In order to improve services for micro,
small, and medium enterprises, CIMB Niaga continues to distribute financing to the
MSME sector as an effort to drive growth in the Indonesia’s economy.
Micro, Small and Medium Enterprises (MSME) are an important part of the Indonesian economic structure. This is due to the increasingly important role the sector plays in supporting economic growth and job creation. In addition, this sector has proven resilient under severe conditions of national and global economic recession. To that end, the Government of Indonesia has encouraged wider and easier access to financing for the MSME sector to drive the Indonesia’s economy is in line with the government. Bank Indonesia issued regulation No.14/22 / PBI / 2012 which requires Bank to channel 20% of distributed loans to the SME sector.
Although this regulation will be phased gradually, CIMB Niaga has since 2014 responded to this regulation by establishing the MSME Directorate (Micro, Small and Medium Enterprises) that focuses on providing financial services to the SME sector. MSME Directorate consists of SME Banking, Micro Linkage and Micro Laju. This step was furthered in 2014 with the establishment of the Sub Directorate of Pension Business that helps pensioners to stay productive and run business with financial support from CIMB Niaga. Currently, the total of financing portfolio in the SME sector provided by CIMB Niaga represents approximately 19.8% of the entire financing disbursed by the Bank.
Micro, Small and Medium
In 2014, there were some changes in the naming of the Directorate of MSME. The Directorate of SMME name was changed to the Directorate of MSME, while the Sub- Directorate of Commercial Linkage was changed too Sub Directorate Micro Linkage. These changes were done in accordance with the order of markets served and to sharpen the focus of the business and create uniformity in the Bank’s internal terminology.
In general, the performance of the MSME Directorate throughout 2014 recorded an increase in loan disbursed by 12.2% to Rp 34.9 trillion with an NPL ratio of 2.4%. MSME third party funds reached Rp 33.1 trillion, an increase of 1.7% from the previous year.
As a result of this hard work, CIMB Niaga was named as the 10 Banks that had the greatest commitment in supporting SME business during “Ide bisnis Choice Award 2014” event held by Ide bisnis Magazine.
Micro Banking
CIMB Niaga initiated two approaches in serving the micro market. The first approach is indirect through strategic partnerships. This strategy was selected to better identify potential micro markets with diverse business while utilizing the existence of strategic partners considered capable of helping the growth of the micro business segment in the future. Business management in the form of this partnership is supervised by the Micro Linkage unit.
Meanwhile, the Directorate of MSME has initiated a direct approach to targeted micro markets. Through this approach, the MSME Directorate provides direct financing to micro- entrepreneurs through Mikro Laju outlets managed by the Bank. The management of direct micro financing is supervised by the Micro Laju Unit.
Micro Linkage
In disbursing loans, the Micro Linkage unit works closely with strategic partners depending on the market segment being financed. One example of a business models that have been applied successfully under this scheme is financing to palm farmers / plasma (end user).
selects KUD (Village Units of Cooperatives and Plantation Corporation (as the Core Companies) as partners. Through these cooperatives, farmers will receive loans from CIMB Niaga Bank they can use to open and grow palm oil plants, and sell the harvest to plantation companies.
Other types of partners selected by the MSME Directorate are financial institutions including the Regional Development Banks (BPD), rural banks (BPR) and Cooperatives.
Meanwhile, the end users who are financed by CIMB Niaga are customers/debtor of BPD and BPR, as well as members of the Cooperatives. These partners are appointed as agents of the Bank with different roles as marketing agent, collecting agent and security agent.
Micro Linkage also offers financing to the retirees for multipurpose needs. This is done through cooperation with POSINDO which helps CIMB Niaga in deducting pension money of the retirees as a source of credit payments.
Looking forward, financing in this sector will continue to be developed both in terms of volume and cooperation. It started with the strategic measures undertaken in 2013, in which CIMB Niaga collaborate with Taspen and Asabri as partners in the payment of pension for retired civil servants and military and police officers.
For the Micro Linkage unit, one of the biggest challenges successfully overcome in this tight financial environment is how to anticipate lower volume of financing due to slowdown in some economic sectors. The unit answered this challenge y continuing to monitor and conduct more in-depth analysis on the quality of financing through more effective communication with selected partners. That is why Micro Linkage unit is currently focusing more on offering financing to the Bank’s existing customers until signs of better Marco economic condition are identified.
As of the end of 2014, Loan disbursed in Micro Linkage had increased 12.3% to Rp 10.2 trillion with sound credit quality as evidenced by an NPL ratio of 1.1%. Micro Linkage business development is supported by 22 branches of Lending (including desk) and 5 branches of Funding spread across Indonesia, employing about 150 staffs.
and help them to grow business sustainably.
Services offered include working capital loans and investment with a ceiling of up to Rp 1 billion. Other services provided by Micro Laju unit are pension benefits and loan payments to the retirees. Also available are savings and deposits with competitive interest, in accordance with the provisions of OJK. All are equipped with Sharia-based services through the Office Channeling that consists of sharia gold pawn service and Hajj Savings Plan service.
Throughout 2014, the number of Micro Laju outlets declined from 350 to 325 units. This decrease was mainly due to the efforts of the Micro Laju unit to identify areas or regions with greater business potential. Underperforming outlets will be closed or relocated to other regions that show greater potential. Therefore, the geographic movement in this business segment will still be very dynamic in the next few years in line with business progress in this particular segment.
Micro Laju has a vision “To be the Best Financial Solution Provider for Micro Entrepreneurs in Indonesia” with the motto “Growing with Trusted Friends”. This vision describes a commitment to be the best companion for micro entrepreneurs in Indonesia through the offering of simplicity, speed and the opportunity to grow with CIMB Niaga.
In order to realize this commitment, Micro Laju during 2014 made improvements to allow simpler, faster and easier credit application process to meet the needs of micro and small entrepreneurs. Micro Laju has also established an SME Center that focuses on providing services according to the business potential in the operational areas of each micro business customers (eg palm plantation, local wet markets and other locations).
In addition Micro Laju has developed a model of value chain financing, by providing loans to the distributors, suppliers and customers of the Bank’s existing customers. Value chain financing includes lease financing offered to tenants of stalls of large developers, to distributors of prominent consumer goods manufacturers and to sub-distributors of large distribution companies.
After a couple of years working at a sandal store in one of the markets in Bogor and I started my own business in 2006 that is the business of making sandals, having that experience and strongly determined.
I had very limited capital and could only afford a small kiosk, assisted by very few employees. I have worked hard for this business and was depending largely on my own capital to live modestly with my family.
But I would often imagine of expanding further. I was thinking of a larger space with more employees and more raw materials I can produce sandals from. I dreamed that my sandal products would be distributed in a larger coverage area beyond Bogor.
Having this dream in mind, in 2009 I started my friendship with Micro Laju at Pasar Anyar Bogor, I borrowed loan in an attempt to realize my dream.
Thank God, I managed to make it happen and now have my own house, quite large factory and a warehouse that has enabled me to distribute my sandals outside the city of Bogor.
I am proud to be one of the companions of CIMB Niaga Micro Laju, and I hope the Micro Laju continues to the best friend of micro entrepreneurs in Indonesia in the future and continue to provide ease and quick services to its customers.
M. Jamil
Owner of Sandal Producer
the payment of retirement benefits at Mikro Laju’s branch offices. Beneficiaries of pension fund can also apply for retirement loans for a variety of needs and starting business.
All of the above initiatives resulted in amiable condition with Micro Laju lending in 2014 showing an increase of 27.1%
from the previous year, ie from Rp 2.4 trillion to Rp 3.0 trillion with sound credit quality and larger number of customers of 21,328. Customer funds reached Rp 299 billion, an increase of 25.2% from the previous year while the number of customers grew to 99,299.
All employees of Micro Laju are encouraged to instill the values of IMPACT (Discipline, Mandate, Motivation, Caring, Enthusiastic and Competent). IMPACT has a meaning that our lives should give effect to ourselves, others, the society and the country.
SME Banking
The SME unit handles customers who are small and medium entrepreneurs having businesses throughout Indonesia. In 2014, one of the breakthroughs made in this business segment is the adjustment of financing platform of financing for customers with proven record of credit and an ability to develop their business healthily. Previous studies were done before this initiative was introduced to bridge the transition process of customers whose accounts need to be
their business growth and thus, greater need for financing.
For the SME unit, this impacts positively as key employees handling this sort of potential customers can deepen their knowledge on the industry of each of these customers.
In 2014 the SME unit managed to achieve improved performance in terms of financing disbursed, customer deposit collected, credit quality and profitability.
In 2014, SME loans portfolio increased 10.4% to Rp 21,6 trillion with an NPL ratio of 2.7%. This increase was balanced with an increase of 6.2% in third party fund - that included CASA (Current and Savings) and Time Deposits - to Rp 1.8 trillion. Growth in customer deposit was achieved thanks to the good cooperation and strong support from the Funding, Bancassurance & Services (FBS) units under the Consumer Directorate structure as collectors of fund and the implementation of cross-selling activities between FBS and SME. The increase in third party funds in the SME unit is supported by the implementation of value chain concept for distributors and suppliers of SME borrowers.
SME Processing Center
In order to educate customers and help them to better understand the ins and out of credit application process, the SME unit has established and managed an SME Processing Center in major cities such as Jakarta, Bandung, Semarang, Medan and Surabaya as the pilot projects. Each SME processing center is equipped with all the supporting units involved to allow end-to-end and quick process of credit application.
CRDE (Credit Retail Decision Engine)
SME Business unit has begun to apply a scoring system of CRDE (Credit Retail Decision Engine) with a limit of Rp10 billion to answer the increasingly tough challenges in business environment. This system is capable of providing an automatic analysis on prospective financing based on historical data that have been validated. This has allowed more rapid process of credit application with equally sound credit quality.
competition, which include: the development of SME organization from previously consisting of 9 areas to 12 areas, and how to meet the demand for employees with adequate quality by organizing sustainable of programs of SME Development.
SME continues to make improvements in the area of credit portfolio monitoring, internal process improvement, and early detection systems on the quality of credit on the part of debtors and system analysis of existing SME credit. Improving the quality of knowledge of SME staffs has been paid heed to by holding scheduled seminars with continuously improved training materials.
CIMB Niaga has encouraged making changes as an effort to maintain its sustainable growth, sound credit quality, reliable SME staff, which in turn will make major contribution to the debtor’s business and the Indonesian business economy in general.
MSME Center
The MSME Directorate has established an MSME Center to capture any emerging financing opportunity. This MSME center will provide the entire range of SME banking services within only one branch to ensure that opportunities will not be captured by competitor banks that offer similar products or services. Currently, we have 69 MSME Centers in strategic areas, are planning to expand them more aggressively in 2015.
MSME Funding
MSME business is one of the sources of low-cost fund for CIMB Niaga. As of the end of 2014, third-party fund collected in the MSME business segment reached Rp 33,1 trillion.
Compared with financing that reached Rp 34.9 trillion, this business segment has proven its resilience and capability fund its own growth.
One of the drivers of this relatively large fund was an increase in the volume of financing disbursed through value chains.
The scheme encourages customers particularly those in the value chains of SME customers to require their business partners to open account at CIMB Niaga.
The strategy for the micro segment is similar as the Micro Laju unit requires credit applicants to open an account at CIMB Niaga. The objective is increase the account balance of micro business while monitoring the performance of micro enterprises business to which we have disbursed financing.
2015 Focus
MSME Directorate will further sharpen its focus on existing customers and on products and services we have offered while monitoring developments taking place in the economy, which had been predicted to remain challenging in 2015.
2014 2.0
2013 1.8
2012 1.6
Net Interest Income (Rp trillion)
2014 33.1
2013 32.6
2012 30.0
Customer Deposit (Rp trillion)
2014 34.9
2013 31.1
2012 27.5
Loan (Rp trillion)
2014 2.4
2013 2.2
2012 2.0
Non Performing Ratio (%)
2014 1,270
2013 1,140
2012 1,110
Profit Before Tax (Rp billion)
2014 5.99
2013 6.57
2012 6.58
Net Interest Margin (%)