Kemenkop UKM Please Concept Fintech Supporting Credit Become An Alternative Solution For MSME Financing

Minister of Cooperatives and SMEs (Menkop UKM) Teten Masduki (left). (Photo: Doc. Kemenkop UKM)

JAKARTA - The Ministry of Cooperatives and SMEs (Kemenkop UKM) hopes that the scoring credit scheme used by fintech can be an alternative financing solution for MSMEs who have had difficulty accessing loans to banks.

"The key is access to financing. I think this should be addressed. Including, reviewing the application of scoring credit through the distribution of People's Business Credit (KUR) which has been implemented in 145 countries," said Minister of Cooperatives and SMEs (Menkop UKM) Teten Masduki in a written statement, quoted Friday, September 15.

Minister Teten said, in a survey issued by the Central Statistics Agency (BPS) in 2020, around 69.02 percent of MSMEs experienced capital difficulties during the COVID-19 pandemic. The data shows that capital assistance for MSMEs is important and needed.

However, banks often find it difficult to provide funding to MSMEs because MSME players do not have sufficient collateral as loan guarantees.

Meanwhile, fintech is here to provide financing solutions to MSMEs without implementing collateral because it uses technology so that it is able to know exactly the criteria for prospective customers to be given financing.

"In fintech, a loan ceiling of IDR 2 billion has been given without using collateral. In fact, MSMEs connected to the Goods Procurement Policy Institute (LKPP) can borrow loans of up to IDR 10 billion. This is a good breakthrough for MSMEs in accessing financing," said Teten.

Even so, Teten provided notes related to high interest rates in fintech. This is because high interest rates are also a separate problem in making it easier for MSMEs to access financing.

It is noted that currently the interest on fintech ranges from 12-18 percent per year.

"The most important health of MSMEs can repay loans, so it is hoped that interest will be bolder to lower. I am optimistic that the decline in interest in fintech can occur and it is also a consideration for banks to dare to lend to MSMEs without collateral," he said.

Meanwhile, AFPI Secretary General Sunu Widyatmoko said fintech members under the auspices of AFPI continue to strive to optimize loans to MSMEs. Currently, as much as 40 percent of financing is included in the productive sector.

It was recorded that in the January-July 2023 period, the distribution of financing reached IDR 58 trillion and financing in the productive sector amounted to IDR 22 trillion.

"The financing of 40 percent to the productive sector in Indonesia is relatively large when compared to China. In ASEAN, this portion is quite appreciated. China is actually bigger in structure to finance the consumptive sector. We want fintech in Indonesia to be an example for ASEAN," he said.

Sunu emphasized that in optimizing financing for MSMEs, two important factors are needed, namely digital literacy and financial literacy that cannot be separated. MSMEs if they cannot adopt digital will be left behind.

"Because digital will be the track record of cashflow. For example, MSMEs in remote areas, as long as they are connected to digital, fintech will definitely dare to provide loans. Digitalization confirms business activities digitally," he added.