"This is a great potential to improve MSMEs' performance," director of the investment management system at the Finance Ministry Syafriadi stated on the sidelines of a discussion panel during the ASEAN Finance Minister and Central Bank meeting in Nusa Dua, Bali, on Wednesday.
He remarked that in 2019, Indonesia had a total of 65 million MSMEs, out of which 64.6 million were micro businesses.
According to research from Bank Rakyat Indonesia (Indonesian People's Bank), commonly known as BRI, in 2022, some 45 million MSMEs still needed funding. It is estimated that of the 45 million figure, 18 million have no access to financing, he pointed out.
The opportunity for financing is expected to push up the target of MSMEs' credit to 30 percent in 2024, he stated.
In 2022, the realization of MSMEs' credit in Indonesia had only reached 21 percent, or Rp1,349 trillion (US$89.4 billion), of the total Rp6,424 trillion (US$425 billion) of the bank credit, he noted.
The figure has decreased as compared to 2021, during which it was recorded at Rp1,221 trillion (US$80.9 billion), or 21.1 percent of the total Rp5,769 trillion (US$382 billion) in credit, Syafriadi noted.
"Hence, there is still 10 percent more to (achieve) in 2024, and this is a big challenge (to be addressed) in just a one-year period," he noted.
In spite of being the one sector to contribute to the economy through employment and investment, 88 percent of the MSME players had also yet to actively tap into the potential of digitization to support their businesses that made it another challenge to surmount, he remarked.
He affirmed that the government has provided the People's Business Credit to promote financial access for MSMEs through subsidy, with a six-percent interest rate annually.
Business credit disbursement in 2022 had reached Rp365.5 trillion (US$24.2 billion), or 23.34 percent of the total MSMEs' credit. Moreover, a financing scheme is in place for ultra micro businesses, Syafriadi remarked.
During the period from 2017 to 2022, some Rp26.22 trillion (US$1.7 billion) had been disbursed to some 7.41 million ultra micro businesses, he added.
"Digitalization is a crucial and necessary to be expedited in Indonesia, particularly for MSMEs, because it allows for efficiency in budget and expanding market reach," he said.
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Translator: Dewa Ketut SW, Mecca Yumna
Editor: Azis Kurmala
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