The Government Strengthens Fintech As One Of MSME Financing Accesses

Illustration. (Photo: Doc. Antara)

JAKARTA - The government strengthens financial technology (fintech) companies as a strategy to expand access to financing for micro, small and medium enterprises (MSMEs).

Head of the Financial Sector Policy Center of the Fiscal Policy Agency Adi Budiarso said that there are still many MSMEs that face financing difficulties. Therefore, various efforts are needed that can increase financial inclusion among MSMEs, one of which is through fintech.

"This is one of our strategies. The presence of fintech is indeed a disruption to the financial sector, but through technological advances, fintech also offers convenience and opportunities for financing needs, especially in MSMEs," Adi said in a series of activities of the Meeting of the Minister of Finance and the Governor of the Central Bank (AFMGM) in Jakarta, quoted from Antara, Tuesday, August 22.

The government strengthens the role of fintech through Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (UU P2SK).

The law regulates the implementation of technological innovation in the financial services sector (ITSK), especially regarding the mechanism for providing ITSK services, as well as regulations related to aspects of better ITSK risk management and governance and protecting consumers.

Adi explained that the fulfillment of MSME financing access is one of the biggest challenges facing Indonesia. Bank credit targeting new MSMEs covers 20 percent of total bank credit.

Meanwhile, MSMEs contributed greatly to gross domestic product (GDP), which was 60.3 percent in 2022. MSMEs were also able to absorb 97 percent of the workforce in Indonesia.

Therefore, the government and related authorities are trying to increase the portion of MSME loans by 30 percent by 2024.

In encouraging MSME growth, the government provides various credit programs for MSMEs, such as people's business credit (KUR) and ultra micro (UMi) financing distribution.

The realization of KUR per semester I-2023 was recorded at IDR 126.3 trillion with 2.3 million debtors. The realization of UMi financing through the Ministry of Finance's Government Investment Center (PIP) until June 2023 reached IDR 2.33 trillion, which was channeled to 568,574 debtors.