Community Empowerment at Micro-, Small, Medium Businesses and Cooperatives in Muara Enim
Development Planning Agency at Sub Nation Level of Muara Enim District

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
In Indonesia there are around 57 million UMKM (micro-, small and medium businesses) and 212 thousand cooperatives that play an important role in contributing to the economic sector such as providing employment, reducing poverty and spurring economic growth. According to statistical data UMKMK (micro-, small, medium businesses and cooperatives), contributes up to 56 percent to the Gross Domestic Product (GDP) in 2013. It is a big figure so that it is normal for the government to pay attention to UMKMK. Based on BPS (The Central Bureau of Statistics) data of 2016, the number of UMKM in the district of Muara Enim reaches 4.123 units and Cooperatives 481 units. The main problem being faced by UMKMK in Muara Enim is capital. Most of them do not have adequate access yet to banks. Even if they have micro-, small businesses they are still unable to apply for credit because the interest in commercial banks is relatively too high for them. Many of them still rely on street credit providers known as loan sharks. Under the condition it is difficult for them to develop their businesses. So, they generally have businesses but cannot improve their welfare. The condition has gone for years causing many of them especially micro- and small businesses live under the poverty line. The situation gives an impression as if "the state is not present" to help solve UMKMK problems. To deal with the problem The Government Of The District of Muara Enim has made a breakthrough through Development Movement Through Community Empowerment at Micro-, Small, Medium Businesses and Cooperatives (UMKMK) in The District of Muara Enim, South Sumatera Province, Indonesia (GERBANG SERASAN) based on The Decision of Muara Enim District Head Number 6, 2001. Under the program The Government of Muara Enim puts Regional Budget Funds into a freezed giro in the Executing Bank as a credit guarantee. The Executing Bank will give special credits to UMKMK with a low interest with a guarantee of The Muara Enim District Government. Although the program has gone well, based on the BPK (State Audit Agency) audit results, it may not be continued because based on Government Regulation Number 54, 2005, The Government may not guarantee a third party (including UMKMK) to obtain bank credits. Considering that GERBANG SERASAN is an innovation program to empower UMKMK to overcome poverty the concept is then improved. New GERBANG SERASAN System (Refined). Under the new system The Government of Muara Enim no longer puts regional budget funds as a credit guarantee for UMKMK but it a) optimizes existing bank credit scheme; b) extends credit and insurance premium subsidies to UMKMK; c) provides KKMB (Partner Bank Financial Consultant) as UMKMK partner in dealing with bank credit; and d) provides GERBANG SERASAN Secretariat as the home base for UMKMK.

B. Strategic Approach

 2. What was the solution?
• GERBANG SERASAN as empowerment of UMKMK to increase incomes in the context of poverty reduction. • GERBANG SERASAN synergize between local government and banking in strenghtening the UMKMK capital. • GERBANG SERASAN improve UMKMK competitiveness in national and global levels.

 3. How did the initiative solve the problem and improve people’s lives?
Solutions of problems are discussed in a staff meeting led by Muara Enim District Head and attended by Deputy District Head, Regional Administration Secretary, Assistants and Heads of Regional Government Working Units (SKPD) within the District Government regarding public complaints especially from UMKMK about capital issue and solutions from The District Head. It is then followed by Focus Group Discussion (FGD) attended also by Community and Religious Figures, Sriwijaya University (UNSRI), Non-Governmental Organizations (NGO) and Banks (including Bank Indonesia Palembang) in which the concept of GERBANG SERASAN program to be implemented is agreed upon. Innovative steps in GERBANG SERASAN program that will be carried out to solve problems : a. The Old System of GERBANG SERASAN (2001-2007) • The Government of Muara Enim holds cooperation with Executing Banks (Bank Rakyat Indonesia and Bank Sumsel Babel) facilitated by Bank Indonesia Palembang. • The Government of Muara Enim provides regional budget (APBD) funds kept in the form of freezed giro in The Executing Bank as credit guarantee for UMKMK. • The Executing Bank extends special credit with a low interest to UMKMK recommended by The Government of Muara Enim with credit guarantee from the APBD funds kept in the form of freezed giro. • When bad credits or credit arrears happen The Executing Bank will cut the guarantee funds provided by The Government of Muara Enim. • The Government of Muara Enim through BAPPEDA (Development Planning Agency at Sub-National Level) and Technical SKPD concerned conduct counseling and monitor its implementation. b. The New System of GERBANG SERASAN (2008-now) • The Government of Muara Enim makes a new cooperation deal with Executing Banks (Bank Rakyat Indonesia and Bank Sumsel Babel) facilitated by Bank Indonesia Palembang regarding The New System of GERBANG SERASAN credit distribution system to UMKMK. • Credit distribution to UMKMK is done by optimizing existing bank credits (KUR Mikro, KUR Ritel, KUPEDES, KUKPEDES-GS, and KUM-GS). • The Government of Muara Enim provides subsidized credit interest and insurance premium for UMKMK. • The Government of Muara Enim provides KKMB (Bank Partner Financial Consultant) as UMKMK advisors in banking affairs. Right now there are 10 KKMB who help the implementation of GERBANG SERASAN Program. • The Government of Muara Enim provides GERBANG SERASAN Secretariat that implements, monitors, evaluates and reports the implementation of GERBANG SERASAN activities and at the same time functions as an UMKMK HOUSE. • UMKMK House functions as a place for seeking answer for their problems, consultations, partner meeting, coordination and others. With the introduction of GERBANG SERASAN innovation program, UMKMK especially micro-small businesses and cooperatives would be helped in strengthening their capital through subsidized credit scheme so that they could develop their businesses and improve their welfare. GERBANG SERASAN innovation program is a program that offers an employment and poverty reduction in Muara Enim Regency and prepares the UMKMK to be able to compete in the national and global level.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
The New system of GERBANG SERASAN is a breakthrough program of The Government Of Muara Enim which is innovative as shown by : • The strengthening of UMKMK capital through cooperation with banks in distributing bank credit to UMKMK with subsidized credit interest and insurance premium provided by The Government of Muara Enim. Through the system UMKMK get subsidized bank credit to help their businesses and improve their welfare. • Provision and optimization of KKMB as UMKMK advisors to help UMKMK get access to banks and formulates credit proposals and also monitor their credit repayment in addition to other kinds of consultations. • Provision of GERBANG SERASAN Secretariat that will implement, monitor, evaluate and report activities of GERBANG SERASAN as UMKMK House. GERBANG SERASAN Secretariat is located in a special office with special employees and KKMB who are ready to give services needed by UMKMK. GERBANG SERASAN functions at the same time as UMKMK House in Muara Enim, to get answers to their problems, to express complaints and for consultation purposes as well as a business partner for UMKMK. So UMKMK House functions not only as a home for social but also for business purposes.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The partnership between The Local Government and Banks is the right choice as the parties directly involved in the implementation of GERBANG SERASAN program. Where each party has their respective roles that are : 1) Government Provide budget from APBD for the operations of the GERBANG SERASAN Secretariat, empowerment Partner Bank Financial Consultant (KKMB) as well as interest rate subsidies and insurance premiums. 2) Banking Distribute credit to UMKMK by optimizing the existing bank credit (KUR Mikro, KUR Retail, KUPEDES, KUKPEDES-GS, KUM-GS). With this partnership, UMKMK get assistance in improving capital ability, business development and institutional strenghthening of economics enterprises by facilitating access to banking given Local Government through KKMB. Improving the capital ability of UMKMK can accelerate efforts to reduce the number of poor people.
 6. How was the strategy implemented and what resources were mobilized?
Strategy for implementing The GERBANG SERASAN innovation program (New System) in Muara Enim : 1) After the audit results from BPK on Local Government Budget (APBD) financial statement of Muara Enim Regency that prohibit the Local Government act as guarantor for third party loan because it contradict The Government Regulation Number 54, 2005, Government Of Muara Enim begin to develop concept to improve GERBANG SERASAN program which involve several Local Government Working Units and coordinate with Bank Indonesia Palembang. Several FGD facilitated by Bank Indonesia Palembang was held between Government Of Muara Enim, team from Bank Sumsel Babel and team from Bank Rakyat Indonesia in Palembang. After several FGDs it was agreed the concept of GERBANG SERASAN with new scheme, with following principles : a) to do re cooperate with Executing Bank; b) optimization of banking credit scheme with credit plafond between US$ 149 to US$ 37.355 c) The Government Of Muara Enim provide subsidy of interest loan and insurance premiums for UMKMK that participate in GERBANG SERASAN and supply KKMB officer to assist UMKMK; d) The Government of Muara Enim provide an office as Secretariat for GERBANG SERASAN and it also as HOME BASE for UMKMK. 2) The Enhanced Concept (New System) was submitted to parliament and set into Local Regulation Number 11, 2008 on GERBANG SERASAN. 3) The implementation of GERBANG SERASAN is improved (New System) based on Local Regulation Number 11, 2008 in stages through: • Provision by The Government of Muara Enim of APBD funds for the operation of GERBANG SERASAN Secretariat, empowerment of KKMB and credit interest and insurance premium subsidy. • Cooperation Agreement between The Government of Muara Enim and The Regional Office of Bank Rakyat Indonesia. • Cooperation Agreement between The Government of Muara Enim and Bank SumSel BaBel Palembang. • Optimizing bank credit scheme by involving Insurance Institution. • Provision by Bank Indonesia of technical aid to empower KKMB in the form of training resource persons, monitoring and consultations. • The Regulation Of Muara Enim District Head on The Formation of Organization and Working System for The Executors of GERBANG SERASAN. • The Regulation of Muara Enim District Head Number 22, 2013 on The Amendement of The Decree Muara Enim District Head Number 23, 2010 on Credit Interest and Insurance Premium Subsidy on Credits of Participants of GERBANG SERASAN (Regional Gazzete of Muara Enim Regency Number 23, 2013). • The Decision of Muara Enim District Head on GERBANG SERASAN Muara Enim Regency Number 359/KPTS/VI/2012. • The Decision of Muara Enim District Head on Amendment of the General Reference for the Implementation of GERBANG SERASAN. • Formulating the requirement and credit application mechanism of GERBANG SERASAN. • KKMB recruitment • Program sosialization. • Program Implementation. • Monitoring, reporting and evaluation. Resources used are : 1) Financial Resources Financial resources come from local government budget (APBD) and banking fund. Muara Enim local budget that is used to finance Secretariat of GERBANG SERASAN average US$ 59.768 per year. Subsidy for interest loan and insurance premium from 2009 - 2016 is amounted US$ 1.091.020 while the GERBANG SERASAN credit realization from Bank Sumsel Babel and Bank Rakyat Indonesia in the amount of US$ 9.778.446 is allocated for 3.828 UMKM. 2) Human Resources Human resources that support the implementation of this program are Partner Bank Financial Consultant (KKMB), GERBANG SERASAN Secretariat, Banking and Government. 3) Other resources Other resources which are also important to boost growth and for the implementation of the iniative are commitment, political support, networking, consistency and conducive situation that make the innovation of GERBANG SERASAN Program go well until today.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
The basic idea for refinement of GERBANG SERASAN concept comes directly from The District Head of Muara Enim raised in a meeting attended by Heads Of Legal Affairs, Financial Affairs, Animal Husbandry and Fishery Service and Bappeda. He orders The Head Of Animal Husbandry And Fishery Service to formulate a concept of GERBANG SERASAN refinement and conduct coordination (FGD) with teams from Bank Indonesia Palembang, Bank Sumsel Babel and Bank Rakyat Indonesia and the refined concept of GERBANG SERASAN (The New Pattern) is agreed upon. The signing of the cooperation agreement is done by The Head Of Muara Enim District, The Head of The Regional Office of Bank Rakyat Indonesia Palembang, The Directors of Bank Sumsel Babel, Head by The Chairman of the Muara Ening Legislative Assembly and Witnessed by South Sumatra Deputy Governor. GERBANG SERASAN is implemented by Secretariat headed by Head of Secretariat and General Affairs Assisted by head of UMKM Development Section and KKMB Empowerment Section. The implementation of GERBANG SERASAN is fully supported by KKMB and monitored by Coordination Forum involving SKPD concerned which is led by Regency Secretary.

 8. What were the most successful outputs and why was the initiative effective?
Several concrete outputs of GERBANG SERASAN program innovation are : 1) Empowerment of 3.828 UMKM through capital strengthening using GERBANG SERASAN credit totaling US$ 9.778.446 in the period from 2009 to 2017 and the rate of smooth repayment with Non-Performing Loan less than 1%. 2) Increasing income of GERBANG SERASAN participants (UMKMK) at an average rate of 59% from before becoming GERBANG SERASAN participants and increasing new businesses by 33%. This show positive correlation to decrease in the poverty rate in Muara Enim from 17,98% in 2008 to 14,54% in 2015 (BPS Data). 3) The functioning of UMKMK House as a place for seeking answers, consultation and guidance in making proposals, partner meetings and others so that the house does not only function for social but also business forum for UMKMK. 4) The follow up of the GERBANG SERASAN Program is the establishment of PD. Bank Perkreditan Rakyat (smallholders’ bank BPR) GERBANG SERASAN in Muara Enim which was officially opened on December 5, 2016 to increase the number and reach of UMKMK that receive GERBANG SERASAN credit. 5) GERBANG SERASAN Program innovation has received awards in the form of a) Certificate of Appreciation for Selected Nominator for Innovative Government Award in 2013 from The Minister of Home Affairs of The Republic of Indonesia and b) Appreciation for Muara Enim GERBANG SERASAN innovation as 2015 Top 99 Public Service Innovation From The Minister of Empowerment of State Apparatus and Administrative Reform.

 9. What were the main obstacles encountered and how were they overcome?
Obstacle being faced in the implementation of GERBANG SERASAN in Muara Enim are among others: 1) At the start of the activity the obstacle being faced is the lack of data base of UMKMK so that during familiarization it is difficult to find participants. To overcome it KKMB intensively conducts familiarization to villages and sub-districts. 2) There is “silent resistance” from loan sharks who threaten UMKMK to join GERBANG SERASAN. To deal with it KKMB approaches UMKMK individually to explain the benefit of GERBANG SERASAN program. 3) Different perception from leaders of executing banks emerge and so everytime they are changed GERBANG SERASAN Secretariat must conduct explanation again about GERBANG SERASAN. 4) Some UMKMK do not meet urgent bank requirements and force to get GERBANG SERASAN credit. To overcome the problem explanation is done transparently regarding the requirements to get GERBANG SERASAN credit. The problems or obstacles met are also discussed at the coordination meeting which is done per quarter so that all stakeholders know and understand so that they can help inform UMKMK in the field.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The main benefit of GERBANG SERASAN innovation program : 1) The government is "present" to overcome UMKMK problems. Before the implementation of GERBANG SERASAN, most UMKMK do not have access to banking. If any, generally UMKMK is not able to take loan because the commercial bank interest rate will not reasonable for small micro enterprises. On the other hand they have to maintain their small business. Eventually, many of the them fall into the hand of moneylenders. Loan interest from moneylenders is 10-15 % per month. This condition is very heartbreaking, the poor who seek to live are getting poor. After the implementation, UMKMK have access to banks and can get credit with a low interest (subsidized) so that they can develop their businesses. Collaterals are also not needed for certain credit scheme. In other words the regional government is present and ready to help empower UMKMK in running their businesses and develop them. From 2009 to 2016 it was able to empower 3.828 UMKMK by strengthening their capital through GERBANG SERASAN credit scheme up to US$ 9.778.446 in value. 2) The presence of UMKMK House to be the place for UMKMK seeking answers of their problems, consultations and also suggestions to start their new businesses and or develop their businesses, meet partners and develop the marketing of their products. UMKMK House is not only a place for social activities but also a business house because it is completed with WiFi free of charge, computers, printers and a location to meet with partners. In the future it will also be completed with E-Commerce for UMKMK. 3) Evaluation on the implementation of GERBANG SERASAN program in 2009-2015 produced by Bina Darma University Palembang show the following results: • GERBANG SERASAN credit mostly distributed by Bank Rakyat Indonesia at 88% and Bank Sumsel Babel only 22%. • The business sector that receives the most credit is the trade sector reaching 63%. • The business sector that increases the number of its workers after receiving credit is the trade sector reaching 47% and the plantation sector at 33%. • There is an increase of UMKM income after becoming GERBANG SERASAN participants by no less than 50% which is enjoyed by 60% UMKM and an increase of income of 50% to 100% enjoyed by 26% UMKM and an increase of more than 100% enjoyed by 14% UMKM. In general the average increase of income of UMKM after becoming GERBANG SERASAN is 59%. • The creation of other businesses of up to 33% has been the impact of GERBANG SERASAN program, So it means new businesses have been created for UMKMK. 4) The success of UMKMK empowerment through credit distribution to strengthen their capital has contributed to the improvement of the role of service sector in PDRB of Muara Enim District and helped reduce poverty in the district. PDRB contributor from non-oil and gas service sector in Muara Enim in 2008 reached US$ 724 Million and in 2015 US$ 2 Billion increasing by 277,5%.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The launched of policy innovation GERBANG SERASAN shows that government of Muara Enim taking seriously, care and responsible in solving the UMKMK’s major problem that is difficulty to get capital with easy access and low interest rate to grows it business. This policy is part of government’s responsibility to improve quantity and quality of public services. In this case the government “Present” with the people in finding the best solution to solve the problem faced by UMKMK. Formulation of policy innovation GERBANG SERASAN program, policy implementation, monitoring and evaluation which is carried out strictly, accountable and sustainable demonstrated the government of Muara Enim strong commitment in empowering UMKMK in order to reduce poverty and increase UMKMK competitiveness in national and global levels. Commitment and concrete steps in formulation, implementation and monitoring GERBANG SERASAN policy by government of Muara Enim is an effort to strengthen government integrity in improving public service quality in local region. Strengthening the integrity of public services in local region is government of Muara Enim’s commitment in meeting the needs of community to improve their welfare.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
Innovation program GERBANG SERASAN target is UMKMK who is week in capital so it is not able to expand its business. In fact UMKMK who participated in GERBANG SERASAN program is dominated by women and most of them are poor. According to the data around 34,47% of UMKMK who apply for GERBANG SERASAN credit are women and there are about 12,07% are vulnerable people with low income. The data indicate that innovation program GERBANG SERASAN is giving opportunities for women and vulnerable people with low income to improve their business through GERBANG SERASAN capital strengthening credit which is low interest and easy to access.

Contact Information

Institution Name:   Development Planning Agency at Sub Nation Level of Muara Enim District
Institution Type:   Local Government  
Contact Person:   Abdul Nadjib
Title:   Head of Planning Agency of Muara Enim  
Telephone/ Fax:   +62734422004
Institution's / Project's Website:  
Address:   General Ahmad Yani Street Number 16
Postal Code:   31311
City:   Muara Enim
State/Province:   South Sumatera

          Go Back

Print friendly Page