Sri Mulyani Admits That National Banking Is Still Low In Providing Credit To MSME Actors

Minister of Finance Sri Mulyani Indrawati. (Photo: Doc. Antara)

Minister of Finance Sri Mulyani said formal financial institutions such as banks in Indonesia were still very low in providing credit to micro, small and medium enterprises (MSMEs).

"If we know that MSMEs are important, but in terms of percentage, Indonesia is only 20 percent of its total loans from financial institutions for MSMEs," Sri Mulyani said in "BRI Micro Finance Outlook 2023", quoted from Antara, Friday, January 27.

Therefore, he asked all parties, especially financial institutions, to help MSMEs because the government cannot do it alone.

Sri Mulyani also compared it with financial institutions in countries around Indonesia that could lend UMKM up to 50 percent of their credit portion, even financial institutions in South Korea could disburse loans up to 80 percent to the sector.

Thanks to the considerable financing from the financial institution in Gingseng Country, South Korean MSMEs have the potential to grow very largely because of their liquidity and access to capital.

Based on the analysis of Bank Rakyat Indonesia (BRI), around 45 million MSME actors in the country still need additional financing. Of this number, 18 million MSME actors, including ultra-micro customers, have not received access to financing.

People's business loans (KUR) are directed at MSME players who have not yet had access to bank financing of as many as 18 million, or who have just been able to access informal financing.

On the other hand, the Minister of Finance hopes that the increasing financial inclusion in Indonesia can encourage greater financing for MSMEs because MSMEs are currently the government's focus.

"But it is not only the financing that is encouraged, but the quality and productivity of MSMEs in Indonesia also needs to be improved," he said.