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View all search resultsNo end in sight for MSME lending woes
Bank lending to micro, small and medium enterprises (MSME) remains sluggish despite multiple policy efforts to invigorate the segment. Analysts blame weak consumer spending power and the risky credit profile of many small businesses.
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A micro, small and medium enterprise (MSME) entrepreneur takes a photo of the QR code used for digital payments of his products on Sept. 9, 2023 during the Malang Brewtiful Festival 2023 in Malang Town Square, East Java. (Antara/Ari Bowo Sucipto)
B
ank lending to micro, small and medium enterprises (MSME) remains sluggish despite multiple policy efforts to invigorate the segment. Analysts blame weak consumer spending power and the risky credit profile of many small businesses.
Edy Misero, secretary-general of the Indonesian MSMEs Association (Akumindo), said “there’s been some reluctance” among business players, as they still struggle to secure bank loans.
He told The Jakarta Post on Wednesday that findings on the ground suggest that government support aimed at boosting MSME lending had yet to reach many players in the sector.
For instance, businesses continue to face difficulties accessing the subsidized microcredit program (KUR), which offers loans with a ceiling of up to Rp 100 million (US$5,595) without requiring any additional collateral.
The process of applying for bank credit can also take months, while MSMEs often need financing immediately to sustain operation. As a result, Edy said that business owners are increasingly turning to fintech peer-to-peer (P2P) lending platforms for faster access to funding.
“It comes down to public awareness and the willingness to take existing programs seriously. If online lending platforms can penetrate every corner of society, why can’t the government’s KUR do the same?” he said.
According to a monthly report published by Bank Indonesia (BI), bank loan issuance to MSMEs grew by 0.6 percent year-on-year (yoy) in May. While that marks an increase from the 0.2 percent recorded in April, the figure is tiny when compared to overall bank credit growth of 11.51 percent yoy in the same month.
