Role of Microfinance Institutions (MFI/LKM) Non Bank in Supporting Small and Medium Enterprises (SME/UMKM) in the Province Riau

Fahrial, Fahrial and Maryunani, Maryunani and Ashar, K. and Kaluge, D. (2015) Role of Microfinance Institutions (MFI/LKM) Non Bank in Supporting Small and Medium Enterprises (SME/UMKM) in the Province Riau. Microeconomics and Macroeconomics, 3 (3). pp. 58-66. ISSN 2168-457X

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Abstract

This study was inspired from the difference between the role of non-bank MFI (MFI-NB) in support of SMEs under Law No. 01 of 2013 concerning the MFI and Law 20 of 2008 on SMEs which regulates the implementation and achievement of the performance of the microfinance sector in Riau Province. The purpose of this study are: a) determine the role of MFI-NB in support of SMEs in the province of Riau, b) know the quality of implementation and mechanism of MFI-NB terms of mechanisms (governance) in Riau Province, and c) develop strategies MFI-NB in improving the welfare of communities in Riau province. This study used qualitative research methods and review the existing legislation implemented or enhanced fit the facts on the ground conditions in Riau Province. Results of this study explains that: (a) The role of MFI-NB in Riau Province in support of SMEs are MFI-NB role as providers of capital to SMEs, the certainty that the capital is in the MFI-NB is intended for viable SMEs and the capital believed are not diverted to other uses or loans to large enterprises. And MFI-NB is believed not to be intervened by another party, another role of a given MFI-NB to SMEs is accelerating MFI-NB's capital to SMEs decent hands and responsible by using services such as energy contributors and coordinators who helped the function of the service of MFI-NB. (b) the quality of the implementation of the disbursement of funds by the MFI-NB to SMEs is less satisfactory because it is slow to respond to the desire of SMEs to additional capital. The quality of the implementation of the training held by the MFI-NB to SMEs say less than optimal. (c) MFI-NB Strategy to improve the welfare of the people in the province of Riau, with training materials that really demand so as to motivate SMEs to further develop their potential. MFI-NB continue to provide assessment and issue a certificate or award for outstanding SMEs so that SMEs can thrive in Riau Province. Another strategy to improve the welfare of the community is to help SMEs develop business, namely through the development, marketing (promotion, exhibition and clusters/groupings), partnerships, advocacy, implementation of management functions, so that SMEs have a good standard and credibility even when dealing with other financial institutions, Policies that there is or is believed to be held by the MFI-NB actors become the dominant factor in formulating strategies, policies and programs that support increasing the role of the MFI-NB in support of SMEs in the province of Riau

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