Gov’t Provides Interest Subsidy for MSMEs, Credit Relaxation for UMi
Date 17 Juli 2020
The Government has allocated Rp35.28 trillion from the National Economic Recovery (PEN) budget amounting to Rp607.65 trillion to provide subsidies for Micro, Small, and Medium-sized Enterprises (MSMEs) and credit relaxation for Ultra-micro Financing (UMi) Program.
The Government deemed it necessary to support the MSMEs since they cover 90 percent of the national economy. The program aims to reach 60.66 million debtors whose businesses are affected by the pandemic.
“COVID-19 has impacted the economy, and sales revenue of MSMEs. For that reason, the Government made several policies such as credit relaxation for the MSMEs, interest subsidy and stimulus for Smallholder Business Credit (KUR) debtors, provision of funds by Bank Indonesia, and tax exemption. Today, we will discuss the interest subsidy,” Rizky Novrianto from Ministry of Finance’s Directorate of Investment Management System said on Friday (17/7).
Those eligible for the MSMEs interest subsidy are existing debtors with credit ceiling not exceeding Rp10 billion and recorded an outstanding debit balance for credit as of 29 February 2020.
They must not listed in the National Blacklist (DHN) for credit ceiling exceeding Rp50 million, they must be classified under “collectable one” (current) and “collectable two” (special mention) as of 29 February 2020, must have Tax Identification Numbers (NPWP) or are applying for it.
Furthermore, the debtors must receive restructuration from credit/financing channeling companies for those with cumulative ceiling between Rp500 million and Rp10 billion. The debtors must also meet all requirements set by Ministry of Cooperatives and Small and Medium-sized Enterprises.
Banks and credit/financing channeling companies provide interest subsidies covering 6 percent for the first three months and 3 percent for the next three months for loan under Rp500 million. For loan between Rp500 million and Rp10 billion, interest subsidy of 3 percent is given for the first three months and 2 percent for the next three months. The debtors can monitor the subsidy on the website https://jendelaumkm.id/.
To accelerate the disbursement of interest subsidy, the Government has issued Regulation of Ministry of Finance Number PMK 85/PMK.05/2020 to amend PMK 65/PMK.05/2020 that changes subsidy disbursement method from virtual account to directly to the debtors through the banks or credit channeling companies.
For monitoring and verification purposes of the disbursement, the Internal Government Apparatus Supervision (APIP) cooperates with the Development Finance Comptroller (BPKP) and the Attorney General’s Office.
In addition, the Government also provides credit relaxation for UMi borrowers in form of loan principal payment delay for six months in maximum. This program is intended for debtors/linkages/channeling companies with financing agreement that was signed no later than 4 June 2020. Grace period will be given to new debtors/linkages/channeling companies with financing agreement that was signed between 4 June 2020 and 30 November 2020.
For the record, UMi is an instrument of Smallholder Business Credit (KUR) with loan ceiling up to Rp10 million which will be given to debtors who are not applicable for bank loans.
The target for credit relaxation program is 1.64 million debtors in which 1.02 million debtors with Rp2.95 trillion of credit ceiling can delay their loan principal payment of Rp1.47 trillion.
Currently, around 615,000 debtors with Rp1.89 trillion of credit ceiling have received grace periods. In addition, Rp349.29 billion of subsidy has been disbursed to 934,500 debtors with a total credit ceiling of Rp2.6 trillion. Regarding new debtors, proposal agreements with a total value of Rp3.3 trillion have been submitted, and that amounting Rp1.168 trillion of it have been signed.
Those eligible for the subsidy are debtors with performing credit payment classified as “collectable” as of 29 February 2020, their financing agreements have been registered in UMi electronic data interchange system, their businesses are impacted by the pandemic, and those show good intention and cooperation. Debtors that signed financing agreement after 29 February 2020 cannot apply for this subsidy.
As for the linkage, the requirement are; have debtors that meet the criteria and have applied for the relaxation, with performing credit payment as of 29 February 2020 (except for those signing financing agreement after 29 February 2020), show good intention and cooperation, have signed loan/financing agreement after the stipulation of Regulation of Managing Director Number 5 of 2020 on 5 June 2020.
Requirements for channeling companies, are:
- have debtors that meet criteria of direct disbursement and have applied for the relaxation;
- have linkage agencies that meet the criteria of direct disbursement and have applied for the relaxation;
- have been classified as “collectable” in performing credit payment as of 29 February 2020 (except for those signing financing agreement after 29 February 2020). (Ministry of Finance/EN)
Translated by : Rany Anjany
Reviewed by: Mia Medyana