Remarks of President of the Republic of Indonesia at the Handover of the KUR Cluster and the Distribution of Fund through the Revolving Fund Management Institution (LPDB-KUMKM) at the State Palace in DKI Jakarta Province, December 19, 2022

Bismillahirrahmanirrahim.

Assalamu’alaikum warahmatullahi wabarakatuh.
Good morning,
May peace be upon us all,
Om swastiastu,
Namo Buddhaya,
Greetings of Virtue.

Distinguished Coordinating Minister for Economic Affairs, Minister of Finance, Minister of the National Development Planning/Head of the National Development Planning Agency, and Minister of Cooperatives and SMEs as the host;

Distinguished Deputy Governor of Bank Indonesia (BI), President Directors, and Board of Directors of banks providing the People’s Business Credit (KUR), MSME players who are also KUR Cluster recipients;

Ladies and Gentlemen.

I don’t mean to make all of you uneasy. Instead, I would like to remind you that economic challenges we will face in the future are not getting easier.  Next year is two weeks away. We, not Indonesia, but the world, are still haunted by COVID-19 pandemic, global economic uncertainties, changeable geopolitical situation, which also can lead to financial crisis, energy crisis, food crisis, and global recession.

However, we have to be grateful. In Q3 our economy still grew by 5.72 percent. This is what we should be grateful for. Inflation is still maintained at 5.4 percent. To that end, Indonesia still has opportunity to grow, despite difficult situation worldwide. And the most important thing is that this growth can maintain people’s purchasing power, create as many job opportunities as possible. In addition, in real sector, especially MSMEs, still accelerates rapidly.

Every evening when I look around, I am thrilled that traditional food stalls are open, restaurants are open with long line, street vendors are also packed with customers. I am really proud. It means that there is people’s purchasing power. Once again, our economy still positively grows. One of the steps is by strengthening micro enterprises, small enterprises, and medium enterprises that prove to serve as the drivers of Indonesia’s economic growth.

Last week I discussed with the President Director of PNM Mekaar. People who loan Rp1 million, Rp2 million, Rp3 million, Rp5 million in 2016 were probably only 500 thousand customers. Today, it has reached 13.5 million people. So do not let there be an opinion which says the Government does not pay attention to micro and small enterprises. It is a big mistake. From 500 thousand customers, currently it has reached 13.5 million customers. And my target by 2024, the customers can reach above 20 million.

Who are they? I find out who is on loan by PNM Mekaar. More than 90 percent of recipients are women. What is it used for? Selling fried foods, selling noodles, selling in the market. It is all productive businesses. There are stalls in the small village, in the village. This is what we want to initiate. And if you can [afford to loan] from PNM Mekaar, and pay the loan back, it is great. You can level up to KUR (People’s Business Credit). It means that we will push [the small businesses] to [obtain loan] from state-owned banks BRI, BNI so that the credit ceiling can be greater. I am sure that out of those 13.5 million customers, there must be hundreds of thousands who can level up every year. It is indeed such a stage. Do not let us sell fried foods, but the loan provided is Rp100 million. It will become consumptive goods that become unproductive. These are the stages that must be passed.

Furthermore, KUR has been optimized by 39.4 million SMEs. I really appreciate that currently there is a model of KUR cluster. It is the right initiative considering that it must be clustered. I am pleased that an Islamic boarding school was able to reach several billion in horticulture sector. The vegetables have buyers. They are sold through businesses with large networks. So, it is clear. The off-taker is clear. The guarantor for the purchase is clear.

There is also a coffee [business] in Toraja. How much loans it gets? Rp50 billion. It is coffee cluster, horticultural cluster. It could be easier when we group them into a cluster. The guarantor will not take care of one by one. Which customer borrows Rp10 million and so on. If Rp50 billion is borrowed by some people, the bank is also overwhelmed. It is better this way, then it can be provided based on cluster.

And if you think about it that way, what it will run to, not only raw materials of coffee that will be sold, semi-finished goods or finished goods [of coffee] can also be sold. As of today, in many regions I notice that the packaging is eye-catching, good so that it can be sold easier.

I also notice that there is a cluster for handicraft. There is Krisna, a souvenir store in Bali that also get loan. This also applies to craftspeople. They produce. There is an off-taker as well as a guarantor for the buyers. There is also a showroom to sell the products. It means that the process from the production phase to the consumers is clear. So, the creditors, be it the bank or other non-bank institutions will have the confidence to get their money back.

I think that KUR Cluster can also be carried out in sectors including animal husbandry, fisheries, farming. This kind of cluster must be increased. And I order to banks that 30 percent for SMEs, as I said last year, must be increased.

I know that BRI must be above… how much is it, Mr. President Director? 84 comma [percent]. Yes, it is very high. Other banks should also be encouraged to have concerns to take care of the micro, small, and medium [enterprises]. If we take care of them, the small ones can be medium [enterprises], the medium ones can be big [enterprises]. This is what will boost our economy to grow well and equitably.

Once again, this ecosystem-based financing program will be excellent and bridge business groups with aggregation model, aggregator, and can consolidate with offtakers. It is our hope that we can really absorb as many goods as possible from existing groups, obtain market certainty, reduce business financing credit risk from KUR channeling institutions, especially banks.

I underscore that KUR Cluster can be carried out in all business sectors including community plantation, community livestock, community fishery, MSME industry, and other business sectors that have great market potential or local featured products; so that our competitiveness will increase and we can enter the global market.

That concludes my remarks on this auspicious occasion. Last but not least, I call on all of you to make the most of loan facilities, provide it on target, and the channeling process must be transparent and accountable.

I thank you.
Wassalamu’alaikum warahmatullahi wabarakatuh.