Jakarta: The development of Micro, Small, and Medium Enterprises (MSMEs) is necessary and important to encourage economic growth, according to Coordinating Minister for Economic Affairs Airlangga Hartarto.
The minister noted that the MSME sector had played an important role in economic recovery. MSMEs had been able to dominate the structure of the Indonesian economy, with their number growing with each passing year.
"Hence, the development of MSMEs is necessary to push Indonesia's economic growth even higher," Hartarto noted in a press statement here, Friday.
The contribution of MSMEs was recorded at around 61 percent of the national GDP and absorbed 97 percent of the total workforce. During every crisis period, MSMEs also become buffers and resilient as well as were able to recover well, Hartarto pointed out.
The minister emphasized that the Indonesian government was paying serious attention to MSMEs through efforts including promoting MSMEs to the wider market to increase access to financing.
Currently, MSME loans accounted for only 18 percent of the total credit. President Joko Widodo (Jokowi) has given directions to increase the percentage of MSME loans by at least 30 percent by 2024.
The government has also issued various policies to increase access to MSME financing, such as payment of guarantee service fees and interest subsidies in the People's Business Credit (KUR) whose sources of funds come from financial institutions.
In addition, the government has prepared ultra-micro financing with State Budget funding and revolving funds, as well as sharia financing and channeled through microfinance institutions.
"It is hoped that the integrated financing ecosystem, ranging from social assistance programs to commercial financing for financial institutions, would encourage more MSMEs to grow bigger," Hartarto affirmed.
The minister believes that MSMEs' competitiveness could be improved through digital innovation. The government has also provided facilities, including licensing, fiscal incentives, market access, and access to raw materials for MSMEs.
In order to strengthen the MSME ecosystem, the government had worked towards creating a healthy business climate, supporting digital payments and logistics, ensuring personal data protection, and implementing electronic systems and transactions as well as digital infrastructure in e-commerce.
“The existence of MSMEs is an important pillar for our country's development. Our economy will grow in line with the development of MSMEs," the minister concluded.