Indonesia, officially the Republic of Indonesia, is one of East Asia Pacific’s most vibrant democracies, emerging as a confident middle-income country. 

With more than 270 million people, Indonesia is the fourth most populous country in the world, the largest country in Southeast Asia, the most populous Moslem-majority country, and an ethnically diverse country with around 300 ethnic groups.  

Today, Indonesia is the world’s 10th largest economy in terms of purchasing power parity, and a member of the G-20. As the pandemic hit, the poverty rate rose to 10,19%, leaving 27 million more Indonesians living in poverty. 

German Sparkassenstiftung for International Cooperation (DSIK) has a long project history in Indonesia. 

» 2005 – 2010: Sparkassen Reconstruction Fund. 

Through a development cooperation with a regional development bank, Bank BPD Aceh, the German Sparkassen channelled funds to micro and small entrepreneurs that had been affected by the Tsunami in the severely damaged province of Aceh. Within the framework of this down scaling project, a microcredit scheme – Kredit Usaha Mikro (KUM) - was developed and successfully implemented as a new line of business of Bank BPD Aceh. 

» June 2010 – March 2020: Promotion of a Decentralized Financial Services Offering of the Regional Development Banks (BPD) 

DSIK has expanded its work in the fields of capacity development, MSME financing and financial literacy to a total of 19 BPDs and the association ASBANDA. 30% of all 27 BPDs have demonstrably become more effective in fulfilling their legal mandate of economic development sustainably. This project was carried out in the context of Bank of Indonesia’s “BPD as Regional Champion” and the Indonesia Financial Services Authority - OJK’s “BPD Transformation” programmes. In 2016, the KUM microcredit scheme was officially approved by OJK as a blueprint for BPD’s financially viable, cash flow based microlending. Further, nearly 16,000 participants were trained with DSIK’s Micro Business Game and Savings Game to improve the basic economic and financial literacy of aspiring and established entrepreneurs. 

» April 2020 - present: Rural Development in Indonesia through Strengthening the Rural Banking Sector (BPR)  

The resilience and competitiveness of the BPR still needs to be improved in consideration of the various challenges, arising from the numbers of BPR with limited capital, limited human resource capacity, rapid technological change, constraints in products and services, and increasingly fierce competition from commercial banks, cooperatives, and financial technologies (fintechs).  

The project supports the strengthening of BPR sector in Indonesia, by improving governance including risk management, promoting innovation in banking financial products for micro and small enterprises, accelerating public financial literacy including improving financial management skills, and encouraging consolidation and digitalization, by a synergy with the BPR association.  

Currently, the project is located in Bali province with the project partners, BPR Sukawati Pancakanti, BPR Kita Centradana, and the regional association of rural banks in Bali, DPD Perbarindo Bali as well as the Indonesian Financial Supervisory Authority (OJK).  

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