The International Finance Corporations (IFC) Program for Eastern Indonesian Small and Medium Enterprise (SME) Assistance, or IFC PENSA, is helping small producers in some of the poorest areas in Indonesia. The program is helping coastal farmers make their seaweed production and processing more profitable and their marketing networks more transparent. The project is promoting the growth of a viable SME sector in Eastern Indonesia. It was formally launched in April 2004 and has a 5 year budget of US$25 million and 85 mainly local staff across offices in Balikpapan, Denpasar, Jakarta, Makassar, and Surabaya.

IFC PENSA projects cover six areas, namely business enabling environment; access to finance; supply chain linkages to SMEs in four areas of agribusiness; handicrafts; oil, gas, and mining industry; and sustainable supply chains.

IFC PENSA Programs
1. The Business Enabling Environment Program, based in Jakarta, is working with Foreign Investment Advisory Service to remove potential legislative and policy obstacles to investment and growth for SMEs in Indonesia. A current focus is a pilot program working with five regional municipalities to reduce the time it takes to start a business - on average registration presently takes 151 days.

2. The Access to Finance Program is based in Surabaya. The program is working to develop a network of “brokers” that will link SMEs and banks. In 12 months this program has seen US$4.5 million of loans approved and US$6.2 million being processed. Also, a credit facility of up to US$100 million is being created for commercial banks for lending to SMEs. The program has also run workshops for more than 200 businesswomen on financing options.

3. The Agribusiness Linkages Program, based in Makassar, works with farming and coastal communities in some of the poorest areas of Indonesia. Program work centers on three areas - seaweed; cocoa; and integrated maize/poultry - supporting over 5,000 farmers.

4. The Oil, Gas, and Mining Industry Program is based in Balikpapan. Its principal focus is the development of supply chain linkages between local enterprises and the large oil, gas, and mining interests. The program has started work on a cost sharing basis with BP in Papua, developing local businesses and potential suppliers.

5. The Handicraft Export Program is based in Denpasar. This program is working to increase local small scale handicraft producers’ export sales, which suffered a dramatic downturn after the Bali bombings of 2002 and 2005. To date, the program has helped facilitate almost US$500,000 of export orders.

6. The Sustainable Supply Chain Program is based in Denpasar and aims to create business opportunities—primarily in forestry/furniture—by emphasizing improved environmental management and sustainable practices. The program has provided technical assistance in areas such as design, marketing, timber drying and establishing contact with international furniture buyers. Already the program has delivered furniture sales of over US$300,000.