Indonesia to convert loans to venture capital

Posted on 13 May, 2016 by Mark Chatterley, reporter

Indonesia's government plans a $8.9bn program to convert small business loans as a way to strengthen venture capital funding for startups in the country.

Rudiantara, minister of communications and informatics in the Indonesian government, has confirmed that the government is considering to strengthen VC funding by converting small business loans, according to Katadata.

The government has allocated a total budget of Rp120 trillion ($8.9bn) to venture capital financing this year. This money will be used to enable startups move away from using small business loans which often have high interest rates and short return periods.

Through this conversion startups will have access to funding with interest rates of 9% per year.

Rudiantara aims to have the rules finalised this year with the conversion program beginning next year.

PT Bahana Securities and PT Danareksa Sekuritas, both government-owned organisations, are being considered as management firms for the program.

Rudiantara said: "[Startups] would all be dead if they took out bank loans. They would get a loan today and have to repay it next month."

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