Halal Industry Islamic Finance

Indonesia government partners with biggest Islamic organization to set up 10,000 grocery stores

JAKARTA – Indonesia’s Coordinating Ministry for Economic Affairs, banks, microfinanciers and fintech lenders are teaming up with the country’s largest Islamic organization Nahdlatul Ulama (NU) to set up 10,000 grocery stores in the next 4 years.

The ministry’s vice deputy for financial institutions and capital market, Gede Edy Prasetya, said the banks and fintechs, including BRI Syariah, Bank Jabar Banten, Permodalan Nasional Madani and Kerjasama.com will provide financing under micro credit schemes (KUR) to Islamic boarding schools under NU management to develop the so-called kios WarNU digital groceries.

He said they will start with 100 stores near the Javanese cities of Cirebon and Purwakarta.

“These grocery stores will promote and sell goods from MSMEs near Islamic boarding schools and will be supported by digital technology such as cashless payments via QR Codes integrated with digital ordering systems, digital delivery system and digital goods tracing system,” said Gede.

Amid the COVID-19 outbreak this year, the government is seeking new potential eligible beneficiaries for its micro credit schemes, said Gede. This year, it aims to disburse 190 trillion rupiah ($13.6 billion) as part of the scheme. It has already disbursed 34.2 trillion rupiah in loans as at the end of April, with a non-performing loan rate of 1.23%.

“The Vice President (Ma’ruf Amin) has mandated us to strengthen the Islamic economy and finance industry by expanding financial inclusion to institutions such as Islamic boarding schools,” said Gede.

“Since NU is the biggest Islamic organization with estimated membership of more than 120 million and 29,000 Islamic boarding schools and 256 universities [under it] we decided to empower them. The idea is to provide all the needs of Islamic boarding school students through these grocery stores and to give them entrepreneurship skills,” he said.

The partnership with banks and other financial institutions will ensure students and the Islamic schools can pay school administration fees, carry out savings or deposit money.

“Meanwhile the grocery stores are expected to increase their economic scale by engaging more in entrepreneurial activities. We are also partnering with (security systems specialists) PT Jaring Sistema Semesta to provide technical assistance for grocery management strategy, designing the grocery layout, operations management. We’ll monitor them regularly to ensure their sustainability,” Gede added.

He estimates that it will cost around 40 million rupiah to establish a new grocery store under the new partnership. Other grocery stores such as Sumber Alfaria Jaya and Indomaret could spend around 200 million rupiah to 300 million rupiah to set up a store, according to Gede.

Participants in the new government program can upsize their loans up to 500 million rupiah if they want a bigger scale grocery set up.

“But of course they need to prove that their business is running well first before they able to upsize (their loans),” he said.

(Reporting by Yosi Winosa; Editing by Emmy Abdul Alim emmy.abdulalim@salaamgateway.com)

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