TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Bank lending to MSMEs slows down despite govt push
The growth in loans issued to micro, small and medium enterprises has diverged significantly from overall loan growth, hampering a business segment that is vital for employment.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
A batik seller photographs her products for a social media ad in Bengkulu city, Bengkulu, on Oct. 19, 2023. (Antara/Muhammad Izfaldi)
I
ndonesian banks posted solid loan growth in September, but most of those funds went to big businesses and consumers, while anemic lending to micro, small and medium enterprises (MSMEs) is hurting a sector that is vital for employment and development.
The latest data from the Financial Services Authority (OJK) shows that overall bank lending was up 10.85 percent year-on-year (yoy) in September, meeting the target of 9 to 11 percent.
Loans issued to MSMEs grew at less than half that rate, despite claims by both the current and previous presidential administrations that they would prioritize the segment.
The OJK points to the lingering impacts of the coronavirus pandemic over four years ago and MSMEs’ focus on resolving past loans as contributing factors.
However, analysts argue that the issue runs deeper, pointing to the previous administration's emphasis on downstream mineral industries and large infrastructure projects, which primarily benefit big businesses.
Aside from that, there is a lack of pre-bank funding and support for MSMEs, which need a more robust financial supply chain to bridge funding gaps.
Since his election campaign, President Prabowo Subianto has pledged support for MSMEs, promising tax exemptions for new businesses and easier access to financing.
