Investment Minister Refers to MSMEs as Saving Grace in the 1998 Crisis

Investment Minister Refers to MSMEs as Saving Grace in the 1998 Crisis

TEMPO.CO, Jakarta – Investment Minister and the head of the Indonesian Investment Board (BPKM) Bahlil Lahadalia said that the micro-small-medium size enterprises (MSMEs) sector was the saving grace for Indonesia during a crisis, for example, the 1998 monetary crisis.

He said that almost all companies collapsed during the 1998 crisis with half of them filing for bankruptcy. “Our economic bastion during the 88% inflation rate and 15% deficit were not big companies but MSMEs,” he said during a single business number (NIB) certification in Pekanbaru, witnessed virtually on Thursday, August 9, 2023.

Bahlil said that 99% of businesses in Indonesia are MSMEs, amounting to 64.3 million, while the rest of 1% are big companies. MSMEs also created around 120 million to 134 million existing job opportunities. Therefore, MSMEs are a sector that boost Indonesia’s economy and forced it out of a crisis.

Unfortunately, according to Bahlil, the government is not entirely siding with MSMEs. MSMEs are often used as a political commodity ahead of an election.

The other prominent problem highlighted by Bahlil is the lack of credits loaned to MSMEs. Bahlil noted that out of the Rp6,300 to Rp6,500 trillion credits that banks distributed this year, only Rp1,235 trillion were given to MSMEs or 18% to 19% of the total bank credits. The rest of the credits were distributed to big companies.

The minister reported the issue to President Jokowi, which in turn obliged banks to give at least 30% of total credits to fund MSMEs.

The low number of credits, according to Bahlil, was caused by the number of MSMEs who have not obtained permits due to illegal fees. Thus, he implemented an online single submission to obtain permits.

Moreover, the government also instructed banks to waive security for loans under Rp50-100 million loans by MSMEs through the People’s Business Loan (KUR) program.

Minister Bahlil emphasized that MSMEs are the backbone of Indonesia’s economy. Therefore, MSMEs need to be protected and facilitated to gain access to working capital loans.


Editor’s Choice: Indonesian SMEs Expenditure Potential at Rp2,000tn

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