According to him, the State-Owned Banks Association (Himbara) must be proactive in providing financing support. In addition, the approach of taking loans using collateral is no longer relevant for MSME players.
"This method is no longer used abroad. They are using a credit scoring scheme to assess whether an MSME is eligible to receive financing," he informed here on Tuesday.
He made the statement at the opening of an event entitled "Extreme Poverty Eradication Acceleration in the Field of Cooperatives and MSMEs."
Masduki said that President Joko Widodo's target of providing 30 percent of bank credit to MSMEs in 2024 could be realized if there is a major change in the loan terms policy.
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The Ministry of Cooperatives and SMEs has continued to make efforts to help MSMEs have easier access to finance, including through consolidation with small-scale farmers who have few lands through cooperatives.
The cooperatives serve as off-takers or suppliers for industries or markets where they are tasked with connecting farmers to the financing sector, such as banks.
"Including the one in Ciwidey, banks have entered financing with cooperatives that become off-takers. Because, after all, banks want to enter if the potential ratio of Non-Performing Loans (NPL) is small," he said.
The easing of access to finance could help MSMEs develop and create more jobs and support poverty eradication in various regions, he added.
Currently, MSMEs account for 99 percent of all Indonesia's business units, while the share of corporations or conglomerates is only 0.01 percent. However, the share of bank credit provided to micro businesses is only around 21 percent.
"Our MSMEs provide 97 percent of national jobs and have outstanding resilience. Now, what we have to do is strengthen our MSMEs," the minister said.
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Translator: Maria Cicilia, Raka Adji
Editor: Jafar M Sidik
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