MSMEs are among the most affected businesses, based on the Asian Development Bank’s (ADB's) survey, with 48.6 percent temporarily closingJakarta (ANTARA) - Expert Staff to the Minister of Finance for Macro Economy and International Finance, Suminto, drew attention to the impact of the COVID-19 pandemic on the survival and sustainability of micro, small, and medium enterprises (MSMEs).
"MSMEs are among the most affected businesses, based on the Asian Development Bank’s (ADB's) survey, with 48.6 percent temporarily closing," Suminto remarked during the 2020 BMT Summit in Jakarta on Monday.
Apart from Indonesia, temporary closures were also observed in other countries, including Laos, with 61 percent, and Thailand, with 41 percent.
Suminto further noted that the ADB survey also found that Indonesian MSMEs had recorded a 30.5-percent plunge in domestic demand.
The decline in demand is in line with the high number of layoffs that had led to the declining rate of revenue among people," he explained.
Furthermore, Indonesian MSMEs are encountering other issues arising from the pandemic, including the scarcity of core materials and distribution, hindered by halted logistics owing to restricted movement of people and goods.
"We see that in the wake of the COVID-19 pandemic, the main challenges faced by MSMEs are the decline in demand and the subsequent decrease in sales, as well as hindered distribution and financial issues," he noted.
Speaking in connection with capital funding issues, Suminto said banks are considering the potential risks of bad credit, which results in them tending to withhold credit distribution to MSME makers.
Hence, Suminto has ensured that the government is offering assistance, through the National Economic Recovery Program budget of Rp114.81 trillion that comprises interest subsidy of Rp13.43 trillion and the placement of funds, combined with the placement of corporate funds of Rp66.99 trillion.
Among other schemes is the MSME credit insurance of Rp3.2 trillion aimed at assisting MSMEs amid such unprecedented times.
Realization of the National Economic Recovery Program budget to support MSMEs, as of November 9, was recorded at Rp95.25 trillion, or 83 percent of the budget ceiling, including Rp64.5 trillion in fund placement and Rp1 trillion of LPDB investment financing. (INE)
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Translator: Astrid Faidlatul Habibah/Aria
Editor: Azis Kurmala
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