JAKARTA – Bank Indonesia (BI) considers the sustainability of Indonesia’s economy to be dependent on a strong Micro, Small, and Medium Enterprises (MSMEs) sector. Therefore, BI is encouraging banks to increase credit distribution to MSMEs.
BI Governor Agus Martowardojo stated that the government has set a target for People's Business Credit (KUR) distribution at IDR 110 trillion this year, with interest rate subsidies provided. However, he acknowledged that the government alone cannot fully implement this credit distribution.
To support this, the monetary authority has issued a regulation requiring all banks to allocate a minimum of 20% of their total credit portfolio to MSMEs. This regulation, outlined in a Bank Indonesia Regulation (BPI), was introduced in 2012 and will take effect in 2018.
"We want the parliament to provide political support for this initiative. If we do not focus on MSMEs, our plan to build an inclusive economy and reduce the gap between the rich and the poor will not be realized," Agus said during a hearing with Commission XI of the DPR on Thursday (Feb 9).
Agus compared Indonesia to other countries that have already enacted laws specifying interest rate ratios for MSMEs by sector. Some nations even apply negative interest rates for MSME loans to encourage growth.
He noted that the current MSME credit ratio in the banking sector has reached 19.4%. However, 17 national private banks from BUKU I and II categories, along with several Regional Development Banks (BPDs), still fall short of this requirement.
"Some BPDs are overly focused on consumer loans rather than productive credit, and this needs to be redirected," he added.
Agus emphasized that MSMEs should remain a priority in KUR distribution. He pointed out that MSMEs were the only sector that remained resilient during the 1997-1998 financial crisis. He also proposed that while national banks should maintain a 20% MSME credit ratio, foreign banks could be allowed to compensate by allocating 20% of their credit portfolio to export financing instead.
"This will ensure Indonesia’s economy grows strong, balanced, and inclusive," Agus concluded.
(Source: Kontan.co.id)