OJK Supports Financing on Agricultural Sector From Upstream to Downstream

Jakarta, InfoPublik - the Financial Services Authority (OJK) is committed to encourage funding in agricultural sector, not only in upstream but also in downstream sectors, in order to create job opportunities, improve the welfare of farmers and increase agricultural productivity.

"So far food sector financing has become priority despite its small composition of less than 20 percent," said OJK Deputy Commissioner for Strategic Management 1B Slamet Edy Purnomo in a discussion with Mass Media  editors in Bandung on Sunday (22/1).

On November 2016, credit disbursement in food sector reached Rp 638.4 trillion, or about 14.90 percent of the total banking credit of Rp 4,285 trillion.

Meanwhile, nonperforming loan (NPL) in food sector reached 3.32 percent of the total value of Rp 638.3 trillion. "The number is higher than national NPL of 3.18 percent," said Slamet.

Related to this financing, OJK will launch  Financial Acceleration for food synegry and Inclusion or Food Action Program .

The program is initiated byOJK and  Agriculture Ministry, together with  Agrarian and Spatial Planning Ministry, Cooperatives and SMEs Cooperatives, and  Financial Services Industry and Association .

"There are three main focus in  Food Action Program, namely the role of financial services industry, value chain on financing schemes and the role of food innovation through Fintecg or e-commerce," he explained.

OJK is plan to launch Food Action Program on January 30, 2017, in Payakumbuh, Padang, West Sumatra to support the government's  Nawacita (nine agenda development principles) program. "The launching will be held outside Java in order to avoid Java-centric  and to drive the economy outside Java," she said.

He added that in 2019 the government is targeting inclusive finance or access to financial services in agricultural sector to increase from 36 percent in 2014 to 75 percent in 2019. (Translator: Sugiarti)