Gov’t Lowers People’s Business Credit to 3 Percent

By Office of Assistant to Deputy Cabinet Secretary for State Documents & Translation     Date 30 November 2022
Category: News
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Coordinating Minister for Economic Affairs Airlangga Hartarto leads a coordination meeting of the Financing Policy Committee for Micro, Small and Medium Enterprises (MSMEs) regarding the Evaluation of the KUR Program for Fiscal Year 2022 and Proposed Changes to KUR 2023 Policy, Monday (11/28) in Jakarta. (Photo: PR of Coordinating Ministry for Economic Affairs)

The Government has lowered the interest rate for the Super Micro People’s Business Credit (KUR) to three percent in order to face the risk of stagnation and as a form of assistance towards workers affected by layoffs and housewives who run productive businesses.

This policy was conveyed by Coordinating Minister for Economic Affairs Airlangga Hartarto when chairing Coordination Meeting of the Financing Policy Committee for Micro, Small and Medium Enterprises (MSMEs) regarding the Evaluation of the KUR Program for Fiscal Year 2022 and Proposed Changes to KUR 2023 Policy, Monday (11/28) in Jakarta.

Airlangga added that this policy is also needed to optimize KUR distribution so that it is more targeted and to encourage budget efficiency for interest subsidies/KUR margin subsidies so it will not burden the government’s fiscal capacity.

He went on to say that amidst the current global uncertainty, KUR is one of the Government’s policies that continues to show impressive performance and is able to become a contributor to national economic growth.

For the record, KUR has contributed to economic growth in the third quarter of 2022 amounted to 5.72 percent with a total outstanding KUR reaching 25.2 percent or exceeding bank credit growth of 11.01 percent.

“With the improving condition of the national economy, the Government considers that it is necessary to make adjustments to the KUR policy regarding the relaxation given to debtors,” said Airlangga.

In addition to the Super Micro KUR interest rate, the Government has also made other adjustments, including by reinstating several KUR policies during the pre-pandemic period, starting from the Micro KUR and Small KUR interest rates to 6 percent, re-establishing KUR distribution in the production sector at 60 percent, and limiting the total accumulated ceiling for Small KUR to a maximum of Rp500 million.

The meeting also decided on a number of adjustments, such as Bank Indonesia’s approval to provide additional incentives for the relaxation of the Minimum Statutory Reserves (GWM) for KUR distributors with a mechanism for providing incentives that will be further regulated, harmonization of the OJK Financial Information Service System (SLIK) with the Program Credit Information System ( SIKP) Ministry of Finance, determine the distribution of KUR in the production sector by 60 percent, determine the KUR interest rate with a ceiling below Rp10 million by 3 percent and maximum repetition of two times, determine the KUR interest rate with a ceiling of over Rp10 million by 6 percent, and determine interest rate of 3 percent for the agricultural equipment and machineries credit scheme with a maximum ceiling of Rp2 billion and cannot be enjoyed repeatedly.

Furthermore, through the results of the Financing Policy Committee Coordination Meeting for MSMEs on 22 July 2022, it was discovered that the target for KUR distribution in 2023 had been set at Rp470 trillion and Rp585 trillion for 2024. However, adjustments will also be made to the amount of the KUR ceiling taking into account the adequacy of the interest subsidy budget. The KUR margin subsidy that has been set in the 2023 State Budget is IDR 40.94 trillion. The Government has also made additional target adjustments consisting of a target of new KUR debtors in 2023 of 1.7 million debtors and a target of 2023 graduated KUR debtors of 2.3 million debtors.

The meeting also discussed the proposal for a special machine loan scheme to comply with the directives of the President of the Republic of Indonesia Joko Widodo (Jokowi) to prioritize the distribution of KUR to the agricultural sector to strengthen food security. The proposal is in the form of setting the machine loan interest rate at 3 percent and reducing the down payment (DP) from 30 percent to 5 percent to 10 percent.

“The maximum credit limit for agricultural equipment and machineries is also set at Rp2 billion with an interest rate of 3 percent accompanied by risk mitigation in the form of installing a clear GPS and vehicle certificate,” he said.

As of November 21, 2022 KUR has been distributed to 6.71 million debtors with a realization of Rp323.13 trillion or 86.59 percent of this year’s distribution target of Rp373.17 trillion. Outstanding KUR as of November 21, 2022 was recorded at Rp451 trillion which was distributed to 38.85 million KUR debtors with non-performing loans (NPL) which were maintained at the level of 1.11 percent. (PR of Coordinating Ministry for Economic Affairs/UN) (EST/MMB)

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