Government Committed to Increasing Quantity and Quality of MSME Financing

By: Dirandra Falguni

The government continues to demonstrate a strong commitment to supporting the Micro, Small, and Medium Enterprises (MSMEs) sector in Indonesia. One of the strategic steps taken is to increase the quantity and quality of MSME financing, especially through the People’s Business Credit (KUR) program. In addition, the government is also targeting the elimination of MSME bad debts, integration of MSMEs in the Free Nutritious Meals (MBG) program, and facilitation of halal certification and Intellectual Property Rights (HAKI). These efforts are expected to increase competitiveness and strengthen national economic resilience.

The Deputy for Micro Enterprises at the Ministry of Cooperatives and SMEs, Riza Damanik, emphasized that the government continues to encourage an increase in the quality and quantity of KUR distribution for MSMEs. As much as 60 percent of the total KUR distributed is expected to be allocated to productive sectors, such as agriculture, fisheries, animal husbandry, and plantations. According to him, this is important to strengthen national food security.

In addition, the government is also working on eliminating bad debts for MSMEs, with the first stage targeting 67 thousand small business actors. This process has been running since December 2024 and is targeted to be completed in March 2025.

The government is also focusing on integrating MSMEs into the Free Nutritious Meal (MBG) program ecosystem. This program aims to ensure that MSMEs get access to financing that supports the sustainability of their businesses.

To increase the effectiveness of the program, the Ministry of Cooperatives and SMEs also continues to coordinate with the State-Owned Bank Association (Himbara) and regional banks. It ensures a higher quality and more targeted financing scheme.

The government’s three main priorities in strengthening MSMEs this year include Eliminating bad debts for MSMEs to ease the financial burden on business actors, Integrating MSMEs into the MBG program to expand their market access, Increasing KUR distribution to be more inclusive and have a direct impact on economic growth.

Chairman of Commission VII of the Indonesian House of Representatives, Saleh Partaonan Daulay, said that business actors who want to borrow up to IDR 100 million do not need to provide collateral or guarantees. In addition, loans under IDR 50 million also no longer require a Taxpayer Identification Number (NPWP). If the loan is more than IDR 50 million, an NPWP is required, if it is less than IDR 50 million, an NPWP is not required.

Commission VII of the Indonesian House of Representatives together with the government will closely monitor the bank’s commitment to distributing KUR. If the banks involved continue to ask for collateral, the government will not pay interest subsidies to the bank. Himbara banks, private banks, and regional development banks are required to distribute this KUR without requiring collateral, according to government regulations.

For 2025, the government has increased the KUR distribution target to IDR 300 trillion. This figure is higher than the realization of KUR in 2024 which only reached around IDR 280 trillion.

Meanwhile, Member of Commission VII of the Indonesian House of Representatives, Beniyanto, reminded that this large target must be balanced with maximum efforts from the Ministry of Cooperatives and SMEs. He hopes that the target of IDR 300 trillion will not suffer the same fate as last year. The active role of the Ministry of Cooperatives and SMEs is needed so that the implementation of KUR can run effectively.

He also highlighted the importance of evaluating KUR distributing banks to be more optimal. The appointed banks must not only meet administrative requirements, but must also have the capability to distribute KUR effectively. In addition, strategic policies such as the arrangement of the KUR Committee, changes to the KUR implementation guidelines, and support for food security programs must also be considered.
The KUR program must be part of the grand vision of President Prabowo Subianto’s government in driving the people’s economy and accelerating national economic recovery.

In addition to financing support, the government also helps Small and Medium Industries (IKM) in obtaining halal certificates and Intellectual Property Rights (HAKI). The Palu City Trade and Industry Service (Perindag), for example, has handed over certificates to 43 IKM actors on Wednesday (5/2/2025).

The Head of the Palu City Trade and Industry Service, Zulkifli, said that this program is a form of government support in increasing the competitiveness of local products. Of that number, 23 IKM actors received halal certificates, while 20 others received HAKI brand certificates. The handover of these certificates was carried out in stages so that the government could have direct dialogue with business actors, understand their challenges, and provide appropriate solutions.