The Jakarta Post
The government has unveiled a new microcredit program (KUR) for laid-off workers and housewives who own micro-sized businesses to help them recover from the impacts of the COVID-19 pandemic.
According to the Coordinating Economic Ministry’s deputy for macroeconomic and finance, Iskandar Simorangkir, the government aimed to disburse supermicro KUR loans worth Rp 12 trillion (US$814 million) to 3 million people by the end of this year.
“We expect the program, which will be launched by the end of August, can help laid-off workers and housewives build their micro-sized productive businesses,” he said during a virtual press briefing on Thursday.
The latest data from the Manpower Ministry shows that as many as 2.15 million workers have been affected by the COVID-19 pandemic. As many as 631,000 informal workers have been affected, while 1.13 million formal workers have been furloughed and 384,000 formal workers laid off.
The National Development Planning Agency (Bappenas) projects unemployment rate to reach between 8.19 percent and 9.2 percent this year, significantly higher than 2019’s figure of 5.28 percent.
Iskandar further explained that the program would cater to laid-off workers and housewives who have had a running business for at least three to six months and have never received KUR loans before.
The applicants must also participate in a formal or informal mentorship program incorporated in a business group or have a family member with an existing business.
“Borrowers can apply for a maximum Rp 10 million in loans with a zero percent interest rate until this December,” Iskandar said, adding that they would then be charged a 6 percent interest rate next year.
Aside from the zero percent interest rate, banks will also be prohibited to ask for additional collateral for the loans.
Although the program is aimed at helping those affected by COVID-19, the government plans to continue the program after the pandemic to encourage entrepreneurship, which is expected to contribute to the country’s welfare and economic growth, he said.
Coordinating Economic Affairs Ministry data shows that KUR loan disbursement reached Rp 89.2 trillion for 2.67 million debtors as of July, despite a slight slump during the height of the pandemic in March to May.
As demand for new KUR loans have increased since the third week of June following the easing of large-scale social restrictions (PSBB) across the country, the government plans to increase this year’s total loan disbursement.
“We have raised the KUR loan disbursement ceiling for this year by Rp 22.2 trillion, making this year’s total figure Rp 198.73 trillion, from the previous Rp 176.53 trillion,” Iskandar said.
He went on to say that the government also planned to extend loan interest subsidies to KUR borrowers until December. On top of the extension, it would also increase the interest subsidy to 6 percent until the end of the year.
Finance Minister Sri Mulyani Indrawati announced in April that KUR borrowers with loans amounting to between Rp 10 million and Rp 500 million would enjoy interest subsidies of 6 percent for the first three months and 3 percent for the next three months.
“We’ve decided to extend the subsidy because many KUR borrowers have yet to recover from the impacts of the pandemic,” Iskandar said.