It is all an understanding up to the grassroots level because we know that many MSMEs are not yet able to, have not met the requirements, and are not in a position to enter the banking industry
Jakarta (ANTARA) - President Joko Widodo (Jokowi) has requested to increase the target volume of smallholder business credit (KUR) disbursements to above Rp320 trillion (US$21.67 billion) by 2024, Finance Minister Sri Mulyani Indrawati stated.

"The figure of Rp320 trillion is a very big value," Indrawati noted at the 1st International Conference on Women & Sharia Community Empowerment, accessed online, here on Thursday.

As for now, she remarked that the amount of KUR distributed by the government through banks, including sharia banks, had been increased annually, from Rp170 trillion ($11.51 billion) to Rp270 trillion ($18.29 billion).

Under the KUR scheme, the minister elaborated that small businesses that take loans from banks only pay a minimal interest rate, as they are given an "extraordinarily" large amount of subsidy by the government, reaching over Rp24 trillion ($1.63 billion).

The minister noted that the subsidy is also one of the forms of encouragement, so that the capital in the banking industry can be distributed to micro, small, and medium enterprises (MSMEs) in addition to the government's efforts to reduce the MSMEs' burden in the form of interest subsidies.

However, Indrawati pointed out that several MSMEs are still "unbankable" or cannot have access to banking, so they are empowered through efforts or included in the revolving fund program managed by the Finance Ministry's Ultra Micro Financing (UMi).

Furthermore, non-banking financial institutions, such as state-owned pawnshop PT Pegadaian and state-run microlender PT Permodalan Nasional Madani (PNM), provide capital with simple loan terms than that of banks and aim to reach the ultra-micro small businesses.

"It is all an understanding up to the grassroots level because we know that many MSMEs are not yet able to, have not met the requirements, and are not in a position to enter the banking industry," Indrawati explained.

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Translator: Agatha V, Kenzu T
Editor: Sri Haryati
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