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Government Investment Unit of Indonesia

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James Chen
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Updated June 24, 2022
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What Is the Government Investment Unit of Indonesia?

The Government Investment Unit of Indonesia is a provider of microfinance to small and medium-sized enterprises (SMEs) and is overseen by the country's Ministry of Finance. Also known as Pusat Investasi Pemerintah, 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. In 2017, It was allocated a revolving fund of 1.5 trillion Indonesia rupiah (IDR) to help as many as 300,000 microenterprises.

Key Takeaways

  • The Government Investment Unit of Indonesia provides microloans to SMEs in Indonesia.
  • Also known as Pusat Investasi Pemerintah, it was established in 2006 as a sovereign wealth fund.
  • The fund provides microenterprises with financing up to Rp 10 million without any collateral from the borrower.
  • As much as Rp 20.79 trillion in loans has been disbursed to nearly 2.8 million recipients.
  • Although it originally invested in infrastructure, the fund's assets and responsibilities were transferred to PT Sarana Multi Infrastruktur in 2015.

Understanding the Government Investment Unit of Indonesia

The Government Investment Unit of Indonesia was established in 2006 as a sovereign wealth fund. It invested in various asset classes like debt and equity, major infrastructure projects across the country, and other direct investments. As mentioned above, it is also known locally as Pusat Investasi Pemerintah.

A 2015 law required the fund to transfer Rp 18.3 trillion in assets to PT Sarana Multi Infrastruktur. 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 now works with local governments and distribution partners to get funds into the hands of small entrepreneurs. As such, it aims to become a provider of microfinance to those who need funding by doing the following:

  • Managing the revolving fund
  • Distributing funds in accordance with its vision
  • Developing a microfinance program that informs and meets the needs of the current society
  • Working with local governments
  • Educating individuals about microfinance

Financing is available for microenterprises for as much as Rp 10 million or about $675. No collateral is required by the recipients of these loans. As of June 2022, it has distributed Rp 20.79 trillion in loans to more than 2.8 million recipients in more than 500 different cities across Indonesia. This dollar amount translates to just over $1.4 billion.

The most current figure for Indonesia's gross domestic product (GDP) for 2020 was $1.06 trillion. The nation's economy contracted by 2.1% that year.

Special Considerations

Microfinance in Indonesia

Indonesia has a large microfinance sector with over 60,000 financial institutions that deal in this type of lending. Because it is such an integral part of the nation's economy, the country's central bank, Bank Indonesia, has a requirement that all banks must set aside a minimum of 20% of their lending portfolio to microfinance in an effort to expand the sector.

PT Sarana Multi Infrastruktur

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 federal government's Ministry of Finance. PT SMI is permitted to finance infrastructure development in eight areas, including roads and bridges, transportation, oil and gas, telecommunications, waste management, electricity, irrigation, and drinking water supply.

Article Sources
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  1. Pusat Investasi Pemerintah - Kementerian Keuangan. "Sejarah."

  2. Pusat Investasi Pemerintah - Kementerian Keuangan. "Beranda."

  3. PT Sarana Multi Infrastruktur. "PT SMI at Glance."

  4. Pusat Investasi Pemerintah - Kementerian Keuangan. "Visi Misi."

  5. Xe. "Convert."

  6. The World Bank. "Indonesia."

  7. Global Business Indonesia. "An Outlook on Indonesia’s Microfinance Sector."