Economist: Gap between MSME and national credit growth signals structural issues
The gap between MSME credit growth of only around 1 per cent up to June 2026 and national credit growth of 12.6 per cent points to a structural problem.
Jakarta (ANTARA) - Yusuf Rendy Manilet, an economist at the Center of Reform on Economics (CORE) Indonesia, has said the disparity between the growth of micro, small and medium enterprise (MSME) credit and national credit indicates a structural problem.
“The gap between MSME credit growth of only around 1 per cent up to June 2026 and national credit growth of 12.6 per cent shows a structural problem. Yet MSMEs contribute around 60 per cent of GDP (Gross Domestic Product) and are the largest absorber of labour,” he told ANTARA in Jakarta on Saturday.
According to him, beyond access to financing, the main problem lies in weak demand caused by the declining purchasing power of the lower middle class, which is squeezing turnover and cash flow.
On the other hand, he continued, banks still view MSMEs as a higher-risk segment because many business operators lack tidy bookkeeping, complete legal documentation, or an adequate financial track record.
This, Yusuf said, explains why corporate credit growth is far higher, at nearly 20 per cent. Banks tend to channel credit to borrowers with strong collateral, stable cash flows and more transparent financial information.
“Because of that, increasing MSME financing cannot rely solely on interest subsidies or chasing credit distribution targets. What is needed is strengthening the ecosystem so that MSMEs become more bankable,” he said.
Regulations such as Financial Services Authority Regulation (POJK) No. 19 of 2025 are said to already point towards ecosystem strengthening, by opening up the use of alternative data such as digital transaction histories and intellectual property in the credit assessment process.
However, implementation is judged to require improving business operators’ capacity, starting from simple bookkeeping, separating business and personal accounts, through to transaction digitalisation, given that data quality will improve the accuracy of banks’ risk assessments.
At the same time, according to him, financing must be accompanied by market certainty. If demand has not recovered, additional credit risks increasing debt burdens without boosting productivity.
“The experience of South Korea and Thailand shows that MSMEs connected to large corporations’ supply chains through long-term contracts have more stable cash flows, making it easier for them to obtain financing. A model like this is worth strengthening in Indonesia through incentives for corporations that partner with MSMEs,” said the CORE economist.
In addition, the distribution of the People’s Business Credit (KUR) scheme is considered to need continued focus on productive sectors so its impact on investment and value creation is greater.
From the policy side, Bank Indonesia is considered capable of strengthening credit distribution incentives through the Macroprudential Liquidity Incentive Policy and Macroprudential Inclusive Financing Ratio.
As for achieving long-term success, it still depends on collaboration between banks, financial technology (fintech) companies, and institutions such as PT Permodalan Nasional Madani.
Fintech is said to be able to improve credit scoring accuracy through machine learning, while PNM reaches business operators who are not yet bankable.
“Equally important is maintaining credit quality through mentoring and data-based monitoring so that the troubled loan ratio remains under control. If all these policies run in an integrated manner, the target of MSMEs accounting for 25 per cent of total credit by 2029 will become more realistic while strengthening the productive sector and creating more inclusive economic growth,” said Yusuf.