Airlangga Values Guarantee Companies Play An Important Role In Mitigating The Risk Of KUR Distribution

Coordinating Minister for the Economy Airlangga Hartarto. (Photo: Doc. ANTARA)

JAKARTA - The government continues to strive to maintain people's purchasing power by maintaining inflation and encouraging domestic demand, distributing incentives, social assistance, and fiscal stimulus in the housing sector.

Coordinating Minister for Economic Affairs Airlangga Hartarto said that positive growth in the Indonesian economy was supported by one of the MSME lending which recorded strong growth of 8.9 percent (yoy) in August 2023.

The contribution of MSMEs is quite high to GDP, which reaches 61 percent with the ability to absorb 97 percent of the total national workforce absorption.

Total investment in the MSME sector reaches 60 percent of the total national investment and its contribution to national non-oil and gas exports is also able to reach 16 percent.

"Paying attention to the importance of the role of MSMEs, the Government continues to encourage access to financing by increasing MSME credit shares, which in August 2023 is still 23.2 percent of total credit, so that it can reach 30 percent of national credit by 2024," said Airlangga in his statement, Friday, November 17.

In terms of strengthening MSME financing, he said, one of the important instruments for increasing national MSME loans is People's Business Credit (KUR) where the Government provides interest subsidies so that the interest rate/KUR margin can be low and the requirements for additional KUR collateral are also facilitated.

Even as a form of support for empowering MSMEs, additional collateral for KUR up to Rp100 million is no longer needed.

Airlangga said the government also continues to encourage KUR distribution to meet the target and be of higher quality. In terms of quantity, the total distribution of KUR as of November 6, 2023 was recorded at IDR 204.17 trillion or 68.74 percent of the 2023 target of IDR 297 trillion and has been given to 3.67 million debtors.

According to Airlangga, the quantity of KUR distribution was followed by an increase in quality as reflected in the distribution achievement in the production sector of 55.8 percent, then the dominance of new KUR recipients which reached 79 percent of the total KUR recipients, and the success of the KUR debtor's graduation which reached 52 percent of debtors who rose to class.

"The guarantee company is one of the main characters in the implementation of the KUR program from 2007, and until 2023 there have been 12 guarantee companies consisting of the central guarantor company and the regional guarantor company," he explained.

The contribution of the KUR guarantor is reflected in the guaranteed amount of KUR. As of August 2023, the amount of KUR that has been guaranteed has reached Rp1,542 trillion with a total debtor of 45.3 million.

The guarantor value reached Rp1,080 trillion with a claim paid of Rp22.8 trillion.

Airlangga conveyed that the important role of the guarantee company in the KUR program was also reflected in the successful implementation of risk mitigation of KUR bad credit so that the NPL KUR level could be maintained at 1.63 percent.

In addition, KUR Guarantees are also able to accelerate the absorption of labor in the KUR program through the MSME assistance program.

Airlangga hopes that guarantee companies can continue to play an active role in encouraging MSMEs to advance to class through assistance and development of MSME credit risk databases that can be used as a complement to credit rating databases in the KUR program.

"They are also expected to maintain and increase the capacity of guarantee and risk management through the implementation of KUR guarantees that implement good governance," Airlangga concluded.