Gov’t Steps Up Efforts to Provide Protection for MSMEs Amidst COVID-19
Date 29 April 2020
The Government continues to redouble efforts to protect and restore the nation’s economic condition amid the ongoing COVID-19 pandemic.
For this matter, President Joko “Jokowi” Widodo during a limited meeting on Wednesday (29/4) highlighted the urgency to protect MSME actors from collapsing following the pandemic.
“Among the economic assistances are special programs for ultra-micro and micro businesses designed for financial institutions and banks,” President Jokowi said.
The President also raised five economic programs to protect those business sectors, including:
First, programs for MSME entrepreneurs who are categorized as poor and groups vulnerable from the impact of COVID-19.
“The Government must ensure that those people are included as part of the recipients of social assistance programs, such as Family Hope Program (PKH), food packages, cash assistance, as well as the exemption/reduction of electricity tariffs and the Pre-Employment Card program,” said the President.
Second, tax incentive program for SMEs whose turnover is still below Rp4.8 billion per year.
“For this group of SMEs, the Government has lowered the final PPh rate from 0.5 to 0 percent over the 6-month period from April until September 2020,” the President said.
Third, relaxation and restructuring credit scheme for MSMEs, including delaying installments and interest subsidies for recipients of the People’s Business Credit (KUR) program, ultra-micro credit program, the Fostering the Economy of the Prosperous Family Mekaar program amounting to 6.4 million debtors, and also in state-owned mortgage company Pegadaian which has 10.6 million debtors.
In addition, President Jokowi has underlined that the recipients of business assistance from ministries and regional governments should also enjoy the credit incentives.
Fourth, the financing expansion program scheme for SMEs in the form of stimulus for working capital assistance.
“The working capital assistance must be well-designed so that it can be well-targeted for the MSMEs,” the President added.
Data shows that there are 41 million MSMEs in the country that have been connected with financial institutions and banks.
“Aside from that figure, other 23 million MSMEs have never received funding from financial institutions or banks,” President Jokowi said, adding that those groups should also enjoy the expansion of working capital assistance.
“The assistance can be carried out through the KUR program, or non-bank programs such as Ultra Micro Credit, Mekaar, and others,” the President said.
Fifth, ministries, institutions, SOEs, and local governments must be a buffer in the MSME business ecosystem, especially during the initial stages of business recovery.
“This is very important. SOES or regional-owned enterprises should become off-takers for MSME products in the fields of agriculture, fisheries, culinary, and home industries,” explained the President.
In addition, President Jokowi also said that the reallocation of regional government budgets must also aim at economic stimulus programs for MSME sectors.
“I have ordered Minister of Home Affairs to disseminate this program to regional governments. The Government hopes that the MSMEs can survive in the midst of the COVID-19 pandemic,” the President said. (FID/EN)
Translated by: Estu Widyamurti
Reviewed by: M. Ersan Pamungkas