Want To Grow MSMEs, BI Boss Reveals Three Challenges That Must Be Overcome

Illustration (Photo: Doc. Ministry of Finance)

JAKARTA - Governor of Bank Indonesia (BI) Perry Warjiyo said that the role of micro, small and medium enterprises (MSMEs) in the national economy can still be increased if they can overcome a number of existing challenges.

According to him, the current massive digitalization is a game changer and must be utilized to gain access to more inclusive finance.

"There are three important steps to overcome the challenges of MSMEs in the form of limited economic capacity, financial literacy, and access to digital infrastructure," he said in a press statement on Thursday, May 12.

Perry said that the first step is through economic empowerment, including for women to become micro entrepreneurs.

"Second is increasing capacity, productivity, literacy and financial management through education supported by innovation and digitizing business processes so that MSMEs are more empowered and competitive," he said.

And the third is policy harmonization, among others through BI's support for the Job Creation Law, which is a regulation that simplifies the licensing process and supports the MSME and e-commerce ecosystem to encourage MSME access to domestic and global markets.

"Digital transformation is one solution in increasing access to finance and MSMEs must be encouraged to play a greater role in post-pandemic economic recovery," he stressed.

For information, MSMEs are considered capable of creating jobs, attracting investment, and supporting Indonesia's gross domestic product by 60 percent. However, MSMEs still face challenges in obtaining access to financing.

“Currently, only 18 percent of bank loans are given to MSMEs. The COVID-19 pandemic has made it more difficult for MSMEs to access financing. For this reason, it is necessary to create policies that can increase access to MSME financing that can increase the multiplier effect on the economy," concluded Perry.