OPTIMAL FINANCING SYSTEM FOR INDONESIAN SMES

Indonesian SMEs have become the main target of investment worldwide due to its massive 57 million units operating in economy that contribute in the making of 60% of Indonesia GDP and absorption of 98% of the nation labor force. Rate of return of SMEs is above the average banks interest rate, thus results in a higher rate of return for direct investment to SMEs compared to investment in banks and/or other financial institutions. From banks perspective, credit to SMEs is considered to be risky due to the high risk nature embedded in SMEs itself, thus results in a higher interest rate charged to credit to SMEs compared to other credit arrangement forms. SMEs, however, have other option in financing the needs of fund from cooperatives, microfinance institutions, and government subsidy. Another important source of fund for SMEs comes from private sector via CSR initiatives. The study describes current condition of financial system in the context of SMEs in Indonesia, analyzes the gap, and suggests solution in realizing the optimum financial system for SMEs financing in Indonesia. We conclude that the optimal financing for SMEs requires a structured and integrated data base, so that all parties, both borrowers and lenders, should access to the system before executing the finance. Therefore very intense IT involvement in building the data base system is a must. Keywords: SMEs, financial system, IT involvemen

EVALUATION OF BANK MERGER IN INDONESIA: Lessons from Parametric Cost Function

Merger dan akuisisi telah menjadi pilihan utama dalam pelaksanaan konsolidasi perbankan yang direkomendasikan dalam rangka penguatan industri perbankan di Indonesia. Proses merger dan konsolidasi ini membutuhkan biaya besar dan mengandung resiko, dua factor yang menyebabkan penurunan tingkat efisiensi bank yang telah melakukan merger. Penelitian ini menunjukkan bahwa proses merger menurunkan efisiensi bank, meski berdampak positif terhadap stabilitas dari efisiensi bank tersebut. Ini menunjukkan manajemen bank yang lebih baik setelah merger dan peningkatan economies of scale. Sebelum merger, bank harus meningkatkan efisiensi terlebih dahulu, misalnya dengan meningkatkan produktivitas tenaga kerja dan peningkatan utilisasi teknologi. Paper ini menunjukkan, jika skor DFA 0,7, bank dapat meraih keuntungan economies of scale, economies of scope dan technical progress yang dapat meningkatkan efisiensi. Beberapa rekomendasi yang diusulkan, pertama, Bank Indonesia seharusnya mengarahkan manajemen perbankan dalam hal pengalokasian biaya operasional secara optimal. Kedua, harus ada upaya untuk mengembalikan tingkat efisiensi bank pada level efisiensi semula. Ketiga, Bank Indonesia, harus mengarahkan perbankan untuk mengabsorpsi teknologi sejauh mungkin. Keempat, efisiensi internal merupakan aspek penting yang harus diraih sebelum proses merger dilakukan. JEL: C29, C39, D23, G21 Keywords : X-efficiency, Merger, Seemingly Unrelated Regression, Cost function, Economies of scale, Bank

Economic Impact of Imposing Excise Tax on Plastic Bottles of Drinks

This research simulates the effect of imposing excise tax on plastic container of drinks towards economic performance of beverage industry in Indonesia and governmentâ˘A ´Zs tax revenue. The results showed that by imposing excise tax on plastic cups and plastic bottles the government would lose tax revenue from value added tax (PPN) and corporate income tax (PPh badan) more than they gain additional revenue from excise tax. Hence, imposing excise tax on drink containers should serve a clear purpose and an undeniable reason. This paper recommends the government to develop proper excise infrastructure to extend the goods or services to be taxed. This paper also recommends the required stages for extending the excise tax

Evaluasi Merger Perbankan Di Indonesia Ditinjau Melalui Fungsi Biaya Parametrik

Konsolidasi perbankan yang dilakukan untuk memperkuat industri perbankan di Indonesia, membuat merger dan akuisisi menjadi pilihan utama dalam pelaksanaan konsolidasi tersebut. Adanya resiko yang harus ditanggung oleh bank hasil merger dan proses konsolidasi yang membutuhkan biaya tinggi, antara lain merupakan penyebab dan menurunnya tingkat efisiensi bank hasil merger. Dalam paper ini ditunjukkan bahwa proses merger menurunkan efisiensi tetapi meningkatkan stabililas dan keefisienan bank merger. Kestabitan ini menunjukkan terbentuknya manajemen yang lebih baik dari bank hasil merger. Skala ekonomi bank setelah merger mengalami peningkatan.Sebelum melakukan merger, bank secara internal harus terlebih dahulu meningkatkan efisiensinya, yang dapat dilakukan misalnya dengan meningkatkan produktivitas dari karyawan dan peningkatan penggunaan teknologi. Dalam paper ini ditunjukkan bahwa apabila skor efisiensi DFA-nya sudah mencapai 0,7, maka bank baru merasakan manfaat dan economies of scale, economies of scope dan kemajuan teknis unuk meningkatkan efisiensinya.Tulisan ini memberikan beberapa rekomendasi: pertama, Bank Indonesia harus mengupayakan agar manajemen dari bank tetap baik, sehingga bank dapat menggunakan dan mengalokasikan biaya-biaya operasionalnya secara optimal. Kedua, harus adanya upaya untuk mempercepat pulihnya efisiensi bank setelah merger, sehingga tingkat efisiensinya kembali ke level semula. Ketiga, Bank Indonesia harus mendorong perbankan untuk dapat memanfaatkan teknologi dengan sebaik mungkin. Keempat, efisiensi internal dari sebuah bank penting dilakukan sebelum bank melakukan merger

FENOMENA UNIVERSAL BANKING DITINJAU DARI PERSEPSI PELAKU SISTEM KEUANGAN INDONESIA

The development of the financial system tends to move to a liberalized system where the geographical border vanished as well as the limitation on the function of the financial institution. The product intersection and similiarity across the bank, insurance and securiy gives the signal of the integration process into one multi-function financial institution, which in turn create a universal bank; a bank that run both bank and non-bank function. This tendency requires a stronger cooperative coordination between the bank and the non-bank regulator, yet the explicit forms of the relationships are not defined well. This papaer highlights this issue by analyzing and contrasting the perception about the bank and the non-bank institution. The aim of this paper is to provide a insight for the regulators of how to coordinate and control this unifying functional process between the bank and the non-bank institution in Indonesia. Keywords : universal banking, financial coordination, Indonesia JEL Classification : E52, G21, G22, G2

Peningkatan Kinerja Industri Manufaktur Di Indonesia Melalui Penurunan High Cost Economy Periode : 1990-2003

The economic crises attacking Asian regions in the mid of 1997 have brought depressing impacts to Indonesia‘s economy. Indonesia experiences a declining share of investment— it is even the lowest amongst neighboring countries. Indonesia also ranks the first position in the issue of inefficiency which further discourages investors to invest in Indonesia. The study focuses on the issue of efficiency in the manufacturing industry whose share in the economy tends to increase during I988-2OO5 in a higher percentage than in the agriculture and services sectors. The objectives of the study are two-folds, first is to measure the score of efficiency in the manufacturing industry in order to identify which in industries are classified as efficient, moderately efficient, or less efficient. Secondly is to identify whether there is an association between input factor or output degree of protection and the score of in efficiency of a 5-digit-JSIC industry. The method employs in the study is the stochastic production frontier where efficiency is an explicit function of specifically determining factors. The study finds that wood preservative industry has the highest efficiency score, while garment and textile industry has the lowest. The study also discovers there are more industries with less and moderately efficient classification. Sources of inefficiency are from the high output tariffs, which have potential contributions to high price and less competitive products in the market. The study recommends that manufacturing industries with low scores of efficiency should improve their productivities through lower cost of production. The government has to make effort to reduce tariff for finished goods. Taxes on luxurious goods and duty charges for export oriented industries should be eliminated as an alternative to increase efficiency in the manufacturing industry. Comparative advantages, particularly for linkage industries, should be improved