PROPOSAL OF PROFESSIONAL INTERNSHIP PROGRAM

SOCIAL PROGRAM OF BANK INDONESIA:

EMPOWERING THE RICE-FARMING IN MALANG DISTRICT

BY:
TASNIMA NUR AZIZAH
125020107121016

INTERNATIONAL UNDERGRADUATE PROGRAM

FACULTY OF ECONOMICS AND BUSINESS
UNIVERSITY OF BRAWIJAYA
MALANG
2016

APPROVAL PAGE
Professional Internship Proposal entitled :
SOCIAL PROGRAM OF BANK INDONESIA:
EMPOWERING THE RICE-FARMING IN MALANG DISTRICT

Arranged by :
Name

: Tasnima Nur Azizah

NIM (Student Number)

: 125020107121016

Faculty

: Economics and Business

Program

: Economics

Concentration

: Finance

Has been evaluated and approved as a Report of Professional Internship Program,

dated September 7th 2015.

1. Putu Mahardika Adi Saputra, SE., M.Si., MA., PhD.

NIP. 19760910 200212 1 003

........................

(Internship Advisor)
2. Wahyu Ratnawati
NIP. 15625

........................

(Field Super Advisor)

Acknowledged by,
Head of International Program in Economics

Devanto Shasta Pratomo, SE., M.Si., Ph.D

NIP : 197610032001121003
ii

Acknowledgement

I would like to address the most sincere gratefulness to the one and only God, for
making the completion report of the professional internship program with title:
Social Program Of Bank Indonesia: Empowering The Rice-Farming In Malang
District.
This report has been designed to be used as an evaluation tool for the result of
professional internship program as well as learning process in writing a research
paper from the field practice.
I realize that the successfulness of this activity depends on others supports.
For this reason, I feel that this is an honor for me to express my gratitude to:
1. Ms. Wahyu Ratnawati as a Field Supervisor
2. Mr. Putu Mahardika Adi Saputra as an Internship Advisor
3. Mr. Devanto as the Head of International Economic Development Program in
the Faculty of Economics and Business, University of Brawijaya
Finally, I hope that this report can be of much help for many people. Amen.

Malang, January 11th 2016

Tasnima Nur Azizah

iii

TABLE OF CONTENT
page
APPROVAL PAGE ........................................................................................... ii
ACKNOWLEDGEMENT ................................................................................. iii
TABLE OF CONTENT ..................................................................................... iv
LIST OF TABLES ............................................................................................. vi
LIST OF FIGURES ............................................................................................ vii
CHAPTER I

: INTRODUCTION
1.1 The Background of the Report ....................................... 1
1.2 Formulation of the Problem ............................................ 6
1.3 The Objective of Internship ............................................ 6
1.4 The Significance of Internship ........................................ 6
1.4.1 For the Students .................................................. 7
1.4.2 For the Related Instance/Society ......................... 7
1.4.3 For the University and the International Program
of the Faculty of Economics and Business ......... 7
1.4.4 For the Advisors .................................................. 8

CHAPTER II

: THEORETICAL FRAMEWORK ........................................ 9

CHAPTER III : IMPLEMENTATION OF INTERNSHIP

3.1 General Description of Internship Spot .......................... 19
3.1.1 Bank Indonesia as the Central Bank of Indonesia
.............................................................................. 19
iv

3.1.2 Bank Indonesia Vision and Mission ................... 20

3.1.2.1 Bank Indonesia Vision .......................... 20
3.1.2.2 Bank Indonesia Mission ....................... 20
3.1.3 Bank Indonesia Strategic Values ........................ 21
3.1.4 Bank Indonesia Strategic Objectives .................. 21
3.1.5 SMEs Empowered by Bank Indonesia Malang .. 22
3.2 Activities Conducted ...................................................... 27
3.2.1 The Place of Internship ....................................... 27
3.2.2 The Date and Time of Internship ........................ 27
3.2.3 The Daily Activity of Internship Program .......... 28
3.3 Evaluation of Internship Result ...................................... 29
3.3.1 Empowering the Rice-Farming in Malang District
.............................................................................. 29
3.3.2 Learning Experience ........................................... 35
CHAPTER IV : CONCLUSION
4.1 Conclusion ...................................................................... 39
4.2 Suggestion/Recommendation ......................................... 41
BIBLIOGRAPHY .............................................................................................. 42

LIST OF TABLES

No. List of Tables

page

1.1

The contribution of rice in inflation rate in Malang, 2012 ....................... 4

1.2

Data about rice-farming in Malang District as a consideration ................ 4

3.1

The working time schedule of Bank Indonesia Malang ........................... 25

3.2

Activities conducted during the internship program ................................ 26

3.3

The expenditure of the representative office of Bank Indonesia in Malang

for performance of rice cluster on October 2014 ...................................... 30

vi

LIST OF FIGURES

No. List of Figures

page

3.1

Farmers' Hut by the Representative Office of Bank Indonesia in Malang . 33

3.2

A model plan of food resilience in Malang District ................................. 29

vii

CHAPTER I
INTRODUCTION

1.1 Background of the Report

One true goal of Bank Indonesia is to maintain the stability of
Indonesian currency, Rupiah, and that is of course applied to all the
representative office of Bank Indonesia, including in Malang. Maintaining the
stability of Rupiah is whether towards the currency of other countries reflected
by the exchange rate or towards the price of goods and and services reflected
by the inflation rate. In other words, to maintain the stability of Rupiah, Bank
Indonesia needs to concern about the inflation rate. That is why Bank
Indonesia has program in empowering SMEs and rice-farming that have
potential to be exported or that are contributors in the inflation rate. This
program proves that bank Indonesia also plays a big role in the real sector in
order to achieve the one and only goal of Bank Indonesia.
In the developing country like Indonesia, SMEs hold a very important
role in the economy and contribute substantially to income, output, and
employment. SMEs or Small Medium Enterprises are the most common
businesses found across most of the worlds economies. As important as
SMEs, rice is also an important commodity that needs to be empowered since
rice is the main food in Indonesia.
There is a need to increase the productivity of SME as well as rice. The
productivity gap between the SME sector and large enterprises is so wide that

the value added per worker in the SME sector is about 0.5 percent of that of
the large enterprises on average. To make the SME-related projects more
effective, the Indonesian government has chosen to dedicate itself to adopting
a clustering approach with help from non-governmental organizations such as
Business Development Services, members of which are spread throughout the
nation.
Related to this topic, what is the role of Bank Indonesia? Bank
Indonesia has one program to empower the SMEs and main commodity that
have potential to be exported or that are contributors in the inflation rate. The
purposes of the program itself are, as seen, to push the export and to be able
to have a control in the inflation rate. In this case, even though Bank
Indonesia has the program to empower the SMEs and the main commodity,
Bank Indonesia does not give loan/credit to the SMEs or the main commodity
and does not link the SMEs and main commodity to a certain conventional
bank for loan/credit. The role of Bank Indonesia in this case is only about
delivering loan/credit information from some conventional banks to the
SMEs and farmers and it is up to the SMEs and the farmers which bank they
will choose for credit.
There are some roles of Bank Indonesia in strengthening the initiative
work. The first role is developing the leading commodity clusters to support
the economic growth in a region so that unemployment and poverty level will
be able to be reduced. The second is creating new job opportunities as an
effort to create an economic center activity that supports the decrease of
unemployment. The third role is to empower the leading commodity clusters

in a region and the main contributor to commodity inflation in Indonesia as

an effort to support the economic growth in a region. The last is strengthening
the regional food

resilience by facilitating and coordinating with the

stakeholders.
The existence of the SMEs and main commodity empowerment
program is based on strengthening the regional food resilience in the working
area of the representative office of bank Indonesia in Malang. The
background of the initiative program in food resilience of Bank Indonesia is
as the program of developing the national economy with a purpose to push
the development of economy with quality by increasing the economic
development and decreasing the unemployment and poverty level.
There are some SMEs and main commodity that are empowered by the
representative office of Bank Indonesia in malang. Those are Batik, potatoes,
red onions, mushrooms, and rice. However, in this report, the writer will only
introduce rice-farming in Malang district as one commodity to be empowered
by the representative office of Bank Indonesia in Malang.
The common consideration of choosing rice as a commodity is that rice
is one of the main contributors in contributing the inflation rate beside chili,
onion,

chicken meat, beef, and horticulture. Another consideration of

choosing is rice as a commodity is, unlike other countries from Europe or

America, that rice is the main food for the society in Indonesia. Therefore, it
is very important to empower the rice-farming to increase the economic
growth of a region.

Table 1.1
The contribution of rice in inflation rate in Malang, 2012
2012
INFLATION RATE
Jan
3.64
Feb
3.67
Mar
3.77
Apr
4.49
May
4.43
Jun
4.42
Jul
4.16
Aug
4.27
Sep
4.58
Oct
4.68
Nov
4.56
Dec
4.60
AVERAGE
HIGHEST

RICE
1.02
1.20
1.32
1.41
1.29
1.08
0.57
0.40
-0.03
-0.08
0.01
0.06
0.69
1.32

Source: BPS Malang 2012

The table 1.1 shows the contribution of rice in the inflation rate in
Malang, 2012. Rice contributes the highest on March. It is around 35% of the
total inflation. That is why rice is an important commodity in supporting the
economic growth in Indonesia, especially in Malang.
There are three main specific backgrounds as to why rice-farming in
Malang district is chosen to be empowered by the representative office of
Bank Indonesia in Malang. The first reason is that the research result of the
leading commodity business of SME shows that rice is potential commodity.
Table 1.2
Data about rice-farming in Malang District as a consideration
OBJECT
Rice Field Area
Technical Irrigation Network
Production of Rice
Source: Data from Bank Indonesia

TOTAL
49,515.0 Ha
27,934.5 Ha
457,617 Ton

The second reason is a consideration upon the field area and the
production of rice. As we can see from table 1.2, Malang District has big
contribution in rice-farming for the area of farming is quite wide.
The SWOT analysis (Strength, Weakness, Opportunities, and Threats)
of the empowerment program is as follows:
1.

Having an adequate rice field area and rice being a main food in
Indonesia become the internal strength of the program.

2.

The internal weakness is the small numbers of labor to cultivate the

paddy.

3.

The availability of abundance rice field area and the availability of

superior seed varieties are the external opportunities.

4.

The external threats are import of rice and the instability of grain price.
Those are the considerations the representative office of Bank Indonesia

in Malang takes in choosing rice as the commodity that needs to be

empowered. The main purposes of the program itself are to increase the
welfare of the farmers, to stabilize the price of rice, to create an access as an
intermediary between bank and the farmer, and to strengthen the institutional
farmers.
In this report, the writer would like to give a report about one of the
social program of Bank Indonesia or PBSI (Program Sosial Bank Indonesia).
That is a program of empowerment to SMEs. There are 5 SMEs empowered
by the representative office of Bank Indonesia in Malang. Those are Batik,
potatoes, mushrooms, red onion, and rice. However, this report will only
focus on the empowerment of rice-farming in Malang District. So, the

purpose of this paper is to report the effectiveness of the social program in the
representative office of Bank Indonesia in Malang.
1.2 Formulation of the Problem
From the background explained above, the formulation of the problem
will be as follow:
What is the reason of the representative of Bank Indonesia in Malang in
choosing rice as one of the small medium enterprises that needs to be
empowered?
What is the effort of the representative office of Bank Indonesia in
Malang in empowering rice-farming in Malang district?
1.3 The Objective of Internship
The objective of internship is to gain significances as many as possible
for all parties, either for the related institution, in this case, Bank Indonesia,
for the students, and for the universities. However, the main objectives for
general are as follow:
To understand and to share the information about the reason of the
representative office of Bank Indonesia in Malang in choosing rice as one
of the small medium enterprises that needs to be empowered.
To learn about the effort of the representative office of Bank Indonesia in
Malang in empowering rice-farming in Malang district.
1.4 The Significance of Internship
There are some significances of internship for some parties, such as for the
students, for the related institution, for the advisor, and for the university.
Those are:

1.4.1 For the Students

- As a tool to gain some working experiences in the real life.
- Enhancing intellectual and emotional maturity.
- Applying the theoretical knowledge obtained from the educational
program in a variety of real cases faced in the business world and the
work of environment.
- Growing self-confidence in living social life.
1.4.2 For the Related Instance/Society
- Doing favors for the company/institution to lighten their jobs.
- As a tool to link the company/institution with the university.
- Implementing one of the social responsibilities of the corporation or
institution for the society.
- Getting ideas and energy in order to increase the performance of the
companies/institutions and the society
1.4.3 For the University and the International Program of the Faculty of
Economics and Business
- As an evaluation of the internship report to create a better curriculum
for the next period to be a better generation.
- As a tool to create a cooperative relationship between the university
and the companies/institutions.
- Produce honest and skillful labors to serve the society.
- Expanding networks with companies/institutions and businessmen.

- Improving curriculums relevance of a wide range of majors in

International Program in Economics Department with the business
world and the fieldwork.
- Developing more social services for the society.

1.4.4 For the Advisors

- Getting knowledge and understanding about various Economics
practices in the business world and the field work.
- Enhancing network with the business world and the fieldwork.

CHAPTER II
THEORETICAL FRAMEWORK

The financing of small and medium enterprises (SMEs) has attracted much
attention in recent years and has become an important topic for economists and
policymakers working on financial and economic development. This interest is
driven in part by the fact that SMEs account for the majority of firms in an
economy and represent a significant share of employment. Furthermore, most
large companies usually start as small enterprises, so the ability of SMEs to
develop and invest becomes crucial to any economy wishing to prosper.
There is also the perception among academics and policymakers that
SMEs lack appropriate financing and need to receive special assistance, such as
government

programs

that

increase lending.

Various studies support this

perception. A number of papers find that SMEs are more financially constrained
than large firms and, importantly, lack of access to external finance is a key
obstacle to firm growth, especially for SMEs. On the policy side, there are a large
number of initiatives across countries

to

foster SME financing including

government subsidized lines of credit and public guarantee funds.

The conventional wisdom on SME finance argues that supply-side
factors are at the root of the inadequate financing of SMEs. In particular, the way
in which financial institutions operate is biased against offering SME financing.
Thus, many banks and other financial institutions are not interested in servicing
SMEs. One of the main factors often cited that hampers SME financing is
opaqueness. By opaqueness the literature, it means that it is difficult to

10

ascertain if firms have the capacity to pay (have viable projects) and/or the
willingness to pay (due to moral hazard). This opaqueness particularly undermines
lending from institutions that engage in more impersonal or arms-length financing
that requires hard, objective, and transparent information.
To the extent that opaqueness has received special attention in the
literature on SME financing so has relationship lending. The conventional view
is that relationship lending is the obviousif not the onlyway to cope with
opaqueness. Relationship lending can mitigate opacity problems because it relies
primarily on soft information gathered by the loan officer through continuous,
personalized, direct contacts with SMEs, their owners and managers, and the local
community in which they operate (Berger and Udell, 2006).
Because of the personalized, community-based nature of the contacts that
relationship lending implies, the conventional wisdom argues that it is difficult for
large and foreign banks to engage in this type of lending. Moreover, there is the
perception that large and foreign banks are relatively less capable of processing
and

quantifying soft information and

communication

channels

of

transmitting it through the formal

large/complex

organizations

for

which

the

headquarters are far away. As a result, the segment has to rely on small or niche
banks, which are close to the relevant sector, community, or neighborhood and,
therefore, are typically domestic. Although not conclusive, the literature finds
evidence consistent with the idea that banks (mainly small and niche) engage with
SMEs through relationship lending using soft information and that large and
foreign banks lend less to SMEs. Moreover, improvements in the institutional

11

environment enhance lending to SMEs be-cause it reduces the need to engage in

relationship lending.
In particular, the evidence characterizes a different pattern of bank
involvement with SMEs, which is consistent with the arguments first articulated
by Berger and Udell (2006). This new pattern goes well beyond pure relationship
lending and is increasingly observable even in relatively less developed countries,
where relationship lending would be expected to be more prevalent. In particular,
we find the following main stylized facts.
First, contrary to the perception that banks in general are not interested in
lending to SMEs, we find that most banks do indeed want to serve SMEs and find
this segment profitable, especially as margins in other banking markets narrow
due to intensified competition. In particular, as the public sector and large
corporations gain access to local and international capital markets and as
competition in the retail sector (among banks and retail chains) increases, banks
have greater incentives to incur the switching costs needed to pursue new business
in the middle market of SMEs. In this context, SMEs emerge as a strategic
sector for most banksincluding large and foreign banks, not just small and niche
banks. As a result, the SME market in the sample countries has be-come
competitive, yet is still far from saturated.
Second, part of the interest in SMEs comes from the fact that, as argued by
Berger and Udell (2006), relationship lending is not the only way in which banks
can extend financing to these firms. Banks are increasingly applying to SME
financing different transactional technologies that facilitate arms-length lending

12

(such as credit scoring and significantly standardized risk-rating tools and

processes, as well as special products such as asset-based lending, factoring,
fixed-asset lending, and leasing). For example, hard information on the SME or its
owner obtained from credit bureaus allows banks to infer future loan performance
and thus enables the use of credit scoring to process and approve small loans at a
scale that makes costs sufficiently low. Moreover, the pledging (as col-lateral) of
assets that do not lose much value over time and are relatively easy to liquidate
(e.g., equipment and real estate) provides greater assurance of repayment, even
when contract enforcement processes are relatively imperfect. Also, reliable
accounts receivable can underpin factoring, while the renting of tangible and
marketable assets through leasing can help overcome costly contract enforcement
processes including ambiguous commercial laws and

inefficient bankruptcy

procedures (as the creditor retains the property rights over the asset). Thus, when
good financial information is not available to gauge capacity or willingness to
pay, banks can use other types of hard information and incentive-compatible
mechanisms to increase the likelihood of repayment. In this way, banks can
compensate for weaknesses in the institutional environment. Moreover, these
mechanisms free banks from having to rely on government subsidies to lend to
SMEs.
Third, lending is just one part of a larger overall package that banks
provide to SMEs. Banks find SMEs profitable through a combination of services;
and this places cross-selling at the heart of the banks SME business strategy. In
effect, banks have developed a wide range of fee-based, non-lending products and
financial services for SMEs. These products and services can be very attractive in

13

terms of profitability; in fact, the evidence suggests that lending is not al-ways the
main or the first product offered to SMEs and that it is often offered as a way to
eventually cross-sell other lucrative fee-based products and services, including
payments, savings, and advisory services. Cross-selling is a way for banks to
maximize their scarce re-source (capital). Moreover, selling products and services
to SMEs deepens the engagement of banks with the firms, is part of the efforts of
banks to become the principal bank the SMEs engage with, and may thus facilitate
increasing the amount of lending to each SME while attracting other clients (like
the SME employees, the owners, and their families). To the extent that these
products and services gain importance, the institutional environment relevant to
credit contract writing and enforcement becomes less of a constraint.
Fourth, under this new model of engagement with SMEs, large and
international banks have several comparative advantages and, as a consequence,
are leaders and relatively more aggressive in this business segment. Some of the
technologies applied to lending to SMEs (other than relationship lending) benefit
from the effects of economies of scale and scope. For example, credit scoring
models that rely on statistical properties to assess risk need a large number of
clients and loans, which tend to increase with bank size. Also, dealing with large
corporations allows banks to reach out and offer loans to good SMEs that have
long-term relations with those corporations (thereby reducing principal-agent
problems and improving risk management). Moreover, large banks can seize the
benefits from scale in supplying non-lending products and services to a large
number of firms, taking advantage of their service plat-forms, technical expertise,
and IT and back-office infrastructures. Finally, large banks are better able than

14

small banks to use sophisticated business models (e.g., business centers, branches,
SME account managers, and marketing campaigns) and risk management systems,
so as to combine and integrate centralized and de-centralized processes as
appropriate to realize efficiency gains in managing both costs and risks. In sum,
the ability to serve many SMEs (and for international banks, the ability to serve
also many countries) through large multi-service platforms and branch net-works
and through sophisticated business models and risk management systems gives
large banks a competitive edge, enabling them to compensate more easily for the
fixed and switching costs of developing products and services to engage with
SMEs while exploiting economies of scale and scope.
Fifth, the trends described above do not seem to be substantially affected
by the recent financial crisis. While banks appear to have become more careful
about their risk exposure, their business models and strategies to serve SMEs have
not changed. Neither has their interest in the segment. Most banks see the crisis as
a temporary shock and have no plans to curtail the involvement with SMEs.
The fact that in most countries SMEs make up the biggest share of total
businesses yet receive the smallest share of credit has stimulated a great deal of
research around the world. Earlier studies mostly focused on SME-specific
(opaqueness of SMEs) or bank-specific (banks lending capacity) factors to
explain banks credit-rationing behavior toward SMEs. In order to make correct
lending decisions, banks need to have up-to-date, reliable financial information to
assess the credit risk of their potential borrowers. However, the opaqueness of
SMEs, i.e. information asymmetries between SMEs and banks, makes it difficult
and costly for banks to deal with SME borrowers. Hence, banks often choose to

15

ration credit to this sector, or ask for more collateral than they would normally ask
for from large enterprises (Berger and Udell, 1995; Berger et al., 2001; Rajan,
1992, Beck et al, 2005).
The relationship lending theory that emerged in the early 1990s argued
that the information asymmetries between banks and SMEs can be overcome by
banks through developing close relationships with SMEs. Based on the know
your customer principle, this theory suggests that small banks are better equipped
to serve SME clients because such banks have a smaller number of clients to
serve, and hence, they can get to know their customers better. In large banks,
however, the clientbank relationship is mostly impersonal and distant because
bank personnel often have no time to develop relationships with their SME
clients. Hence, according to this theory, small banks have an advantage over large
banks when dealing with the information asymmetries. This implies that small
banks are able to make a bigger share of their loans to SMEs than the large banks.
This approached gained support in the 1990s through research by Petersen and
Rajan (1994), Rajan (1992), Keeton (1995), and Berger et al. (1998). According to
the findings of these studies, large banks allocated a smaller percentage of their
assets to SMEs than the small banks did. Furthermore, bigger banks

created

through bank mergers and acquisitions were found in some studies to have
reduced their credit supply to small businesses (Berger et al., 1998).
More recently, however, these views have been challenged by IFC (2007),
World Bank (2007a; 2007b), De la Torre et al. (2010), Beck et al. (2008), Rocha
et al. (2010), Berg and Fuchs (2013), and Jenkins (2014). Contrary to earlier
research, these studies found that, primarily in emerging market countries, not

16

only the small niche banks but also large domestic and foreign banks are
increasingly lending to SMEs and targeting this sector when marketing their
financial products. In line with these observations, Jenkins (2014) provides further
evidence that in Turkey the large banks, on average, allocate 26% of their total
loan portfolio to SMEs, whereas the smaller banks allocate only 17%. It is clear
that these findings, which come recently from emerging market countries, cannot
be explained by the relationship lending theory of the 1990s. This implies that
there must be factors other than bank size affecting SME lending.
The recent World Bank studies confirm our intuition that external factors
such as the macroeconomic environment, banking sector competition, credit
bureaus and countries legal systems play a more significant role in encouraging
or discouraging bank SME lending than was previously believed. For example,
based on the survey results of 91 banks from 45 countries, Beck et al. (2008, p. 3)
states that banks perceive the SME segment to be highly profitable, but perceive
macroeconomic instability in developing countries and competition in developed
countries as the main obstacles.
These recent findings bring our attention back to the theoretical
discussions on a favorable macroeconomic environment that is conducive for
SME finance. Early studies on financial liberalization and financial repression
theories suggest that repressive interest rate policies are harmful for business
finance (McKinnon, 1973; Shaw, 1973). According to these studies, imposing
interest rate ceilings below market rates keeps interest rates artificially low and
discourages savers from saving in financial institutions. This causes a shortage of
funds in which banks are forced to ration credit for some businesses.

The

17

experiences showed that credit rationing affects mostly young small businesses
with no credit record, or a lack of sufficient collateral. According to McKinnon
(1973) and Shaw (1973), liberalization of interest rates can increase domestic
savings and hence increase the availability of loanable funds for all businesses.
Furthermore, the financial liberalization theory suggests that foreign banks entry
into the domestic market can increase competition in the domestic banking sector,
forcing banks to look for other markets, such as the SME sector.
The early research on financial liberalization experiences has been
surveyed by Fry (1982), Cho (1988), Dornbusch and Edwards (1991), and
Pehlivan and Kirkpatrick (1992), and later by Levine (2001), Hanson and
Ramachandran (2005), and many others. These studies showed that financial
reforms and liberalization policies produced many positive results in the 1990s.
However, the results fell short of expectations. During this period, as a result of
economic

instability

and

severe

financial crises

in

many

countries,

the

effectiveness of financial liberalization policies was reduced. Moreover, the

suitability of financial liberalization policies for developing countries was often
questioned. Although bank deposits increased rapidly in the 1990s in most
developing countries,
crowding-out

effect

SMEs
of

access to credit remained low

governments

(World

Bank,

2005;

owing to the
Hanson

and

Ramachandran, 2005).
The full benefits of the financial liberalization policies began to emerge in
2000s in emerging market countries where economic stability was largely
achieved and institutional reforms were mostly realized. In these countries, high
liquidity, reduced government borrowing, and increased competition for corporate

18

lending began to push banks out of their comfort zone toward the more
challenging and profitable SME sector. In this respect, the recent World Bank and
IFC cross-country studies play a significant role in advancing our understanding
of SME lending in emerging market countries (Beck et al., 2008; De la Torre et
al., 2010; IFC, 2007; World Bank, 2007a, 2007b; Fuch et al, 2011). Within this
framework, our research aims to investigate whether economic growth and
stability,

the

government

budget

deficit,

and

banking

sector competition

significantly affected bank lending to SMEs in the Turkish economy between

2007 and 2013.

CHAPTER III
IMPLEMENTATION OF INTERNSHIP

3.1 General Description of Internship Spot

3.1.1

Bank Indonesia as the Central Bank of Indonesia

Commonly, central bank is a banking institution that has the most
important role in the economy of a country, especially in the
monetary,

financial,

and

banking aspect.

Speaking of banking

institution, the central bank is actually very different from the

conventional banks that we know. The central bank is not a profitoriented bank like the conventional banks.
A long time ago, central bank had the same tasks as other banks
in common that we called as commercial banks, but then central bank
started to have bigger tasks and responsibilities than the commercial
banks, that is in term of regulation and policy like creating money and
acting as an agent for the government. After that, central bank was
discharged from any kind of commercial banks tasks and focused on
the regulation and policy until now. One of central bank task is not
only creating money, but also managing it, because, as Walter
Bagehot said, money will not manage itself.
Bank Indonesia is the central bank of Indonesia. It is an
organization built based on Indonesian constitution. Bank Indonesia
has duties and authorities coordinated to reach a certain goal.
According to Indonesian constitution about Bank Indonesia (UU No.

19

20

23 Tahun 1999, applied since May 17, 1999), Bank Indonesia is a

figure as an independent country institution and organization.
Bank Indonesia has one single objective. That is to stabilize the
value of Indonesian currency, Rupiah, whether it is the stable Rupiah
for goods and services which is reflected by the inflation rate or the
stability of exchange rate against other foreign currency which is
reflected by Rupiah performance against other foreign currencies.

3.1.2

Bank Indonesia Vision and Mission

3.1.2.1 Bank Indonesia Vision
Bank Indonesia vision is to be a credible institution and
the best central bank in the region by strengthening the
strategic values held as well as through the achievement of
low inflation along with a stable exchange rate.
3.1.2.2 Bank Indonesia Mission
1.

To achieve Rupiah exchange rate stability and maintain

the efficacy of monetary policy transmission in order to
drive quality economic growth.

2.

To nurture an effective and efficient national financial

system that can withstand internal and external shocks in
order to support the allocation of funding/financing that
contributes to national economic stability and growth.

3.

To ensure a secure, efficient and smooth payment system

that contributes to the domestic economy and helps

21

maintain monetary as well as financial system stability

whilst broadening access in the national interest.
4.

To build and maintain the organization and human

resources of Bank Indonesia, who are performance based
and honor integrity, as well as to enforce good corporate
governance in the implementation of tasks as mandated
in prevailing laws.

3.1.3

Bank Indonesia Strategic Values

Trust and Integrity Professionalism Excellence Public
Interest Coordination and Teamwork

3.1.4

Bank Indonesia Strategic Objectives

To realize its Vision, Missions, and Strategic Values, Bank
Indonesia has stipulated the following medium-long term strategic
objectives:
1.

Strengthen inflation control in terms of demand and supply.

2.

Maintain exchange rate stability.

3.

Foster deep and efficient financial markets.

4.

Maintain financial system stability, underpinned by solid payment

system surveillance.

5.

Realize directed, efficient and synergetic financial inclusion.

6.

Maintain a payment system that is secure, efficient and free from

disruption.

22

7.

Strengthen

accountability

financial

management

at

Bank

Indonesia.
8.

Realize an effective and efficient work process supported by

Information Systems, culture and governance.

9.

Expedite the availability of competent human resources.

10. Build and strengthen strategic alliances and enhance the public
perception of BI.
11. Ensure a smooth transition of the supervisory function to the
Financial Services Authority (OJK).
3.1.5

SMEs Empowered by Bank Indonesia Malang

Bank Indonesia has social program called Program Sosial Bank
Indonesia

(PSBI)

which

is

function

of Corporate

Social

Responsibility (CSR). One of the programs in PSBI is SME

empowerment by Bank Indonesia, main office and the representative
offices.

In Malang, there are five SMEs empowered by the

representative office of Bank Indonesia in Malang. Those are:

1. Perajin Batik Jatim Katesa
Alasan memilih SME Batik : Bagi BI Malang, batik merupakan komoditas
unggulan yang tak hanya bermakna ekonomis, tapi juga kaya sejarah dan
budaya. Mengembangkan batik berarti juga menjaga kekayaan sejarah
serta budaya bangsa ini, kata Pemimpin BI Malang Dudi Herawadi.

23

Katesa is the name given by Bank Indonesia for SME of Batik

empowered by the representative office of Bank Indonesia in
Malang. The SMEs empowered are:
Mr. Satimins Batik Tulis Prabulinggih (Desa Bulujaran Lor,
Kecamatan Tegalsiwalan, Kabupaten Probolinggo, East Java)
Starting from the capital of 2 million Satimin buy batik fabric
and equipment, with the empowerment of BI Malang, today
Satimin successful with 54 employees can produce and market
10-15 pieces of batik per day.
Mr. Saifuls Batik Sekar Wangi Sejati (Desa Tembokrejo,
Kecamatan Purworejo, Pasuruan)
Tembokrejo once known as the largest batik center in Pasuruan,
but after the G-30S 30-Sept-1965, the batik activity disappears,
turning point changes occurred in 2004, when Saiful and Sulis
establish Sekar Wangi Sejati. Furthermore, they also unlimited
creativity on cloth jarik only, but extends to the clothes fit the
demands of time.
Lina Santosos Batik Raden Wijaya (Batu, Malang)
Lina empower her neighbours to make batik. He established a
community-based batik business "Raden Wijaya". For Lina,
batik is not about economical way to earn money, but about love
how to care for ancestral traditions. Not only in demand in the
local market, batik Lina also penetrates the market Samarinda

24

and Balikpapan. In terms of marketing, Lina enlightened by

training held by BI.
Wiwik Niartis Batik Tulis Khas Malangan (Malang city)
Starting from batik training for members of the PKK, Wiwik
start batik business in 2009. Among the contemporaries when
training, only Wiwik really exist, it is because of her love for
batik, so the rise and fall in the batik industry is a pleasure that
should be undertaken to get success. Wiwiks batik often sent to
various regions as a result of online marketing.
Rudi

Ariantos

Batik

Tulis

Bhre

Tumapel

(Kelurahan

Bandungrejosari, Sukun Malang)

As an art teacher in high school, Rudi fell in love with batik. He
pioneered Bhre Tumapel since 2009 by inviting 20 people
around him to take part in developing batik. Rudis market is
state-owned, private, and schools.
Bank Indonesias roles in empowering these SMEs are:
Funding Batik tools worth 10 million Rupiah for each
Holding trainings : engineering design, drawing, coating the
night,

staining,

nglorod,

finalization of workmanship

batik,

waste management, eco-friendly batik with natural coloring

non-chemical,

financial

management

and

marketing

management, improved quality and productivity.

Facilitating the product marketing with exhibitions and fashion
shows held BI

25

Sending the craftsmen to study from the successful industry of

Batik in Pekalongan
2. Kelompok Tani Kentang Batu & Pasuruan
Potato is one of the main commodities in Pasuruan, also
known as one of the foods that can trigger inflation. As an
institution that is in charge of controlling inflation, BI gives
attention to this food. Mr. Sulkhan, the leader of Kelompok Tani
Subur Jaya I, pioneered and developed the seed potatoes business.
The place is in Desa Wonokitri, Kecamatan Tosai, Kabupaten
Pasuruan.
Bank Indonesias roles in empowering this SME are:
Creating the cluster for potatoes
Holding Peluang dan Usaha Pembenihan Kentang training by
giving an education about strengthening the farmers group,
financial, and technology of seed potatoes.
Giving a facility of Screen House for potatoes nursery
BI training and assistances effects in the form of a screen house
for breeding, give direct impact on potato farmers in the village
Wonokitri. Seeds grow in better quality.
3. Kelompok Tani Bawang Merah Probolinggo
It was established since 1984 in Desa Watu Wungkuk,
Kecamatang Dringu, Kabupaten Probolinggo. There are 35 people
in the group with 30 hectare of agricultural land for red onion
commodity.

26

Bank Indonesias roles in empowering this SME are:

Giving a warehouse facility to produce organic fertilizer
Giving the farmers technical skills
Giving a training to increase the productivity of red onion
cultivation
4. Kelompok Tani Jamur Probolinggo
Starting from the eruption of Mount Bromo in 2010-2011
which the volcanic ash blanketed the fields of horticulture, at the
time BI and Kadin Probolinggo helds a training of Button
Mushroom Cultivation (Champignon) to 229 the local farmers
around

Bromo

after the eruption.

Before the eruption, no

mushroom cultivation there.

The leader of mushroom cultivation Tengger Sejahtera
Abadi is Giyantoro and the agricultural land is around the Mt.
Bromo.
Coaching and mentoring initiated by BI give the results. Two
months since the middle of 2015, the average production of the
fungus can penetrate the level of 3.48 kg.
5. Kelompok Tani Padi Malang
Rice is the commodity that can trigger inflation. As an
institution that is in charge of controlling inflation, BI gives
attention to Rice.
The leader of Kelompok Tani Pangan Makmur in Desa
Karangsuko, Kecamatan Pagelaran, Kabupaten Malang, is Riyanto.

27

The agricultural land is around 125 hectares. In 2014, Bank

Indonesia Malang held a training to increase the productivity of
rice cultivation to the farmers.
Training and production facilities given BI Malang proved
quite effective in improving the knowledge and help increase
agricultural productivity. Never again encountered the sad story of
failed harvests in the village Karangsuko.

3.2 Activities Conducted

3.2.1

The Place of Internship

The chosen place for internship is the representative office of
Bank Indonesia in Malang. The address is Jl Merdeka Utara No. 7
Malang 65119, Indonesia.

3.2.2

The Date and Time of Internship

According to Bank Indonesia policy regarding the internship
program, the program was held on September 7 th , 2015 until
September 28th , 2015 (15 work-days).
In the Bank Indonesia in Malang, there is a working time
schedule applied to all of the employees and the internship students in
the Bank Indonesia with the hope that the employees will be more
discipline. The time schedule can be seen in the table below:

28

Table 3.1
The working time schedule of Bank Indonesia Malang
Working Day
Monday Thursday
Friday

3.2.3

Working Hour
07.00 16.15
08.30 16.15

Break Time
12.00 13.00
11.30 13.00

The Daily Activity of Internship Program

For all the students that participate in the internship program in
the representative office of Bank Indonesia in Malang will be sent to
different units in some period of times. Therefore, there will be many
different activities done by the the internship students.
Table 3.2
Activities conducted during the internship program

Day
1

Activity
Meeting with the company's deputy for

Date
September 7th , 2015

briefing about Bank Indonesia as the

central bank of Indonesia
2

Learning about Small Medium Enterprises

September 8th , 2015

(SMEs) and Bank Indonesia program in

empowering the SMEs in the working
areas of BI Malang
3

Discuss about the topic for internship

September 15th , 2015

report with the advisor in BI Malang

4

Sharing about one of the the SMEs

empowered by BI Malang

September 18th , 2015

29

Day

Activity

Date

Discuss about the topic, data processing,

September 22nd, 2015

and the implementation for internship

report
Collecting data of inflation rate of rice in
Malang in 2012 until 2015
6

Collecting data of price of rice in Malang

September 23rd, 2015

in 2012 until 2015

Working on the internship report
7

Preparing for the presentation

September 28th , 2015

Presenting the topic of the internship report

3.3 Evaluation of Internship Result

3.3.1

Empowering the Rice-Farming in Malang District

Before being empowered by the representative office of Bank
Indonesia in Malang, rice-farming in Malang District is not in a very
good condition mostly because of rats. Riyanto, the leader of Pangan
Makmur farmers in Karangsuko, Malang District, said that rats keep
tormenting the farmers. In the mid of 1990s, he still remembers how
the farmers were tormented because the harvest was a total failure
because of the rats. Those rats attacked sporadically and destroyed the
harvest about 125 hectares area. As a result, the farmers suffered from
the harvest failure. Many ways have been implemented in order to
eradicate the rats from destroying the rice-farming.

30

The rice-farmers in Malang District have ever tried to poison the

rats by giving the poison twice before the planting time and twice after
the paddy grows. The poison is mixed with rice diffused in the rice
field. Then, the rats that eat the poison are getting rid of by the
farmers. However, the farmers realised that a poisoning technique is
quite dangerous for the farm animals could also eat the poison.
Therefore, the technique was stopped with a consideration of the
danger. Finally, the farmers decided to use natural predators of rats to
control the uncontrolable population growth of rats. The predators
used by the farmers to decrease the population of rats are owls. With
the help of the representative office of Bank Indonesia in Malang with
the purpose of implementing the social program of Bank Indonesia,
empowerment, the farmers built birdcages around the rice field with
the hope that those carnivores will stay in the cage and prey the rats
around the field. With this technique, there are almost no more rats
destroying the paddy because of the owls and there is almost no more
harvest failure because of the rats attacks.
After finish with the pests, the farmers moved on to the
productivity of rice. Actually, the productivity of rice in this district is
quite high. In dry season, it usually reaches 10-12 tons/hectare, while
in the rainy season, it usually only reaches 6-8 tons. If the rainfall is
high, the production will be lower than 6 tons/hectare. The high
production of rice made Riyanto and the farmers try to cultivate
organic rice. Almost all of the farmers in the district use a semi-

31

organic farming system where not only chemical fertilizer they use,
but also organic fertilizer. However, chemical fertilizer and pesticide
are still used even though in the long-term, they will destroy the
nutrient of the land. The disadvantages of using chemical fertilizer are
land, air, and water polution, the loss of micro-elements, and the
increase of soil acidity.
With the help of the representative office of Bank Indonesia in
Malang, the farmers is invited to observe some agricultural centers.
The cluster of rice-farming in Asinan, Semarang District, is seen to be
having a very high selling price compared to the market price. the
farmers visited Semarang facilitated by the representative office of
Bank Indonesia in Malang in order to gain knowledge from the
farmers in Asinan, Semarang District. The cluster of rice-farming in
Asinan succedded in developing organic rice field from 2 Ha to 40
Ha. It is said that the key success of the farmers in cultivating the ricefarming is because of the support of BUMD (Badan Usaha Milik
Desa).
The program of rice-farming empowerment was first planned in
2013, but it was implemented in mid-2014. Before deciding to
empower the rice commodity, firstly, the representative office of Bank
Indonesia in Malang held a survey of regional food resilience that
which of the commodity succeeded in developing the model of food
resilience. The survey was held on February 5th and April 23rd, 2014.
After choosing the rice commodity as a commodity to be developed or

32

empowered, Memorandum of Understanding (MoU) signing was held

on July 14th with the local government (PEMDA) and on July 21st with
the department of agriculture and plantation (DISTANBUN).
On June until August, the representative office of Bank
Indonesia in Malang held some training for the farmers with the
purpose of an enhancement of the farmers skills and an enhancement
of the productivity of rice cultivation. The main background of
holding the training is because of the low productivity of rice. On June
26th and 27th , the first training was held. The training was about the
manufacture and the use of organic fertilizer. On July 2nd, training
about controlling and eradicating the pests is held. On August 12 th and
26th , the training about planting process and rice cultivation was held.
After holding some training for the farmers, the next effort of
the representative office of bank Indonesia in Malang to increase the
performance of the rice-farming cluster is giving some facilities for
the farmers so that they do not need to cultivate the rice-farming
traditionally anymore, because it takes a lot of time rather than using a
more modern technology.
Table 3.3
The expenditure of the representative office of Bank Indonesia in
Malang for performance of rice cluster on October 2014

Program

Facility

Expenditure

PSBI

20 Hand Wheel Tractors

IDR

20,000,000

PBSI

Renovation of Farmers Hut

IDR

26,818,000

33

As we can see from the data from table 3.3 that the money that
the representative office of Bank Indonesia in Malang spent was
around IDR46,818,000 for the facilities given to the farmers in order
to increase the productivity of rice in Malang district.

Figure 3.1
Farmers' Hut by the Representative Office of Bank Indonesia in Malang

Source: Website of DISTANBUN Malang District

Figure 3.1 is the picture of farmers from Malang District

together with some people from the representative office of Bank

34

Indonesia in Malang. Behind them is the farmers hut facilitated by

the representative office of Bank Indonesia in Malang.
In 2016, the representative office of Bank Indonesia in Malang
has target to achieve. The farmer cluster is targeted to be 30 people
and the production of rice is targeted to be 15 Kg/Ha in 2016. To
achieve those targets, cooperation with some institutions is needed in
empowering the rice-farming. Figure 3.1 contains a model plan of
food resilience in Malang District by the representative office of Bank
Indonesia in Malang.
Figure 3.2
A model plan of food resilience in Malang District

STRENGTHENING

SAPRODI
Bank Indonesia
Department of Agriculture

IRRIGATION
Public Works Irrigation

ACCESS TO BANK
Banking

TECHNOLOGY INNOVATION
Department of Agriculture
BPTP (Balai Pengkajian
Teknologi Pertanian)
INSTITUTIONAL
ENFORCEMENT
Bank Indonesia
Dskoperindag

OUTPUT

Fertilizer, Seed,
Medicine

Enhancement of
Productivity

Plant Index

KUR, KKPE

Capital

Seed Breeding, the

Utilization of
Organic Materials

Seed, Organic Rice

Management

Cooperation

Farmers
Welfare

35

Figure 3.1 shows the related institutions/agencies that have

intervention to achieve the programs goal. Bank Indonesia and
department of agriculture have function as an institution giving a
facility of rice production such as seed, fertilizer, and medicine. Then,
there is public works irrigation as an institution that measures the
plant index. For farmers capital, there is bank that gives KUR (Kredit
Usaha Rakyat) and KKPE (Kredit Ketahanan Pangan dan Energi).
Besides giving facilities of seed, fertilizer, and medicine, department
of agriculture, together with BPTP (Balai Pengkajian Teknologi
Pertanian), gives technology facility to seed breeding and organic
materials

utilizing.

DISKOPERINDAG

Then,
(Dinas

Bank

Indonesia,

Koperasi

together

with

Perindustrian

dan

Perdagangan), will have a management to cooperatives. All those

institutionals/agencies have but one goal. That is to achieve farmers
welfare.
3.3.2

Learning Experience
Doing an internship in Bank Indonesia will have the students to
understand about the central banking, banking, and monetary system.
Even though the writer did not directly go to the field where the SMEs
empowerment program is implemented because of lack of time and
chances, but the story of the process was being told by one of the
employee in the monetary section of the representative office of Bank
Indonesia in Malang that directly carries out the program.

36

In campus, the students will only get a knowledge about a

central-banking and

its purpose, only a theoretical knowledge.

However, after doing an internship in the representative office of

Bank Indonesia in Malang, the students will have an experience to
understand the implementation of the theoretical knowledge that has
been taught in campus.
By doing an internship in the representative office of bank
Indonesia in Malang, the writer gained more knowledge about the
central-banking in Indonesia that is not taught in the campus. PSBI is
one of the example. By doing an internship in the representative office
of Bank Indonesia in Malang, the writer learned that Bank Indonesia
has a program to achieve the goal of bank Indonesia as the central
bank in Indonesia. As we know, the main goal of Bank Indonesia as
the central bank is to maintain the stability of Indonesian currency,
Rupiah, whether it is towards foreign currency or towards the goods
and services. Stabilizing the rupiah towards goods and services is
reflected by the inflation rate. To achieve this goal, the writer learned
that Bank Indonesia has a social program called PSBI (Program
Sosial Bank Indonesia). One of the activity that Bank Indonesia holds
in this program is SME and main commodity empowerment. Bank
Indonesia has its own budget to empower the SME and main
commodity chosen by bank Indonesia in order to be able to control the
inflation rate and increase both skills and welfare of the entrepreneur
and farmer. By empowering the SME and main commodity chosen by

37

Bank Indonesia, Bank Indonesia will have a higher probability to

achieve the main goal as the central bank of Indonesia.
The series of cooperation activities by the representative office
of bank Indonesia in Malang and the government of Malang Regency
has started its activities in 2014. Leading sector with the Department
of Agriculture and Plantation in Malang, the representative office of
Bank Indonesia in malang gave facilities the formation of farmer
groups "Pangan Makmur" from Village of Karangsuko District in
order to increase productivity of rice in the region. With the training
attended by farmers from the village of Desa Brongkal Karangsuko
and the expected productivity of rice in the two regions will be
increased, or in other words from the IP200 becomes IP300. This
means that the rice harvest in a year that its home will be twice to
three times, so expect the level of welfare of the farmers will be able
to increase in the future.
In other words, the representative office of Bank Indonesia in
Malang does not carry out this program by itself. They work together
with the department of agriculture in order to increase the productivity
of rice and the welfare of the farmers. Bank Indonesia works together
with the department of agriculture or related institutions, because
Bank Indonesia is not a profit-oriented institution. Their goal by doing
this social program is only to increase the productivity of a certain
main commodity empowered in order to control and stabilize the
inflartion rate in that region. The representative office of Bank

38

Indonesia in Malang facilitated the farmers by holding trainings

related to the rice-farming, while the department of agriculture
provided the speakers for the trainings. Together with the department
of agriculture, the representativa office of bank Indonesia also
provided the farmers with fertilizers and seeds.
In my opinion, the social program of Bank Indonesia is prettywell implemented, because by directly going into the field, Bank
Indonesia will understand more about the economic condition in a
region even though there is still not much to see as a result from ricefarming in Malang District empowered by the representative office of
Bank Indonesia in Malang. Empowering rice-farming in Malang
District, the writer suggests that the representative office of bank
Indonesia in Malang gives a training about entrepreneurship in order
to increase the welfare of the farmers by selling rice in a multi-form,
such as mush or any food made by rice.

CHAPTER IV
CONCLUSION
4.1 Conclusion
The empowerment of Small Medium Enterprises (SMEs), one of the
social programs of Bank Indonesia (PBSI) is actually a really great idea. The
fact that small medium enterprises play an important role in our economy will
give a great advantage in this program. By empowering the SMEs, it will give
Bank Indonesia and local government a chance to control the inflation rate
depending on the economic growth in the region and to make the SME to be
more independence by holding training and to be more productive by giving a
needed facility. One of the main commodity empowered by the representative
office of Bank Indonesia in Malang is rice. One of the reasons of the
representative of Bank Indonesia in Malang in choosing rice as the main
commodity to be empowered is that rice is both main commodity and main
food in Indonesia and Malang is not an exception. Another reason in choosing
rice as one of the main commodity to be empowered is that, in Malang, rice is
one of the main commodity that has a big contribution in the inflation rate.
Therefore, the representative office of Bank Indonesia in Malang decided to
empower rice-farming in Batu, Malang, in order to be able to control the
fluctuation of inflation rate in Malang. Bank Indonesia is really doing a great
job by holding an empowering program, especially on rice-farming since rice
is the main need for society.

39

40

In empowering the rice-farming in Malang, one of the effort of the

representative office of Bank Indonesia in Malang is holding a training for the
farmers in order to increase their skills in farming the rice. The training
includes

maufacturing

and

using the organic fertilizer,

controling and

eradicating the pests, and planting process and rice cultivation. Another effort
of the representative office of Bank Indonesia in Malang is giving or
upgrading the facility of farmers in order to make it easier for the farmers to
do the job. The facilities that have already been given to the farmers in Batu,
Malang, by the representative office of Bank Indonesia in Malang for the time
being are hand-wheel tractors and farmers hut. Because the empowerment of
rice-farming has just begun in 2014, the empowerment still lasts only about a
year and a half. Therefore, there is not much to see as the result of ricefarming empowerment in Malang Distrit. However, in the short run, the result
of the empowerment can be seen by analizing the inflation rate in Malang.
Even though the inflation rate in Malang is still the highest in the East Java in
the beginning of 2015, it is still not outreach the target rate set by the
representative office of Bank Indonesia in Malang. The targeted inflation rate
in Malang in 2015 is below 3.5%, while the year-to-date inflation rate still
reaches 2.24% up until November 4th . Therefore, there is still a possibility of
inflation rate in Malang being below the target by the end of the year. So, the
conclusion is that the inflation rate in Malang is still under control and the
emporwerment program to small medium enterprises as one of the social
program of Bank Indonesia well-achieved even though the program of
empowering the rice-farming is still one and a half year.

41

4.2 Suggestion/Recommendation
As it is stated that rice-farming empowerment program is still a year
and a half, there is nothing much to see as a result of the program. But by
seeing an effort the representative of Bank Indonesia in Malang gives to the
farmers, the program is well implemented. The suggestion that can be given
is about the training. The writer suggests that the representative office of
Bank Indonesia in Malang needs to give a training about entrepreneurship,
because a knowledge about entrepreneurship is a basic knowledge to run an
SME. As far as we know, the fice-farmers are only rice-farming and then sell
it to the distributor. If the farmers are trained to be a good entrepreneurship,
they can process the rice they farm to be powder slurry or anything else that
can gain more profit rather than just selling the rice plainly. By being able to
process the rice to be a better product they can sell, the farmers welfare will
surely increase and the job opportunities will also most likely to increase for
the local residents.

BIBLIOGRAPHY

De la Torre, Augusto, Mara Soledad Martnez Pera, and Sergio L. Schmukler.

"Bank involvement with SMEs: Beyond relationship lending." Journal of
Banking & Finance 34.9 (2010): 2280-2293.
Jenkins, Hatice and Hussain, Monir. An Analysis of the Macroeconomic
Conditions Required for SME Lending: The Case of Turkey. (2014)
Mazzarol, Tim. 2014. Growing the Global Economy through Small Medium
Enterprise: The G20 SME Conference. http://theconversation.com/growingthe-global-economy-through-small-to- medium-enterprise-the-g20-smeconference-28307 (Accessed in October 15, 2015 at 18:09)
http://www.bicg.org/bicg.php?sectionID=16 (Accessed in October 15, 2015 at
17:59)
http://finansial.bisnis.com/read/20151104/9/488898/bi-malang-optimistis-targetinflasi-2015-di-bawah-35 (Accessed in December 12, 2015 at 18:30)
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42