Indonesia accords priority to MSME recovery

5 April, 2021 12:00 AM printer

Jakarta: The Indonesian government has focused on the recovery of micro-, small- and medium-scale enterprises (MSME) that significantly contributed to driving national economic growth, Coordinating Economic Affairs Minister Airlangga Hartarto has stated.

MSMEs have contributed 61.1 percent to the national economic growth and absorbed 97 percent of the total workforce, or some 116.9 million workers, Hartarto noted in a statement, report agencies.

Hartarto remarked that of the total budgeted 699.43 trillion Rp for the national economic recovery programme, 184.83 trillion Rp were channeled for MSME, Indonesia’s Antara News Agency reported.

Budget disbursal for MSME and corporate funding was conducted through the provision of six stimuli: interest rate subsidy for MSME, productive aid for micro enterprises, return of guarantee services (IJP) subsidy, fund placement in public banks, tax incentive, and credit restructurisation.

The minister stated that some MSMEs fell into grave problems owing to the COVID-19 pandemic.

A survey involving 195,099 MSME conducted by the Cooperative, Small and Medium-Scale Enterprises Ministry found that 23.10 percent of the MSME had experienced a decline in their business turnover, 19.5 percent encountered obstacles in distribution, and 19.45 percent faced problems in working capital.

An Asian Development Bank (ADB) survey encountered a similar condition, wherein 30.5 percent of the MSME in Indonesia had recorded a decline in domestic demand and 48.6 percent were temporarily closed.

One of the government’s moves to revive MSME’s economic activity is by providing stimulus in working capital through the micro loans scheme with low interest rate and without additional collateral, he revealed.

In 2020, the government had waived off interest payments and deferred principal installments of KUR for MSMEs affected by the COVID-19 outbreak for a maximum of six months.

It also established super micro KUR targeting laid-off workers and the micro-scale home industry.

In 2021, the government has extended the provision of interest subsidy of three percent, postponement of principal installments and relaxation of KUR provisions by extending its term as well as an increase in the ceiling to 253 trillion Rp.

The government will need the help of all stakeholders, including the public and MSME operators, to ensure that all government policies have been implemented properly. Thus, the MSME could strengthen their businesses and boost the national economy, Hartarto added.

 


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