Introductory Remarks of the President of the Republic of Indonesia In the Limited Cabinet Meeting through Video Conference On the Continued discussion of the Mitigation Program of COVID-19 Impact to the Micro, Small, and Medium Enterprises Wednesday, 29 April 2020 Merdeka Palace, Jakarta
Assalamu’alaikum warahmatullahi wabarakatuh.
Distinguished Vice President, Ministers, ladies and gentlemen.
I notice that the discussion has become more focused and there are five major schemes in the economic protection and recovery program, mainly in the micro, small, and medium business sector, including special programs for ultra-micro and micro businesses that have not made contact and cannot be reached by financial and banking institutions.
The first program scheme is for the poor and vulnerable groups of MSME entrepreneurs impacted by COVID-19. We must ensure that these people are included as part of the beneficiaries of social assistance, be it the Family Hope Program (PKH), staple food assistance, cash assistance, direct cash assistance (BLT) of the village, as well as the exemption/reduction of electricity tariffs and the Pre-Employment Card.
The second program scheme is tax incentives for MSME actors whose turnover is still below Rp4.8 billion per year. I believe the Government has reduced the final income tax rate for MSMEs from 0.5 to 0 percent for a 6 month period, starting from April to September 2020.
The third program scheme is the relaxation and restructuring of MSME loans with various program schemes, namely in delaying installments and interest subsidies for the people’s business credit (KUR) recipients, Ultra Micro or UMi Credit, Fostering the Economy of the Prosperous Family (PNM Mekaar) which amounts to 6.4 million (debtors), and also 10.6 million debtors in Pegadaian. There are also installments delay and interest subsidies for micro-credit recipients from the Agency for Revolving Fund Management (LPDB) as well as for the recipients of capital assistance from several ministries such as from LPMUKP; Public Service Agency for Forest Management Financing; and Prospective Farmer and Location Candidates in Ministry of Agriculture. I also order that the program to delay installments and interest subsidies to be extended to micro businesses receiving business assistance from the regional government.
The fourth scheme, regarding the financing expansion for the MSMEs, which is in the form of working capital assistance stimulus. We must really design this emergency working capital assistance so that the MSMEs can really experience and get this emergency capital assistance.
From the data obtained, there are 41 million MSMEs that have been connected with financial institutions and banks. And there are 23 million MSMEs have never received funding from financial institutions or banks. Therefore, those 23 million MSMEs must receive the assistance from the expansion of working capital financing. For those who are bankable, distribution will be through the expansion of the KUR program, at the same time this will encourage financial inclusion. While for those who are not bankable, the distribution can be through UMi, Mekaar, or other program schemes.
The fifth, ministries, institutions, SOEs, and regional governments must become a buffer in the MSME business ecosystem, especially in the initial stages of business consolidation recovery. This is very important. For example, SOEs or regional-owned enterprises become off takers for the production of MSME actors in agriculture, fisheries, culinary, and home industries. In addition, the reallocation of regional government budgets must also be directed at economic stimulus programs that reach the MSME sector. I hope that Minister of Home Affairs will be able to convey this to the regions so that we hope our MSMEs can survive in the midst of the COVID-19 pandemic.
That is for my introductory remarks.
Translated by Galuh Wicaksono H
Reviewed by Lulu Wuliarti