Major Smallholder Business Credit Allocation for Small Businesses in 2025
The Indonesian government has set an ambitious goal of distributing Rp300 trillion (approximately US$18.4 billion) in smallholder business credit (KUR) in 2025. This initiative aims to provide accessible funding for micro, small, and medium enterprises (MSMEs).
The government has also allocated Rp48 trillion to ease borrowing costs. This will bring down the interest rates from the standard 15% to 6%, which will ensure that more entrepreneurs can afford loans for their businesses.
Widening Financial Access
The 2025 KUR programme will be implemented through 49 financial institutions, most of which are from the banking sector. Both state-owned and private banks have been given the responsibility for efficient disbursement.
Similarly, the government will introduce policies to support mentorship. This will ensure minimal losses and the sustainable use of funds.
Bringing in New Beneficiaries
In line with the government’s broader policy of supporting and developing entrepreneurship in Indonesia, one of the key priorities for 2025 is to expand KUR benefits to new participants. More specifically, the government aims to reach 2.4 million new beneficiaries while also supporting 1.7 million businesses in moving beyond the micro category. Potential hurdles include ensuring efficient distribution and maintaining credit quality.
Regional Supervision and Monitoring
For better monitoring of smallholder business credit disbursement, the Ministry of MSMEs has divided Indonesia into multiple regions, including Java I, Java II, Sumatra, Kalimantan, and Eastern Indonesia. There will also be regular coordination meetings at the regional level to track progress and address potential challenges.
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