What Is the Government Investment Unit?

The Government Investment Unit of Indonesia, also known as Pusat Investasi Pemerintah (PIP), is a provider of microfinance to small and medium-sized enterprises (SMEs) and is overseen by the country's Ministry of Finance.

In 2017, Pusat Investasi Pemerintah was allocated a revolving fund of 1.5 trillion Indonesia rupiah to help as many as 300,000 micro businesses. The fund was set up after data from the Ministry of Cooperatives and Small and Medium Enterprises identified as many as 44.2 million SMEs in need of government assistance.

Key Takeaways

  • The Government Investment Unit of Indonesia, also known as Pusat Investasi Pemerintah, provides microloans to SMEs in Indonesia.
  • Financing is available for micro businesses in amounts up to IDR 10 million, for which no collateral is required.
  • To date, IDR 8.6 trillion in loans has been disbursed to nearly 2.8 million recipients.
  • Previously, the Government Investment Unit of Indonesia invested in infrastructure. Its assets and responsibilities were transferred to PT Sarana Multi Infrastruktur in 2015.

Understanding the Government Investment Unit

The Government Investment Unit was established in 2006 as a sovereign wealth fund investing in major infrastructure projects in Indonesia. Under a 2015 law, it was required to transfer IDR 18.3 trillion in assets to PT Sarana Multi Infrastruktur (PT SMI).

This left the investment unit without a mission for two years. In 2017, the Ministry of Finance reactivated the agency by tasking it with helping SMEs.

Pusat Investasi Pemerintah works with local governments and distribution partners to get funds into the hands of small entrepreneurs. To date, it has distributed IDR 8.6 trillion in loans to nearly 2.8 million recipients. Financing is available for micro businesses in amounts up to IDR 10 million, for which no collateral is required. As of March 2021, IDR 10 million is worth about $14,400 USD.

The assets and responsibilities that previously belonged to the Government Investment Unit now reside with PT Sarana Multi Infrastruktur, which is a "special mission vehicle" under the Ministry of Finance. PT SMI is permitted to finance infrastructure development in eight areas: roads and bridges, transportation, oil and gas, telecommunications, waste management, electricity, irrigation, and drinking water supply.