Jakarta (ANTARA) - The government will intensify disbursement of micro loans to micro-, small-, and medium-scale enterprises (MSMEs) grouped in cluster to expedite recovery of the national economy that suffered an unprecedented collapse due to the COVID-19 pandemic.

"Boosting the MSME sector through cluster-based microloans is one solution to accelerating economic growth," Deputy for Macro Economy and Finance Coordination of the Coordinating Minister for Economic Affairs Iskandar Simorangkir noted during a webinar on cluster-based KUR here on Wednesday.

The development of cluster-based MSMEs will enhance the efficiency of microloan disbursement, as it will annul the need for banks to meet their clients on an individual basis, and cluster members could also engage in sharing information and expertise.

According to the ministry's data, of the total disbursement for 729 cluster-based KUR, 721 clusters are under the One Village One Product (OVOP) Program and eight clusters are in the One Pesantren One Product (OPOP) Program.

Most clusters are operating in productive sectors comprising 284 clusters in agriculture and 178 clusters in the processing industry, including in animal husbandry, fishery, and handicrafts.

The government has given attention to MSMEs in the post-pandemic economic recovery, taking into account their strategic position in the national economy.

According to the MSME Ministry, Indonesia had 64.19 million MSMEs in 2018, of which 63.35 million are micro businesses, 0.78 million are small-scale businesses, and 0.06 million are medium-scale businesses.

The MSME sector has absorbed 97 percent of workers, thereby contributing 61.07 percent to the gross domestic product (GDP) and 14.37 percent to non-oil and gas exports in 2018.

The government allotted Rp695.2 trillion to handle the health and economic impacts of the pandemic, of which Rp87.55 trillion will be allocated for healthcare, Rp203.9 trillion for boosting social safety nets, and Rp123.46 trillion to incentives for MSMEs.

The funding for MSMEs will be allocated for interest rate subsidy, reaching Rp35.28 trillion; bank deposit for MSME restructuring, Rp78.78 trillion; credit guarantee, or IJP, Rp5 trillion; capital guarantee, Rp1 trillion; incentives for income tax, Rp2.4 trillion; and investment funding for cooperative units through the Micro, Small and Medium Enterprises Management Fund, Rp1 trillion. Related news: Minister optimistic budget for MSMEs will boost national economy
Related news: Ministry distributes free masks to MSME makers

Translator: Dewa Ketut SW, Sri Haryati
Editor: Rahmad Nasution
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