DBS Bank Indonesia Introduces Blended Finance: Unsecured Funding for SMEs

Kapanlagi.com - DBS Bank Indonesia introduces a breath of fresh air for SMEs by launching an innovative funding scheme called blended finance. Through this program, funds amounting to SGD 2 million or equivalent to IDR 24 billion are specifically prepared to assist Micro, Small, and Medium Enterprises (MSMEs) that have a social impact, without the need for any collateral.

Recent data from the Government Investment Center (PIP Kemenkeu) as of October 2024 reveals that of the approximately 65 million MSMEs in Indonesia, more than 44 million are still not connected to the formal financing system. In fact, this sector has tremendous potential to drive the national economy. Unfortunately, challenges such as business legality and limited access to financing remain major obstacles. This is what drives DBS Bank Indonesia to provide solutions for SMEs to grow, develop, and create a positive impact on society.

1. The First Blended Finance Recipient from DBS Bank

The first recipient of blended finance from DBS Bank Indonesia is Adena Coffee, a social enterprise focused on sustainable coffee production and management. This funding will be used to strengthen and expand their impact. Previously, Adena Coffee received grant funding from the DBS Foundation Grant Program 2024.

Executive Director, Head of SME Banking, Institutional Banking Group PT DBS Bank Indonesia, Angela Thenaria said, “As a purpose-driven bank, DBS Bank Indonesia presents a blended finance scheme—a combination of grants and soft financing—to address the capital access gap that often hinders the growth of social enterprises in the country. In Indonesia, SMEs absorb more than 97 percent of the workforce, yet very few have access to formal financing. For social entrepreneurs, the challenges are more complex because their business models often do not meet bankability criteria. The blended finance scheme serves as a concrete solution, reducing risks for banks and encouraging sustainable growth.”

This blended finance scheme is supported by a rigorous selection process, including a thorough feasibility test when grant recipients participate in the DBS Foundation Grant Program. DBS Bank Indonesia also ensures regular monitoring and transparency at every stage of milestone achievement.

Head of Group Strategic Marketing & Communications PT DBS Bank Indonesia Mona Monika said, “DBS Bank Indonesia fully supports social entrepreneurs like Adena Coffee in empowering local economies and communities because we believe that business should not only focus on profit but also on creating impact for the environment and surrounding society. In line with the sustainability pillar of Impact Beyond Banking, by combining grant funds from the DBS Foundation and a blended finance scheme, we hope this solution can support social entrepreneurs in accelerating their business achievements. With this, we can reduce barriers to funding access, encourage cross-sector collaboration, and create an inclusive financing model that can be replicated and scaled for the social entrepreneurship or social impact business sector.”

“We are honored by the trust of Bank DBS Indonesia in us as the first social entrepreneur to receive support through this blended finance scheme. For us, this support is not just a form of funding, but also a manifestation of appreciation for social entrepreneurs like Adena Coffee in driving change. This support also gives us the space to continue to grow, so that we can bring a broader positive impact to the community, especially for coffee farmer groups,” said Founder and CEO of Adena Coffee Abyatar.

2. Adena Coffee's Steps to Develop Sustainable Coffee Farming

DBS Bank Indonesia

As an agrarian country with abundant natural resources, Indonesia has a number of leading commodities in the agricultural sector. According to data from the Ministry of Agriculture, coffee records an annual production of around 789,000 tons, placing Indonesia as the fourth largest coffee producer in the world, after Brazil, Vietnam, and Colombia.

Therefore, Adena Coffee has a strong determination to be a catalyst for change by advocating for fair wages, empowering local coffee farmers, and supporting sustainable farming practices. Starting as a community-driven project fueled by passion, Adena Coffee has evolved into a mature and sustainable business. A consistent commitment to quality, community empowerment, and respect for the cultural values of coffee has become the main foundation that allows Adena Coffee to grow and significantly expand its reach.

Abyatar explains, “What we have learned over nearly 10 years of creating Adena Coffee is that we contribute to friends who do not have access to financial resources. Currently, Adena Coffee works with more than 2,000 coffee farmers in over 30 villages. Research by Indonesia Investment in 2023 revealed that at least 98 percent of coffee in Indonesia is produced by smallholder families, not by corporations. Therefore, we strive as much as possible to build a healthy ecosystem for our coffee-producing friends.”

The various efforts made by Adena Coffee have yielded significant results, with coffee farmers' incomes increasing between 20 to 100 percent. Now, Adena Coffee has successfully exported coffee beans from local farmers to Japan, France, and the United States. In addition, their empowerment program also includes the preservation of the cultural values of indigenous communities through support for existing traditional facilities and infrastructure.

To expand this positive impact, funds from blended finance from DBS Foundation and Bank DBS Indonesia will be used by Adena Coffee to:
Develop software to support compliance with EUDR (European Deforestation Regulation)
Establish a Multi-Purpose Production and Training Center
Build new Wet Mill and fermentation facilities to train farmers in the application of proper wet processing and fermentation methods, to ensure consistent and high-quality harvests
Conduct six capacity building sessions for 500 small-scale coffee farmers in Gayo, Flores, Bali, and West Java.

3. Creating Impact by Improving the Lives of Vulnerable Communities

DBS Bank Indonesia

Since its establishment in 2014, DBS Foundation has allocated over SGD130 million to support 37 social programs and 161 impact businesses across six key markets, including Indonesia. Furthermore, throughout 2024, DBS Foundation successfully reduced 11 million kg of greenhouse gas emissions and managed 8,000 kg of waste through collaborations with Grant Recipients. This initiative also created 45 job opportunities while reinforcing the commitment to provide a sustainable positive impact on the environment and society. Moving forward, DBS Foundation will continue to focus on providing basic needs and promoting inclusion for vulnerable communities, as well as improving the welfare of the elderly.

4. About DBS Foundation

DBS Bank Indonesia

DBS Foundation is committed to improving the lives and livelihoods of those in need. Since 2014, DBS Foundation has supported innovative businesses that create impact—businesses focused on addressing key social issues and achieving profits through impactful and noble solutions. Through philanthropic funding, capacity building, mentoring, and other supportive measures, DBS Foundation catalyzes the growth and impact of these purpose-driven businesses.

DBS Foundation strives to spark positive change by assisting underprivileged communities and building better conditions. This includes providing basic necessities for those who cannot afford them and promoting inclusion by equipping them with financial and digital literacy skills.

DBS Foundation also collaborates with other aligned partners to drive sustainable change. Its vision is to inspire collective action to help build a better world; to make every day better and tomorrow brighter.

5. About DBS

DBS is a leading financial services group in Asia, with a presence in 19 countries. Headquartered and registered in Singapore, DBS is positioned in three major growth axes of Asia: China, Southeast Asia, and South Asia. The credit ratings of "AA-" and "Aa1" for DBS are among the highest in the world.

Known for its global leadership, DBS has been named “World’s Best Bank” by Global Finance, “World’s Best Bank” by Euromoney, and “Global Bank of the Year” by The Banker. DBS is at the forefront of leveraging digital technology to shape the future of banking, having been selected as “World’s Best Digital Bank” by Euromoney and “Most Innovative in Digital Banking” in the world by The Banker. Additionally, DBS has received the “Safest Bank in Asia“ award from Global Finance for 16 consecutive years from 2009 to 2024.

DBS provides comprehensive banking services for all customers in the retail, SME, and corporate segments. As a bank born and raised in Asia, DBS understands the intricacies of doing business in the most dynamic markets in the region.

Established in 1989 as part of the Singapore-based DBS Group, PT Bank DBS Indonesia (Bank DBS Indonesia) is one of the banks with the longest histories in Asia. Operating in 1 Head Office, 13 Branch Offices, 16 Sub-Branch Offices, and 4 Functional Offices, with 3,011 active employees in 15 major cities in Indonesia, Bank DBS Indonesia provides comprehensive banking services focused on customer experience for ‘Live more, Bank less’. DBS Bank Indonesia also has a positive goal that goes beyond banking and is committed to supporting customers, employees, and the community towards a sustainable future.

PT Bank DBS Indonesia is licensed and supervised by the Financial Services Authority (OJK) and Bank Indonesia (BI) and is a participant in the Deposit Insurance Corporation (LPS).

DBS demonstrates its commitment to building long-term sustainable relationships with customers through a banking approach aligned with Asian cultural values. Not only focused on financial services, DBS also goes further through the DBS Foundation, an initiative that supports social entrepreneurs, who are business actors that not only pursue profit but also create positive impacts for the environment and society.

Through the DBS Foundation, DBS Bank actively creates real change. From supporting businesses that care about social issues to equipping communities with future skills and strengthening food security. This is how DBS contributes more than just banking, becoming a growth partner that has an impact for a better world.

(kpl/cvn)