentrated almostexclusively on TABANASpromotion,in 1987 it might expand its effortsto includetime depositsand certificates of deposits. RecentDevelopments 12. As shownin Table 3, TABANASaccountsand depositshave grown at fairlyconstantrate,but this may changeover 1987. In Januaryone military districtand some stateenterprisesin Sumatrabegan payingsalariesvia TABANASaccounts. While these additionswill greatlyincreasethe transactions for the handlingbanks,they shouldalso gain greatersavingsand other formsof bankingbusiness. Table 3: TABANASSAVINGSACCOUNTSAND DEPOSITSBY YEARS Average
No. of accounts
1981 1982 1983 1984 1985 1986(June)
9,480,000 9,952,000 10,887,000 12,425,000 14,712,000 15,362,000
Amount billion Rps 384.2 445.9 540.7 669.6 935.6 1,044.9
Source: Bank Indonesia,IndonesiaFinancialStatistics, October,1986,pp. 80-81.
account balance (Rp) 40,527.43 44,805.06 49,664.74 53,891.35 63,594.35 68,018.49
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ANNEX 8 Page 5
13. In early 1987, the governmentwas considering liftingthe current interestrate controlson TABANASaccountsand allowinghandlingbanks to set theirown rates,termsand conditions.The firstphasemight allow handling banksto offer theirown lotteries,in additionto the Bank Indonesia efforts. The secondstep might be to set a maximumor possiblya range of interestrates ratherthan requiringa uniformone. Other possiblechanges includepermittingwithdrawalsfour timesa month, increasingthe minimum depositto Rp 1,000,using one interestrate ratherthan the currenttwo step interestrate (possibly12%),and perhapspayingthe interestfour times ratherthan once a year. differencesin 14. Interestingly, interviewsrevealedconsiderable opinionaboutTABANAS,but no one spokefavorablyabout the existingsystem. Some felt TABANASdepositsare too expensive,given the interestrate and the costs. If free to do so, theywould limitwithdrawalsto once administration a month,raise the minimumdepositto at leastRp 1,000,and reducethe currentinterestrate from 15% and 12% to one rate of 9% or 10X. In contrast otherswantedto allow more frequentwithdrawals and to pay a higherrate of 141 to 15% on all savings. C. TASKA (TabunganAsuransiBerjangka) 15. TASKA is a nationalinsurancesavingsschemedesignedto provide individuals with a combination of savingsand life insurancecoverage. Under this programdepositorsreceivelife insurancecoverageequal to 12 timesan agreedmonthlypayment. The depositsearn 9.0% p.a. if the programis successfully completed,but only 6.0% with an early withdrawalor failureto meet all payments. TASKA accountholdersare also includedin the lotteryfor TABANAS. As with other life insurancepolicies,TASKA'sattractionis limited becausemany Indonesians believethat it is unluckyto purchasedeath related insurancecoverageand, as shownin Table4, it has not grownmuch in terms of eitherdepositsor accountnumbers.
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Table 4: TASKA ACCOUNTNUMBERSAND OUTSTANDINCS No. of accounts 1981 1982 1983 1984 1985 1986/a /a
Rupiah (billion)
13,000 16,000 16,000 16,000 18,000 16,000
0.2 0.3 0.4 0.5 0.4 0.4
Figuresas of June, 1986
Source: Bank Indonesia,IndonesiaFinancialStatistics, September,1986,pp. 80-81. D. SIMPEDES(SimpananPedesan) 16. The SIMPEDESprogramwas developedby BRI to attractsa ings for theirunit desa ruralbankingsystem. It is a convenient, safe and liquid savingsinstrumentdevelopedfrom marketsurveysof local villagesand then adjustedto its presentform from pilot studies.SIMPEDESwas first introduced at one BRI branch (Sukabumiin West Java)with 16 u-iitdesas in November 1984. An additional12 pilotbranchesfollowedand furtherexpandedin late April 1986 to becomenationallyofferedby June, 1986. Thoughdevelopedby BRI head office staff,8IMPEDESis availableonly throughBRI unit desa system and not throughthe BRI branchoffices. 17. A SIMPEDESaccountrequiresa minimumdepositand a minimumbalance of Rp 1,000. Interestis paid on a slidingscale so that accountswith a minimummonthlybalanceof Rp 25,000or less receiveno interest,Rp 25,001200,000earn 92 p.a.,and over Rp 200,000earn 12X p.a. The interestis postedmonthly(TABANASis annually)and paid roundedto the nearestmultiple of Rp 10. To limit inactiveaccounts,a unit desa may close any SIMPEDES accountthathas had no transactions for threemonthsand a balanceof only Rp 1,000.In practice,though,most SIMPEDESaccountsare activewith an average of 1.26transactions per month (.99 depositsand 0.26 withdrawals). 18. In additionto interest,SIMPEDESaccountsreceiveone lottery chancefor every multipleof Rp 5,000 in theirminimummonthlybalance.This couponis issuedto accountholderson a monthlybasis (one couponwith as many lotterynumbersas multiplesof Rp 5,000). The lotteriesare conducted everysix monthson a districtor BRI branchlevel. The prizesare decidedby the localbranch. One branchin Bali offereda motorcycle, TV, and radioas the firstthree prizesand 10 fourthprizesof clothingmaterial.
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ANNEX
19. Due to the scalingof interestratesand depositand withdrawal activityduringthe month, the real interestrate costsaveragearound0.82 p.m.comparedto the 1% p.m. rate offered. The totalcost of SIMPEDESsavings 14.51or 16.11Zif Bank is confidentially estimatedby BRI at approximately Indonesia's reserverequirements are considered. This percentageincludes interestcostsof 9.54Z,prizesof 1.25%,taxeson prizes0.16% (nowpaid by the prize recipient), the couponissue of 0.12%,and the promotionof 0.5%. The laborcostswere 2.94X. 20. While TABANASis availableonly to individuals, a SIMPEDESaccount can also be in the name of an organization or business. Many local schools, villagefunds,professional bodiesand religiousgroupshave alreadyopened SIMPEDESaccountsand BRI believesthat thereis considerable potentialfor more throughoutIndonesia.Businessaccounts,too, shouldprove importantand 60% of its SIMPEDES one unit desa in Bali estimatedthat approximately accountswere held by small localbusinessesand providedan even higher percentage of its totalSIMPEDESdeposits. 21. In the villagein question,an estimated70% of SIMPEDESdepositors weremale comparedwith some 60% femalesfor TABANASaccounts. Balancesof Rp 25,000or lessaccountedfor some 26.28%of accountnumbers,but only 0.99%of deposits.In contrast,balancesin excessof Rp 200,000comprised18.61%of accounts,but 84.83%of deposits. Middlerange balances(25,001to 200,000) were 55.1 and 14.18Xrespectively. 22. As shownin Table 5, SIMPEDESaccountshave increasedsignificantly both in termsof accountnumbersand totaldeposits.The latterexceededthe BRI unit desa system'sTABANASbalancesfor the first time in October,1986. Thisgrowth shouldcontinuefor the immediatefutureas there is still considerable untappedpotentialsavingsoutsideJava/Baliwhere SIMPEDEShas stillnot been well promoteddue to the lack of promotional materialsat many unit desas. The programalso suffersfrom poor marketingskillsat the BRI branchand unit desa leveland from confusionover the recentunit desa rationalization programand the role of unit desa villagesavingsposts.
ANNEX 8 Page 8
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Table 5: SIMPEDESACCOUNTSAND DEPOSITS,1985-86
1985 January February March April May June July August September October November December
Deposits (Rp'000)
Account balance (Ave.Rp)
3,564 4,550 5,376 6,921 8,132 8,822 14,889 20,925 25,852 33,353 33,786 36,563
279,766 277,372 320,366 283,092 415,627 481,947 1,077,586 2,031,179 2,713,705 3,629,067 4,436,793 5,134,179
78,497.76 60,960.88 59,581.89 40,903.34 51,110.06 54,630.13 72,374.64 97,069.49 104,970.79 108,807.81 131,320.45 140,420.06
39,312 42,127 44,978 54,028 80,889 105,104 145,454 198,934 244,428 306,504 358,352 418,945
5,462,719 5,858,286 6,829,061 8,060,202 10,951,588 15,541,639 23,485,557 30,746,137 42,445,085 55,542,744 69,943,000 82,405,000
138,958.05 139,062.50 151,831.13 149,185.64 135,390.32 147,869.14 161,463.80 154,554.46 173,650.66 181,213.76 195,179.59 196,696.46
No. of accounts
1986 January February March April May June July August September October November December
Source: Bank Rakyat Indonesia,January,1987 E. Contractual or Coal SavingsPlans plans As yet Indonesianbankshave made limiteduse of contractual 23. While these requirements. savings special customer to meet whichare designed programsmay have a limitedpotentialwithin the ruralmarket,nevertheless they may appeal to certainclientsand generallyhelp encouragethe savings habit. Some goal directedsavingsplansare a RetirementSavingsAccounts, Savingsfor SavingsAccounts,Savingsfor ReligiousCeremonies, Scholarship Home Purchases,and a Down PaymentSavingsSchemefor HousingLoans.
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ANNEX8 Page 9
RetirementSavingswith Lottery(TabunganHari Tua Berhadiah) 24. The RetirementAccountis a specialpurposeaccountintroducedby Bank DagangBali for retirementsavings. It earns interestof 15% p.a. paid monthly(1.25Xpm) on the minimumbalance. In additionto interestthe accountis also eligiblefor the Bank'smonthlylotterywith one chanceper each Rp 1,000of the month'sminimumbalance. 25. Underthe RetirementAccountthe customerchoosesan end savings targetand agrees to make a set regularpaymentof at leastRp 1,000per month untilage 55. While the customermay laterdiscontinue the payments,the accountbalanceis stillonly availablefor withdrawalat age 55 exceptfor emergencies.On retirementcustomersmay stillmaintainthe fundson deposit and receivea monthlyinterestpaymenton the remainingbalance. Since the Retirement Accountwas introducedon 4 December1982,it has been well receivedby the Bank DagangBali'scustomersand, as shown in Table6, has been a small,rapidlygrowing,sourceof regularlong term deposits. Table6: RETIREMENTSAVINGSSCHEMEACCOUNTNUMBERAND DEPOSITS
1982 1983 1984 1985 1986
No. of accounts
Total savings Rp
112 3,599 7,319 10,144 13,899
406,000 66,481,900 224,507,925 477,758,763 857,163,675
AverageRp balance 3,625 18,472 30,675 47,098 61,671
Source:Bank DagangBali, January,1987 Scholarship SavingsPlan (TabunganBea Siswa Berhadiah) 26. The Scholarship SavingsPlan is anothergoal savingsscheme introduced by Bank DagangBali on April 12, 1983 (Table7). Customersset a targetdate and monthlyamountto some for highereducationof their children. Like the retirementplan, once the cuistomer determinesthe monthly payment(Rp 1,000minimum)and the maturitydate, he cannotwithdrawthe funds until that date exceptin an emergency. There is no penaltyif a paymentis missed,but, as with the retirementplan, the end benefitis reduced accordingly.Interestis paid at 15% p.a. on the minimummonthlybalance.
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ANNEX 8 Page 10
Table 7: SCHOLARSHIP SAVINGSSCHEME
1983 1984 1985 1986
No. of accounts
Total savings Rp
AverageRp balance
21 3,726 6,447 9,306
65,000 68,422,623 215,912,013 483,105,688
3,095 18,364 33,490 51,913
Source: Bank DagangBali, January,1987 Savingsfor ReligiousCeremonies(TabunganUpacaraAgama) 27. This programwas introducedby Bank DagangBali in January1987 to help Bali residentspreparefor funeralexpenses. Customrequiresan elaboratecremationceremonywhich,if not providedfor in advance,could place the familyinto considerable debt. While no accountshad been accepted in early1987, tne programis expectedto have more appealthan life insurance sincethe marketingemphasisis on the ceremony. Outsideof Bali there is a similarpotentialfor burialsavingsamongTorajanpeopleof SouthSulawesi. There the traditional burialceremonyincludesthe sacrificeof a buffalo which cost Rp 1 to 3 million. Villagersmust make a substantial savings effortto meet the costs. Savingsfor Home Purchase(TabunganPembclianRumah) 28. Savingsfor Home Purchaseis anothergoal savingsplan recently introduced by Bank DagangBali. It operateslike the bank'sscholarship or retirementplan the amountof monthlypaymentand maturityset when opening the account. Down PaymentSavingsSchemefor HousingLoans (TabunganUang Muka KreditPemilikanRuman) 29. This plan was introducedby the NationalSavingsBank in 1985 to encouragepotentialdepositorsto save for the down paymentrequiredfor their plannedhome purchase. The customermust save a set amounteach month equal to approximately one thirdof his normal salaryfor a periodof 24 to 36 monthsdependingon the paymentsize and the end housingloan lesired. These depositsearn interestat 12% p.a. calculatedon the lowestmonthlybalance and paid annually. Underthe plan thosecompletingthe termsand conditions will then be eligiblefor the bank'shousingfinance.
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Haj PilgrimageExpensesSavings(TabunganOngkosNaik Haji) 30. The Raj Piligrimage ExpenseSavingsplan is a form of compulsory savingsplan designedto financethe expensesof a pilgrimageto Mecca.The customerdesignatesthe amountof paymentfor eithera weeklyor monthly basis. Most plansare relativelyshort-termand seldomfor more than a year. In 1985 therewere 34,554accountsoutstanding with a total savings balanceof Rp 108.1billion. These plansare presentlyofferedby Bank Rakyat Indonesia,Bank Negara Indonesia1946 and Bank EksporImporIndonesia,and are likelyto be offeredby other banks in future. F. CompulsorySavingsAccounts 31. Thoughnot significant in termsof totaldeposits,compulsory savingsaccountsare importantto some secondarybanksand smallerrural financialinstitutions.These depositsare not compulsorysavingsrelatedto establishing a savingsrecordwith the bank beforebeinggranteda loan (some multipleof deposits). They are insteada form of compensating balance whereby,with a Rp 10,000loan the applicantwill actuallyreceiveRp 12,000 with Rp 1,000for the flat interestchargedand Rp 1,000 for the compulsory savings. In some cases the savingsamountis returnedafterthe loan is fully repaid,but not always. These compulsorybalancesmay or may not receive interestdependingon the institution. G. Other SavingsAccounts 32. In additionto the TABANASand goal savingsaccounts,some banks offer their own ordinaryor specialpurposesavingsplans,each with their own terms and conditions.More banksare considering such plansand among the secondarybanks,the BKKs plan to acceptdepositsin the near future. OrdinarySavingsPlans 33. WhileTABANAS/TASKA accountsare limitedto only 12 of Indonesia's privatenationalcommercialbanks and are not availablefor the secondary banks,the secondarybanksoffer their own savingsaccountplans in competition to the TABANASscheme. Most allowmore frequentwithdrawalsthan TABANASand pay much higher interestrates. Indeed,some Bank Pasar in tste 1986 were payingup to 21% per annumfor such funds. 34. One of the more interesting examplesof privatebank savings accountsis offeredby Bank DagangBali. It offersa monthlylotteryand a competitiveinterestrate of 1.0% p.m. on the minimummonthlybalance. While this interestrate is less than TABANAS,thereare no restrictions on withdrawalsand the lotterychancesare based on the accountbalancerather than one chanceper account. In contrastto SIMPEDES,the lotterydrawings are made monthlyratherthan twice yearlyand the couponnumbersare basedon the numberof multiplesof Rp 1,000 ratherthanRp 5,000 in the account's minimummonthlybalance. The prizesare also largerwith a Rp 10 million houseawardedevery six months,a Rp 6 millionmini van every threemonths, and a Rp 81 millionmotorcycleeverymonth.
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CashierGuaranteeSavings 35. At leastone statebank requiresthat all tellersor cashierspay 21 of theirsalaryinto a specialsavingsaccount,the balanceof which cannotbe withdrawnuntilafter retirement.This requirementis intendedto guarantee againstpossibletheftand in returnthe bank pays an attractiverate of interest,15% p.a. Save and BorrowAccount(RekeningSimpanPinjam) 36. This is a form of overdraftaccountofferedby Bank Dagang Bali throughwhich the customerhas accessto an automaticcredit facility(Rp 5 millionmaximum)equalto 25 times the agreedmonthlysavingspayment(Rp 40,000per month for an overdraftfacilityof Rp 1,000,000).There is no set time requirement for repayingthe loan,but the agreedmonthlysavingsmust be continued. The savingscomponentearns 0.025%per day on depositbalances over Rp 1,000.Alternatively the customeris charged0.11 per day on any negativeaccountbalance. 37. As additionalincentive,save and borrowaccountcustomerscan pay a Bp 10,000fee and receivean AutomaticTellerMachine(ATM)card. The ATM introduced by Bank DagangBali on May 1, 1986,was the first in Indonesia. Therewere 180 ATM cardsoutstanding as of December,1986 and the ATM had only a half dozen transact4.ons per day totallingapproximately Rp 100,000. The bank is very selectiveboth in the openingof theseSave and Borrowaccounts and in issuingATMs. ProposedCommercialBank OrdinarySavingsSchemes 38. In interviews, state commercialbanks suchas Bank DagangNegaraand Bank NegaraIndonesia1946,indicatedthat they were considering the introduction of their own ordinarysavingsaccountsto competewith their currentTABANASaccountprogram. The Bank DagangNegara schemewould not have a lottery,but would allowwithdrawalsfour timesa month and pay 14Z interest on all savings. The bank hopes to attractlargersaversas smallerones would find the 15% plus lotteryofferedby TABANAS(on depositsup to Rp 1,0,oo000) more attractive.The Bank NegaraIndonesia1946 savingsaccountwould require an openingbalanceof Rp 5,000 and a minimumbalanceof Rp 2,500. The terms might allowup to five withdrawalsper month and would pay intereston the lowestmonthlybalanceof 15% p.a. ProposedBKK SavingsScheme 39. In January1987 the BKKs couldnot acceptvoluntarysavings,but a savingsprogramwas in the planningstagewith a pilot programexpected sometimein 1987.Unlikeotherrural savingsschemes,this programis intended to work on a couponbasis insteadof a passbook. The couponswill be availablein varyingdenominations with the amountof interestdependenton the numberof monthsheld. The back of each couponwill have a schedule showingthe interestper month and the issuedate will be stampedon the front. Those redeemingthe coupon in betweenmonthswould receiveinterestup to the previousmonth. Interestwould be paid only on redemption. Each
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couponwould be numberedand the name of the holder indicatedon the coupon book stub as well as in an index. The couponwould be redeemableonly at the issuingBKK and on each redemptionthe numbercheckedagainstthe recorded holderand his nationalidentification card. The controlsseem adequateto precludefraudand some provisionsare includedfor the redemptionof lost coupons. The BKK'smain incentivefor a couponsystemratherthan a passbook is to reduceis the labor cost and secordkeepingassociatedwith posting intereston customerledgerbooks. UnlikeSINPEDES,the BKK savingsplan hopes to competestrictlyon an interestbasisand wil' offer a higherrate (probably15% p.a.) insteadof a lottery. BKK wantedto avoid the high administrative costsand supervisionthat a monthlylotterybasedprogram entails. H. Time Deposits 40. Time depositsare attractively pricedshortto mediumterm (1 to 24 months)savingsvehicleswith the interestrate fixed over the periodand the interestpaidmonthly. The intereston one month to 24 monthdepositsis exemptfrom taxationand since 1983, the sourceof fundsused for these depositsare free from TaxationDepartmentinvestigation. 41. Prior to June 1983 all interestrates,were set by BI. While state banks are now free to set their own rates,BI imposesa minimuminterestrase of 12% p.a. on the 24 month time depositsacceptedby governmentowned banks. BI also limitsthe secondarybanks from offeringtime depositswith a maturityof over threemonths. 42. As shown in Table 8, thereare substantial differencesin time depositrates. There are also differencesin the minimumdepositsizes,and price competition is encouragedsinceretaildepositrates are collectedand publisheddaily in the Indonesiapress (Kompas).Among the statecommercial banks,however,there is a gentleman's agreementas to the maximumadvertised interestrates,but thesebanks,may provideup to an additional0.5% to their betterclients. Table 8:
RANGEOF TIME DEPOSITINTERESTRATESBY TYPEOF BANK (5 January, 1987) State Banks
Private FX Banks
1 month 3 months 6 months 12 months
13.0-13.50 13.5-14.25 14.5-14.50 15.0-15.00
12.5-14.50 13.5-15.00 14.0-16.00 14.0-16.00
24 months
14.0-15.00
15.5-17.00
OtherPrivate NationalBanks
Source: Interviewswith Bank Indonesia,1987.
Foreign Banks
13.0-15.0 9.50-14.00 14.5-16.0 9.50-14.75 15.0-17.0 10.00-15.50 15.0-18.0 10.25-16.00 -
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43. Statecommercialbanks and regionaldevelopment banksuse a lower minimumdepositsize than the privatebanks. The RegionalDevelopment Bank of East Java, for example,requiresa minimumof Rp 100,000for time depositsas does Bank DagangNegara. In contrast,Bank DagangBali requiresa minimum depositof Rp 500,000,and Bank CentralAsia, a minimumof Rp 1,000,000.The privatebanksalso offer a more limitedrange of maturities,Bank Dagang Bali, for example,will acceptonly up to 12 months. As showuin Table 9, the 12 month maturityis also the most populardepositmaturityamong state commercialbank customers,but priorto the 1983 interestrate liberalization, 24 month depositswere the most popular. Table 9: TIME DEPOSITSWITH STATE BANKS BY MATURITY (billionsof rupiah)
24 months 18 months
12 6 3