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Govt to launch new lending program with lower interest rate to boost microloans
As part of the effort to increase the disbursement of KUR loans to the productive sector, the government will use a financing scheme through a program called One Village One Product (OVOP).
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Office of the Coordinating Economic Minister undersecretary for macroeconomy and finance Iskandar Simorangkir talks about the government’s plan to increase the disbursement of the microcredit program (KUR) in Jakarta on Tuesday. (JP/dfr)
T
he government will launch a new program this year aimed at increasing the disbursement of subsidized microcredit program (KUR) loans to micro, small and medium enterprises (MSME), after failing to meet its target last year.
Office of the Coordinating Economic Minister undersecretary for macroeconomy and finance Iskandar Simorangkir said that the government would further increase subsidized loan disbursements to MSMEs given their growing importance in the economy.
"We realize how important MSMEs are because our economy relies on them," he said in Jakarta on Tuesday. “The government, therefore, should support MSMEs through a financing program," he added.
As part of the effort to increase the disbursement of KUR loans to the productive sector, the government will use a financing scheme through a program called One Village One Product (OVOP).
The government will prioritize agriculture in the program's initial phase, but will later include the plantation, livestock and fisheries sectors.
The plan is part of a larger KUR program, which involves 44 lenders including both state-owned and private banks, to provide loans to small businesses that are considered unbankable in traditional markets but, nonetheless, have profit potential.
The contribution of the country’s nearly 63 million MSMEs to the gross domestic product (GDP) is about 60 percent. MSMEs, which employ 97 percent of the total labor force in the country, contributed around 12 percent or Rp 298 trillion out of the Rp 2,260 trillion total exports in the same year.
