Jakarta. The International Finance Corporation, the World Bank's financing arm for the private sector, signed a $77 million syndicated loan agreement for local financing company Indosurya to support small and medium enterprises in Indonesia, it said in a statement on Friday (02/02).
Indosurya offers multipurpose working capital and investment financing for small-scale businesses. It has already provided loans — through its 70 branches in Java, Bali and Sumatra — for around 2,000 small and medium entrepreneurs.
Indosurya is a subsidiary of Indosurya Group, a mining, finance and property conglomerate that has been around in Indonesia for more than 30 years.
The syndicated loan will help Indosurya provide more funding for small-scale entrepreneurs across Indonesia and also improve their risk management.
"We're excited by this strategic partnership with IFC. We hope they can bring their best practices to our company," Henry Surya, chief executive of Indosurya, said in a statement.
IFC, the lead arranger for the syndicated loan, will provide $20 million. The rest will come from seven other lenders — two development financing companies, four impact investors and a commercial bank.
The senior loan facility falls under the framework of the World Bank's Financial Inclusion program, which aims to address shortage of loans for SMEs by providing investment and mobilizing private sector funds.
According to a 2016 study by the IFC, 54 percent of small and medium businesses in Indonesia were still looking for bank loans, which could add up to $11 billion in total value.
"IFC focuses on small and medium enterprises since they're one of the main growth drivers in Indonesia," Azam Khan, IFC's country manager for Indonesia, Malaysia and East Timor, said.
IFC has helped finance and mobilize more than $7.7 billion for private sector projects in Indonesia to date.