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Jakarta Post

State lenders to cut rates, relax repayment for SMEs battered by COVID-19: Minister

  • Riska Rahman and Eisya A. Eloksari

    The Jakarta Post

Jakarta   /   Fri, March 20, 2020   /   04:20 pm
State lenders to cut rates, relax repayment for SMEs battered by COVID-19: Minister State-Owned Enterprises (SOE) Minister Erick Thohir announced on Friday a plan for state-owned banks to lower loan interest rates for small and medium enterprises to curb the economic effect of the coronavirus spread. (JP/Zul Trio Anggono)

The State-Owned Enterprises (SOE) Ministry announced Friday a plan for state lenders to lower lending rates and relax debt repayment for small and medium enterprises (SMEs) with positive track records that are suffering a hard blow from the COVID-19 pandemic.

“We will make sure state-owned banks cut SMEs’ loan interest immediately,” SOE Minister Erick Thohir told a teleconferenced press briefing.

The minister refers to banks, including Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI) and Bank Mandiri.

Bank Indonesia (BI) has lowered the nation’s benchmark interest rate by 100 basis points (bps) this year to 4.5 percent to encourage banks to lower lending rates and support the economy amid the hard-hitting impact of the COVID-19 pandemic.

Read also: Garuda, ‘severely affected’ by COVID-19, may restructure bonds: Minister

The ministry is also in talks with the Financial Services Authority (OJK) to implement relaxation measures for industries that are highly affected by COVID-19 such as airlines, hotels, restaurants and tourism, which have taken loans from state-owned banks.

However, the ministry emphasized that only businesses with “a positive track record” will get relaxation assistance from the banks.

“These measures are to ensure the economy can continue to run," Eric said, adding that SOEs must be prepared to face losses but to remain optimistic. “Indonesia is a great country and we will recover, even if it takes time.”

The government previously issued a Rp 10.3 trillion (US$642 million) stimulus package to boost household spending and support tourism, which are both expected to be hit hard by the outbreak.

However, it has decided to hold off on giving incentives to attract foreign tourists after it was announced that there were two confirmed cases of COVID-19 in Indonesia in early March.