"The idea is good, but the problem in its realization is the transformation of the idea into reality, as the number of super micro business players is very large," Indrawati noted.
Jakarta (ANTARA News) - The government is currently giving greater attention to small businesses, notably micro-, small-, and medium-scale businesses (UMKM), by increasing the volume of its subsidized credits through the micro business loan (KUR) scheme.

Last year, it had set a target to provide KUR worth Rp120 trillion for UMKM. Although only Rp94.4 trillion of the 2016 target was realized, yet it significantly increased from the KUR extension worth Rp22.7 trillion of the targeted Rp30 trillion in 2015.

This indicates the governments highest commitment to developing small businesses, which play the biggest role in the nations gross domestic product (GDP) growth.

The Ministry of Cooperatives and Small and Medium Enterprises, on its official website, revealed that the number of UMKM in Indonesia had reached 58 million in 2014. Other data showed that UMKM had contributed about 53 percent to the nations GDP in 2011.

Hence, UMKM are now drawing greater government attention. This year, it is also planning to provide a special credit scheme for the smallest segment of businesspersons. This was disclosed recently by Finance Minister Sri Mulyani Indrawati who termed the credit scheme as super micro credit.

Moreover, the government continues to cut the interest rates of KUR credits, so as not to burden the recipients. The interest rate of KUR credits that the recipients had to bear was 22 percent in 2014. It was lowered to 15 percent in 2015 and nine percent in 2016. The government has reduced it further to seven percent this year. The credits are extended by banks assigned by the government.

Hence, the Indonesian Young Entrepreneurs Association (HIPMI) is optimistic that the realization of the peoples KUR extension will exceed Rp100 trillion in 2017, or will be higher than the KUR credit realization of Rp94.4 trillion in 2016.

"We hope and are optimistic that the extension of KUR credits this year will surpass Rp100 trillion," HIPMI Chairman for Economic, Finance, and Banking Affairs Irfan Anwar stated in Jakarta on Tuesday (Feb 14).

According to Anwar, the KUR credit performance in 2016 was better as compared to 2015. The realization of KUR credits in 2015 merely stood at Rp22.7 trillion, or about 75.58 percent of the KUR amount worth Rp30 trillion allocated by the government. However, in 2016, it jumped to Rp94.4 trillion, with bad credits accounting for 0.37 percent.

In addition to the KUR scheme, the government is drafting a scheme of credits that will be provided to the smallest businesses, even smaller than the KUR recipients, or for the poor segment of society.

The scheme is being formulated, as it is different from the KUR. This scheme is designed for the poorest people, or those who are financially weaker than the KUR recipients, according to Minister Indrawati on Tuesday.

Indrawati revealed that the government and relevant agencies are preparing the scheme, which is expected to offer benefits to several people and can be channeled not only through major banks but also through other capital providing agencies.

"If the design has been decided definitely, the credits can be channeled to the peoples group lower than those receiving the KUR credits. It is expected that the funds will be able to circulate," the minister stated.

The super micro credits can be channeled by regional government banks, cooperatives, and other financial capital agencies, such as the BMT venture capital firm.

Earlier, a lawmaker had called on the government to focus its KUR program on small business players in order to improve their welfare.

"The micro loan program should not miss its target," Achmad Haisz Tohir, a member of Commission XI on financial affairs of the House of Representatives, had noted in Jakarta on Friday (Feb 10).

He stated that relatively large businesses should not be offered the subsidized peoples KUR scheme, as they are financially capable or can even take commercial credit at a higher interest rate.

The legislator has requested that the subsidized loans under the micro credit program should be offered to micro businesses engaged in the agriculture, forestry, maritime, and labor sectors and should be increased from 20 percent to 40 percent.

With regard to the super micro credit plans, Minister Indrawati stated that virtually, there is a problem with providing credits for the smallest and informal business sector.

So far, one of the constraints in the distribution of credits of this type is the large number of super micro business players that are difficult to keep track of as compared to the UMKM.

"The idea is good, but the problem in its realization is the transformation of the idea into reality, as the number of super micro business players is very large," Indrawati noted.

She remarked that the funding to be provided in this scheme is not a grant, as it should be re-paid. Hence, it should be managed based on the existing good governance system.

"In the state financial system, funds not provided in the form of grants should be maintained as otherwise they could be recorded as state losses. Hence, introduce it prudently," she remarked.

The minister made assurance that the credits for poor people should not be considered as a subsidy, given in the form of direct cash assistance, which is no longer included in the bookkeeping system once it is already spent.

The minister said the extension of the super micro credit can be complementary to the KUR credit scheme, which is now being channeled to focus on the productive sectors.(*)

Reporter: Andi Abdussalam
Editor: Heru Purwanto
Copyright © ANTARA 2017