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2009/TEL39/LSG/IR/004

Smart Card for Micro-Finance Application Crucial Lifeline for the Emerging MMSE

Submitted by: Alita

Industry Round Table - How SMEs Can Leverage on ICT for Growth and Innovation

Singapore 14 April 2009

by Ita YuliatiAlita Group, CEOIndonesia

The 39th APEC Telecommunications and Information Working GroupSingapore, 13-18 April 2009

Smart Card for Micro-finance Application :Crucial Lifeline for the Emerging Micro, Medium and Small Enterprise

I N D O N E S I A

I n f o c o m m N e t w o r k S o l u t i o n

w w w . a l i t a - i n d o n e s i a . c o m

i n f o @ a l i t a - i n d o n e s i a . c o m

ISTS

Indonesian Secure Transaction System

ISTS’s Biometric Smartcard Potential

Enable under-banked & unbanked people to access micro finance towards less-cash societyEnsure that only the real cardholder can access to the micro loan Prevent fraudulent micro loan application including redundant, blacklisted & unauthorized loan disbursementCan be implemented within a couple of months to provide a quick time to marketCan provide solution for ID application, Cooperatives, Community Credit Banks, Distributed & subsidized goods, Healthcare & Insurance, Prepaid application (energy, transportation, micro payment) etc.Empower micro, small & medium enterprises with secure & latest chipcard technologies without their own investment.

Practical Applications

Suitable for semi-rural & rural communities with insufficient infocomm infrastructure, to enable community credit banks & cooperatives enjoy the ultimate secure electronic micro finance transaction without own investment. Both offline & online transaction is supported.For Cooperatives: Provide convenient, fast, privacy & eliminate manual back-office loan processingFor Healthcare & Insurance companies: Compliment their IT solution with convenient, fast & privacy for the cardholderCard Management: Can provide convenient, fast, privacy chip card solution without changes in the core banking application. For micro banking, the core banking application can be implemented later to provide the bank the speedy time to market & low total cost of ownershipSolution is also available for Logistics & Suppy-chain management, including subsidized goods distribution

BankingActivity (Transfer,

Withdrawal, Remittance, etc)

MicroLending &

Loan

Wages, Salary,Welfare & Social Security

Distribution

Utility Bills, Loyalty, etc

Health &Insurance

ID Card

Payment /E-Cash

ISTS System Host

ISTS System Host

CardIssuers

Acquirer

BanksGovernmentOil CompanyUtility CompanyCooperativesInsurance Companyetc.

MerchantHotelGas StationsRestaurantBanksCellular OperatorPost Officeetc.

TMTM

How We Implement ?

In a cooperative: existing cooperative which has each members belongs to one and only one member group, can enjoy ISTS’s biometric smartcard to prevent unauthorized member & group head to access the collection money & only legitimate cardholder can access the micro loan.Several member groups will share the PC based POS devices, and will lower the total cost of ownership. The mentor of the member groups will be the authorized person to be assigned the POS devices.

If infocom infrastructure is insufficient or unavailable, ISTS’s biometric smartcard solution can be utilized in offline mode. During posting processing, the batch of the offline transactions will be posted to the central site. A shadow account at the central server will be representing the actual information available on the chip card. the shadow account & its related records will provide necessary information for card replacement, & missing information can be prevented by having the transaction logfile.

Offline POS

Vision : Linking up Larger National Network

Collective CooperativeCollective CooperativeOrganizations in East Organizations in East

Java :Java :

PUSKOWANJATI,PUSKOWANJATI,members : 60.000members : 60.000

Centralized Centralized Indonesian WomenIndonesian Women

Cooperative Cooperative OrganizationsOrganizations

LinkageLinkage

LinkageLinkageLinkageLinkage

LinkageLinkageKoperasi Koperasi YY

Koperasi Koperasi XX

Koperasi Koperasi YY

Empowering MSME Through ICT

•Facts :

In Indonesia, total number of micro, small and medium sized enterprise (MSME) in operation reaching about 43 million business unit

Small and medium sized enterprises (SME) contribute more than 53% to Indonesian GDP in 2006 - 2007.

SME make up 95% of all enterprises in the Asia Pacific and contribute 30 to 60% in Asian Economy.

Linking Up to APEC Network ?

Thank You ! Terima Kasih !

Business Case :Implementation of Smartcard-based cooperative system for "Setia Budi Wanita” A-Cooperative Organization in Malang

Koperasi: a private, semi, and/or govermental organizations formed in an entity involved in a diverse range of economic activities by providing value to its members, staff and the community based on its values of self-help through co-operation, mutual aid among members, thrift, equality and equity.

A Women Cooperative Organization :“Setia Budi Wanita” (SBW) Operated in Malang

Field of itsSmall Business

Units

SBW CooperativeMalang

SBW CooperativeMalang

Loan & Savings

Dairy ProductsIndustry

Agriculture &Plantation

Trading

Health Care

Printing

Awarded as 2nd BestCooperative Organization

in 1979

Currently Have5.000 Member

ISTS’s Main Serverat SBW

ISTS’s Main Serverat SBW

ISTS Smartcard Implementation

Registration Card Personalization

WholeSBW Members

Card Ready to Use1 2

Group PICGroup PIC

3

Card Usedfor Loan &Deposit in

GroupCard Used

for Shoppingw/ Offline/

Online Cashier

5

Submissionof activitydata by PIC

4

6 Reconciliation

Cashier

6

Reconciliation

ISTS’s Core SystemCentral Server

for EAST JAVA Regionat PUSKOWANJATI

ISTS’s Core SystemCentral Server

for EAST JAVA Regionat PUSKOWANJATI

Consolidation

Consolidation

Other WomanCooperatives

UnderPUSKOWANJATI

7

About Un-banked and SME

In Indonesia and Asia

Proportion of Banked & Un-banked People

http://www.guerrantfoundation.org/sitebuilder/images/pyramid-615x463.jpg

ProbablyUnbanked

ProbablyUnderbanked

Banked

SME In Indonesia

Source : SME Statistics 2006-2007, Indonesian Republic Ministry of Cooperatives and SME, downloaded from : http://www.depkop.go.id/index.php/Statistik-UKM/

Financial, Rental, and Services

Company, 1.87%

Graph 1 : SME Economic Proportion based on number of business unit in 2007

Services , 4,60%

Communication and Forwarder , 5,54%

Trading, Hotel and

Restaurant , 28.12 %

Buildings , 0,35 %Electricity, Gas

andFresh Water ,

0,02 %

Food Industry, 6,49 %

Mining and digging, 0,53 %

Agriculture, Life-stocks, Forestry, and Fisheries 52,48 %

SME Contribution to Indonesia Economy

Source : SME Statistics 2006-2007, Indonesian Republic Ministry of Cooperatives and SME, downloaded from : http://www.depkop.go.id/index.php/Statistik-UKM/

Graph 2 : SME Contribution Proportion and Large Enterprises to National GDP year

2006-2007

SE ME LE

Year

Percentage

SME in APEC Countries

Member of Economy (Year Joined)

Population(Million)

GDP(US$bn)

GDP per Capita(US$)

SME’sNumber in %

SME’sEmployment (%)

Australia (1989) 19,5 622,7 30,69596,8 (1997) Small Biz

Only50,2 (1997) Small Biz

OnlyBrunei Darussalam (1989) 0,36 5,2 14,352 98,0 (1997) 92,0 (1997)

Canada (1989) 31,3 970,3 30,439 98,0 (1996) 94,0 (1996)

Chile (1994) 15,6 89,3 5,571 15,7 (1993) 36,5 (1993)

China (1991) 1,294 1,601 1,227 99,0 (1993) 78,8 (1993)

Hongkong, China (1991) 7 164 23,592 98,2 (1995) 60,7 (1995)

Indonesia (1989) 217,5 222 1,003 98,0 (1996) 88,3 (1996)

Japan (1989) 127,5 4,621 36,184 98,8 (1996) 77,6 (1996)

Korea (1989) 47,7 667,4 13,806 99,0 (1993) 69,0 (1993)

Malaysia (1989) 23 112,5 4,418 84,0 (1997) 12,3 (1997)

Mexico (1993) 101,8 663,1 6,377 98,7 (1994) 77,7 (1994)

New Zealand (1989) 3,8 92,9 23,120 98,9 (1997) 52,3 (1997)

Papua New Guinea (1993) 5,7 4,0 686 N.A. 52,9 (1997)

Peru (1998) 26,5 66,2 2,290 N.A. N.A

Philippines (1989) 78,6 84,2 1,019 99,5 (1988) 66,2 (1996)

Russia (1998) 143,8 517,8 4,016 85,6 (1993) 33,5 (1993)

Singapore (1989) 4,2 103,6 23,999 91,5 (1995) 51,8 (1995)

Chinese Taipei (1991) 22,5 307,5 13,359 97,8 (1997) 78,4 (1997)

Thailand (1989) 64,3 165,7 2,556 95,8 (1997) 18,1 (1996)

United States (1989) 288,5 11,750 39,991 90,0 (1993) 69,0 (1993)

Vietnam (1998) 80,2 40,4 494 N.A. 85,0 (1998)

Source : Tarmidi, Lepi T, The Importance of MSE’s in Economic Development of Developing APEC Countries, paper from : http://www.apec.org.au/docs/koreapapers2/SVII-LT-Paper.pdf, December 2004 Data

Contribution of SME in APEC Country

Source : Tarmidi, Lepi T, The Importance of MSE’s in Economic Development of Developing APEC Countries, paper from : http://www.apec.org.au/docs/koreapapers2/SVII-LT-Paper.pdf, December 2004 Data

Jobs Firms

All SMEs 68% 99%

Micro(Up to 5 Employees)

30% 75%

Small(5-19 Employees) 20% 20%

Medium(20-100 Employees) 18% 4%

Thank You ! Terima Kasih !