1 * This paper is based on work carried out for the Harvard Institute for International Development as an Adviser to Bank Indonesia's Small Enterprise Development Project. I gratefully acknowledge the assistance and support of Bank Indonesia. The views expressed in this paper are mine alone and are not intended as representing the position of Harvard or of the Bank Indonesia. Some descriptive portions of this paper, including Annex 1, are drawn from a paper ‘Small Scale Enterprise Credit Programs in Indonesia, Background and Experience’, presented by Kamardy Arief, Managing Director of Bank Indonesia, at the World Bank sponsored Conference on Development of Small Scale Industry, 8–11 December 1981, in Colombo, and at the Asia Society/AID Workshop on Small Scale Enterprise Programs and Project Issues, 30 November–3 December 1981, in Yogyakarta.