Government Boosts Loans for MSME, Targeting 30 Percent in 2024 – The government steadily boost lending to micro, small and medium enterprises (MSMEs) by banks, which is still away from the national target.

The Indonesian President, Joko Widodo (Jokowi) hopes that the  lending for MSME can be continually increased to reach 30 percent nationally by 2024.

This was conveyed by the Coordinating Minister for the Economy, Airlangga Hartarto, after accompanying the President in a meeting with representatives of bank president directors at the State Palace, Jakarta, Wednesday 8 September 2021.

“Mr. President certainly hopes that the banking sector can provide credit to MSMEs. On the basis of a year on year now the average is around 18 percent. Therefore, the President requested that credit for MSMEs be increased to 30 percent in 2024,” said Coordinating Minister Airlangga as quoted from the Cabinet Secretariat website, Thursday 9 September 2021.

Airlangga said the 30 percent target was the overall figure for national credit, not the target imposed on each bank. For him, President Jokowi understands that each bank has its own business specialization.

“Nowadays, like at BRI, it’s close to 70 percent and some specialize in corporate. However, the President requested that the total credit be 30 percent, it doesn’t mean that each bank has to have 30 percent because each has its own specialization,” he explained.

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In a meeting attended by the Minister of State Secretary, Pratikno, the directors of the banking industry expressed suggestions regarding the provision of non-performing loans (NPLs). According to the directors, it is needed for harmonization of accounting standards based on the Statement of Financial Accounting Standards (PSAK) and NPLs.

“So far, the national average for several banks is around 150 percent. However, this provision needs to be harmonized between the accounting standards, which are based on PSAK and taxation because of the difference in these reserves will affect the calculation of taxes. The President asked for this to be discussed further,” Airlangga continued.

In addition to the issue of MSME lending, the meeting discussed credit policy issues in Himbara banking. In this regard, President Jokowi requested that these problems be followed up immediately.

“For MSMEs, these activities related to disasters and others caused by disasters from banking can be written off. However, the government bank cannot abolish the bill. As a result, the MSME involved cannot be bleached,” said Airlangga

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