Accelerating Economic Growth Through MSMEs, Government Adds 3 Percent KUR Interest Subsidy

Coordinating Minister for the Economy Airlangga Hartarto/Photo: VOI

JAKARTA - MSMEs have become pillars of economic growth during the COVID-19 pandemic. Therefore, the government also continues to encourage MSME financing through People's Business Credit (KUR), by providing an additional 3 percent KUR interest subsidy until June 2022. Coordinating Minister for Economic Affairs Airlangga Hartarto said MSMEs functioned as a buffer in various economic crises that hit Indonesia. Therefore, the government is committed to continuing to encourage the empowerment of MSMEs so that they can advance to class and make a greater contribution to the Indonesian economy. Not only that, Airlangga said that MSMEs also play a role as a driving force for the national economy. Considering its contribution to GDP which reaches 61 percent with the ability to absorb labor as much as 97 percent of the total national employment.

In addition, MSMEs also play an important role in encouraging increased investment and Indonesian exports. Even the total investment in the MSME sector is recorded at 60 percent of total national investment and its contribution to national non-oil exports is 16 percent. MSME credit financing has been carried out by the Government since 1999, including through the Guarantee Service Fee scheme, interest subsidies, and various institutional guarantee activities. microfinance, as well as guarantees through insurance.

The government also continues to encourage MSME financing through People's Business Credit (KUR), with the KUR interest rate reduced to the lowest point of 6 percent effective per year since 2020. Even during the COVID-19 pandemic, the government provided an additional 6 percent KUR interest subsidy for 2020 so that the KUR interest rate becomes 0 percent, and an additional KUR interest subsidy of 3 percent in 2021 so that the KUR interest rate is only 3 percent until the end of 2021. "In order to accelerate the national economic recovery through the MSME sector in 2022, the government has again increased the KUR ceiling to Rp373.17 trillion and extending an additional 3 percent KUR interest subsidy so that the 3 percent KUR interest rate continues until the end of June 2022," he said in a written statement, quoted on Saturday, January 29. national banking. President Jokowi has also given directions to increase the portion of MSME loans to 30 percent by 2024. "Achieving the 30 percent target is expected to encourage the creation and development of businesses in the MSME sector to reduce unemployment and increase the contribution of MSMEs to the national economy," he said. The Minister of Industry emphasized the importance of the role of stakeholders in developing MSMEs. Academics and policy makers are expected to be able to jointly monitor and evaluate various policies that are being pursued by the government to build a better MSME ecosystem.