Still Facing Diverse Challenges, MSME Financing Needs Sharia Financial Support

Illustration. (Photo: Doc. Antara)

JAKARTA - Expert Staff for Macroeconomics and International Finance of the Ministry of Finance (Kemenkeu) Suminto said financing is one of the important aspects in maintaining the stability and growth of Micro, Small and Medium Enterprises (MSMEs). However, the challenges of financing MSMEs are very diverse.

"The financing challenges vary, ranging from limited access to financing, high transaction costs, collateral problems, unbalanced information, to limited access to markets and business networks," Suminto said in The Annual Islamic Finance Conference (AIFC) as quoted by Antara, Friday. 26 August.

He said it was very important for the government to effectively integrate the financing framework with the development of MSMEs.

According to him, there are four keys in empowering MSMEs through Islamic finance that need to be considered, namely the need for a complete and solid empowerment framework, regulatory support, incentives, and the position of Islamic finance in the MSME ecosystem, the involvement of youth and women MSMEs in efforts to empower MSMEs, and the establishment of development directions. MSMEs formally and clearly.

Director of DinarStandard Sayd Farook on the same occasion stated that Islamic technology-based financial companies (fintech) are developing quite rapidly, especially for financing MSMEs.

The amount of MSME financing by fintech is expected to grow from US$79 billion in 2021 to US$179 billion in 2026.

"Currently the countries with the largest developments in sharia fintech are Saudi Arabia, Iran, Malaysia, the United Arab Emirates and Indonesia," he said.

Meanwhile, Co-Founder and Group Managing Director of Ethis Group Umar Munshi also added the importance of digitalization within the framework of waqf crowdfunding, zakat, alms, and distribution of working capital with the qard hassan scheme (without interest or additional fees).