BPRS Botani IPB University Preparing to Create a National Agribusiness Bank

In the last ten years the share of the agricultural sector in Gross Domestic Product (GDP) has tended to decline. During this period, the growth of the agricultural sector, especially since 2012, also declined. On the other hand, our GDP growth has also decreased, so that the growth in agricultural production and economic growth is positively correlated.

“The correlation between agricultural production growth and economic growth in the last ten years is very high. This means we need to maintain the growth of agricultural production in order to maintain national economic growth. The latest evidence shows that entering this potential recession, agriculture is a sector with positive growth, "said Prof. Hermanto Siregar, Professor of IPB University from the Faculty of Economics and Management in the Webinar on Creating a National Agribusiness Bank by BPRS Botani IPB University, (14/8).

In the midst of the COVID-19 pandemic, in the second quarter of 2020 (y-o-y), the growth of the agricultural sector rose to 15.46 percent. If you only look at the food sub-sector plus plantations, it is 6.3 percent, higher than other sectors. Prof. Hermanto further said that agriculture in a broad sense absorbs around 30 percent of the workforce, but on the other hand, access to bank credit is only 9.5 percent. So that the acceleration of this sector becomes difficult. One of the obstacles to agricultural development is farmers' access to sources of capital. However, these obstacles can be turned into opportunities, namely financing opportunities for banks. With a note, agriculture is not only seen from the on-farm side. It is necessary to look at the off-farm, non-farm side in an integrated manner, to the distribution and marketing side.

"In the context of MSME credit, the agricultural sector does get a slightly higher credit, namely 10.7 percent. However, that figure is still far below the trade sector, which is around 50 percent. Currently, the preference of banks is generally towards MSMEs, in the sense of trade, because turnover and cash flow are easier to manage, from here it becomes the justification for the need for an agribusiness bank, "said Prof. Hermanto. Overcoming obstacles and realizing these opportunities, IPB University initiated the establishment of an Agribusiness bank with a long stage based on the IPB University Long Term Plan for 2019-2045. This Agribusiness Bank is open to various business fields, of course, especially in agriculture.

Meanwhile, the President Commissioner of Bank Mandiri Syariah, Dr. Mulya Siregar also said, currently IPB University has knowledge resources that do not only focus on agriculture. By keeping up with the times, IPB University is now a place for social, economic and environmental sciences. "With this potential, it feels like IPB University is not enough to just establish an Agribusiness Bank that focuses on the agricultural sector, while on the other hand the world is facing the problem of climate change," he said. IPB University needs to pay attention to sustainable finance which is in line with Sustainable Development Goals (SDGs). Sustainable finance is a new business paradigm in finance. SDGs with 17 goals are basically centered on 3Ps (profit, people and planet).

Currently, according to him, banks must also take a role in realizing the 3Ps. Interestingly, Dr Mulya said, 3Ps in SDGs is identical to the Islamic economic concept which is based on maqashid sharia. "If we see, the three pillars of the economy. First is fair and just, where there cannot be speculative, everything must have an underlying cause. Second, balance activities, the financial sector must be balanced with the real sector so as not to become a bubble economy. Third, orientation in accordance with maqashid sharia. So in my opinion, in the future the conventional economy with sharia will find common ground, "he said. (IAAS / Nas)

Published Date : 14-Aug-2020

Resource Person : Prof Hermanto Siregar

Keyword : Agribusiness Bank, BPRS Botani, IPB lecturer