Financial Institutions Asked To Facilitate Access To MSME Financing

Minister of Cooperatives and SMEs (Menkop UKM) Teten Masduki. (Photo: Theresia Agatha/VOI)

JAKARTA - Minister of Cooperatives and SMEs Teten Masduki asked financial service institutions to provide easy access to financing for MSMEs to support productive sector MSME actors such as agriculture, fisheries, livestock, and plantations.

"Financing is an important issue for MSMEs. This is because MSMEs have an important role in the Indonesian economy, as job providers, contributing to GDP, including exports," said Teten as quoted by ANTARA, Friday, March 8.

Teten revealed, a study by Ernst and Young and AFPI in 2023 predicts a greater gap between the need and availability of funding for MSMEs by 2026.

He estimates that the MSME funding needs will reach Rp4,300 trillion, while the supply of funds will only reach Rp1,900 trillion. This shows a significant lack of funds for MSMEs in the future.

The Coordinating Minister for SMEs said that half of Indonesia's MSME players are in the productive sectors such as agriculture, fisheries, livestock, and plantations. However, the absorption of MSME loans in these sectors is still low.

"For example, in the agricultural sector, 31 percent, and fisheries is only around 2 percent. Where do most MSME loans go? To the trade sector because the potential for non-performing loans (NPL) is low," he said.

According to him, the innovation of financing policies for MSMEs needs to be continuously strengthened, such as the MSME financing scheme through the supply chain according to the mandate of PP Number 7 of 2021 to provide certainty that MSMEs can develop more and MSME credit payments are smoother.

Teten sees the need for affirmation and seriousness to provide easy financing for the productive sector as Japan has through the Japan Finance Corporation (JFC), which can channel more than 60 percent to the productive sector.

In accordance with Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, the state has an interest in eliminating MSME traffic jams in banks.

"This aims to provide smooth access to new financing for MSMEs, including the expansion of guarantee insurance support to the peer landing (P2P) industry and crowdfunding securities as an alternative financing for MSMEs," he said.