People wearing masks travel on a motorcycle in Banda Aceh, Indonesia, on Thursday. (EPA-Yonhap)
The International Finance Corp. said Monday it plans to provide a loan of up to $50 million to KB Finansia Multi Finance, an Indonesian subsidiary of South Korean credit finance company KB Kookmin Card.
The loan will contribute to a sustainable and inclusive economic recovery in Indonesia by addressing the liquidity squeeze in the nation’s multifinance sector, the IFC said.
Multifinance companies like KB Finansia Multi Finance are considered the main source of funding for micro, small and medium-sized enterprises. Due to the pandemic, the companies have been facing a liquidity shortage because of the relaxed repayment requirement.
Supported by the loan, KB Finansia Multi Finance will be able to raise long-term Indonesian rupiah-denominated funding and continue lending to micro, small and medium-sized enterprises, which employ nearly 90 percent of the nation‘s workforce, added the global development institution.
“Micro, small and medium-sized businesses, an engine room of economic growth in Indonesia, has been hit hard by the COVID-19 pandemic and helping them recover will be key to stemming job losses and reigniting economic activity,” said Azam Khan, IFC’s country manager for Indonesia, Malaysia and East Timor.
KB Kookmin Card in July acquired a 80 percent stake in KB Finansia Multi Finance for $75.3 million, following a contract in November 2019, as well as the $5 million worth of bonds issued by its existing stakeholders.
By Son Ji-hyoung (email@example.com