Credit policy for small people in Indonesia firstly emerged in the early twentieth century by making the ethical politics as the political basis of the colonial Dutch government back in 1901. Manifestation of this policy is to make volkscredietwesen which was formally responsible for the provision of credit for the Bumiputera (local) community.
According to Drs.Haryono Rinardi, M. Hum., the lecturer of Faculty of Cultural Sciences, Diponegoro University, the government policy to help small people through the provision of credit continued when the New Order came to power. One of the credit programs particularly given to farmers was BIMAS program. Other programs were Credit for Small Investment Program (CIC) and the Permanent Working Capital Credit (KMKP) which began in early 1974.
Credit policy for small people, according to Haryono Rinardi, has been actually conducted by the government since the colonial time up to the Independence period. In fact, an interesting phenomenon in every period of power was the policy to provide credit to small people. "Against the different backgrounds, the government has run a variety of small credit programs. Unfortunately, in reality there is always the debate about the implementation and effectiveness of credit policy," he said at the Multimedia Room, R.M. Margono Djojohadikusumo Building, Faculty of Cultural Sciences UGM on Monday (22/8), in his open examination of doctoral program in history science.
In his dissertation Credit for People: Micro-Banking Credit Policy for Small and Medium Enterprises between 1904-1990, Haryono concluded that micro-subsidized credit policy, whether conducted by the colonial power and the New Order government, is not the main solution to the problem of capital needs for small and medium enterprises. The approach of pump priming credit in rural areas through the establishment of financial institutions in order to encourage rural development is proved not entirely right. "The findings in this study denied the accuracy of the theory among economists of the 1970s who often mentioned that the provision of cheap credits for small farmers and rural communities was the appropriate strategy to increase prosperity and reduce poverty," he explained.
The man born in Rembang, 11 March 1967, said that the failure of micro-subsidized credit program to promote small and medium enterprises can be explained by several things, that micro-subsidized credit for small and medium enterprises often becomes part of the interests of global industrialists, while the dominant business sector which obtains micro-subsidized credit actually is not the economic sector which has strategic value for the economic development of Indonesia.
In addition, Haryono views that there are almost always non-economic objectives behind the micro-credit policy and not all micro-credit debitors are able to utilize credit which is received to improve their business. “This shows that credit need is not the only problem faced by small and medium enterprises in Indonesia to develop because there is always corruption in micro-credit,” Haryono Rinardi said who passed very satisfactorily and became the 1445th doctor of UGM.