The government has promised to guarantee up to Rp 100 trillion (US$9.25 billion) in working capital loans for micro, small and medium enterprises (MSMEs) until 2021.
By
Karina Isna Irawan
·4 minutes read
JAKARTA, KOMPAS — The government has promised to guarantee up to Rp 100 trillion (US$9.25 billion) in working capital loans for micro, small and medium enterprises (MSMEs) until 2021. The loan guarantee is expected to increase the disbursement of economic stimulus and speed up economic recovery.
The government has allocated Rp 123.46 trillion so far to MSMEs in stimulus programs, comprising interest subsidies, fund placement for loan restructuring, purchasing guarantees, working capital loan guarantees, income tax (PPh) exemptions and cooperative investment funds.
Finance Minister Sri Mulyani Indrawati said on Tuesday at a press conference in Jakarta that banks had been encouraged to provide new working capital loans to MSMEs that would be guaranteed by the government. To guarantee the loans, the government would pay premiums of Rp 5 trillion to state-owned credit insurance companies PT Asuransi Kredit Indonesia (Persero) and PT Kredit Kredit Indonesia (Persero).
Between Rp 65 trillion and Rp 80 trillion in MSME working capital loans are expected to be disbursed this year. If MSMEs took advantage of this lending facility, the economy is expected to recover faster.
"MSMEs are a priority for recovery in the first half of 2020. Disbursing the MSME loans will support the national economy. Various stimulus programs have been provided to MSMEs for positive economic growth in the second half of the year," Sri Mulyani said.
The MSME working capital loans have a cap of Rp 10 billion. The loan applications carry no specific requirements for MSMEs. Other financial stimulus schemes for MSMEs include a loan restructuring facility, interest subsidies and a six-month loan payment deferral.
According to Sri Mulyani, the disbursement of funds for the MSMEs stimulus programs would be accelerated, with disbursements to begin in July once the necessary data on MSME debtors had been collected and the formulation of the lending program had been completed.
According to Finance Ministry data, only about Rp 28 trillion, or 22.74 percent, of the MSME recovery programs had been realized by the end of June. The amount disbursed is low because the interest subsidies for the community business credit (KUR) and non-KUR micro credit programs had not been realized. The current budget disbursement includes Rp 30 trillion in funds placed at banks.
Cooperatives and Small and Medium Enterprises Minister Teten Masduki said that MSMEs on the national blacklist could not apply for the new working capital loan facility, which was intended for MSMEs, individuals, cooperatives, and businesses. So far, around 60.6 million MSMEs in the country had access to formal financial institutions.
MSMEs contribute 60.34 percent to the nation’s gross domestic product (GDP) and absorb 97 percent of the national workforce.
According to data at the Cooperatives and SMEs Ministry, MSMEs account for 99.9 percent of all businesses in Indonesia and comprise 60,702 medium-scale businesses, 783,132 small businesses, and 63.5 million micro businesses. MSMEs contribute 60.34 percent to the nation’s gross domestic product (GDP) and absorb 97 percent of the national workforce.
Economic recovery
Bank Mandiri director for institutional relations Donsuwan Simatupang said that the bank planned to disburse Rp 20 trillion in MSME loans. The loans would be granted to MSMEs engaged in a variety of business sectors ranging from agriculture, plantations, service and trade to manufacturing, tourism, and food.
"The guarantee will accelerate loan disbursements to the MSME segment because it will protect debtors and lending banks from default," said Donsuwan.
According to Coordinating Economic Minister Airlangga Hartarto, the disbursement of working capital loans and other stimulus funds for MSMEs was expected to accelerate recovery of the national economy.
The government projects economic growth in 2020 of only between minus 0.4 percent and 1 percent. The economy is expected to contract 3.8 percent in the second quarter of the year.
The large-scale social restrictions (PSBB) to curb the spread of the coronavirus that causes Covid-19 had caused a significant decline in business and sales volume for MSMEs.
Bank Permata economist Josua Pardede said that the government must prioritize the disbursement of MSME stimulus funds. The contribution MSMEs made in terms of business, labor, and GDP was very large. The economic slowed during the second quarter of 2020 because the Covid-19 pandemic had severely affected many MSMEs. The large-scale social restrictions (PSBB) to curb the spread of the coronavirus that causes Covid-19 had caused a significant decline in business and sales volume for MSMEs. (CRN/CAS)