Sat, 01-26-2013 17:59 WIB
Sign Act No.1/2013, President Allows Establishment of Micro Financial Institution
By : the Information Desk
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After it was decided in House of Representative Plenary Meeting on December 11th 2012, President Susilo Bambang Yudhoyono (SBY) on last January 8th, already signed an Act Number 1 Year 2013 about Micro Financial Institution. Therefore, in the next 2 (two) years, as stated in Article 42 of this Act,  Micro Financial Institution (Lembaga Keuangan Mikro or LKM) that served the citizen especially poor citizen and/or citizen with low income, could be established in village level, sub-district, or cities.

Establishment of LKM at least must meet the requirements in the form of a legal entity, capitalization, and get a business license from the financial services authority (Otoritas Jasa Keuangan), either in the form of Cooperatives (Koperasi) or Public Limited Company (PT).

If the LKM in the form of PT, then at least 60% (sixty percent) of the share owned by the district/cities local government or business entity belong to the village. While the rest of the PT’s shares can be owned by Indonesia Citizens (WNI); and/or cooperative. Ownership of WNI over a PT LKM as referred limited to at most 20% (twenty percent).

“LKM prohibited owned, either directly or indirectly, by Foreign Citizen (Warga Negara Asing or WNA) and/or business entity which partially or completely owned by WNA or foreign business entity,” stressed Article 6 Act No.1/2013.

Business Actvities

Concerning business activities of LKM, Article 11 stated, including business development services and society empowerment, either through Loan or Funding in micro scale business to members and the public, the management of Deposits, as well as providing consulting services business development. As for interest rates on loans or Financing the yield will be arranged later in the Government Regulations (Peraturan Pemerintah).

According to Article 11 paragraph (1) Act No.1/2013, the distribution of loan or funding and the management of LKM’s loan conducted in conventional way or based in sharia principles. If LKM business activity based on sharia principles, then the application must be adjusted with sharia fatwa that issued by National Sharia Council (Dewan Syariah Nasional), Tribunal of Indonesia Ulama (MUI).

In order to guarantee citizen’s loan in LKM, local government and/or LKM can set up LKM loan guarantee institution (lembaga penjamin simpanan). In case of need, the Government together with the local government can set up LKM loan guarantee institution.

According to Act No.1/2013, the scope of an LKM business area exist in a village area, district, or cities in accordance with the scale of the KLM business scale that would set forth in a government regulation.


According to the law number 1 Year 2013, in terms of LKM have difficulty and solvency that endanger the sustainability of its business, Financial Services Authority can take action in order to: a. a shareholder or a member of the cooperative increase the capital; b. shareholders to replace the Board of Commissioners or trustees and/or the Board of directors or Board of LKM; c. LKM remove loans or Funding that non performing and takes into account the disadvantages of LKM with capital; d. the LKM do a merger or consolidation with other LKM; e. ownership of LKM diverted to other parties who are willing to take over the entire obligations; f. the LKM gave up entirely or partially the business activities of LKM to the other party; or g. the LKM sells partially or entirely the capital and/or obligations to LKM or other parties.

“In term the action as referred before has not been enough to overcome the liquidity problem and solvency of LKM, the financial services authority revoke the business license of LKM and ordered the Board of directors or Board of LKM to immediately held a general meeting of shareholders, Members meeting, or other similar meeting in order to dissolve legal entities of the LKM and formed a liquidation team,” stated Article 23 paragraph (2) of Act No.1/2013..

This Act also stressed, LKM must convey to the financial services authority: a. Financial Reports every 4 (four) months; and/or b. Other reports which set up in financial services authority regulation. Beside that, LKM must also announced mandatory financial statements in order to implement the principle of openness. (Pusdatin/ES) (TCU)