Economist: KUR should shift towards building MSME capacity

Jakarta (ANTARA) – Yusuf Rendy Manilet, an economist at the Center of Reform on Economics (CORE) Indonesia, said the focus of the People’s Business Credit (KUR) programme should shift from simply pursuing higher disbursement volumes to building the capacity of micro, small and medium-sized enterprises (MSMEs), particularly by increasing turnover and profits and creating jobs.

The Ministry of MSMEs recorded KUR disbursements of Rp243.3 trillion as of 6 October 2026, reaching 1.6 million new borrowers. At the same time, overall MSME credit growth in August 2026 was just 2.38 per cent, far below the 13.65 per cent growth in total bank lending.

Speaking in Jakarta on Tuesday, Yusuf stressed that KUR’s success could no longer be measured solely by disbursement figures and the number of recipients. Evaluations should also take account of revenue and profit growth, additional jobs, repayment performance and borrowers’ ability to graduate to commercial financing.

“Without these measures, an increase in disbursements does not necessarily reflect improved business productivity,” Yusuf said.

The Ministry of MSMEs also recorded that, as of September 2026, only around 511,000 KUR borrowers had graduated to the next level, less than half the target of 1.1 million borrowers for this year.

Yusuf said the high level of KUR disbursement did not yet fully demonstrate that MSMEs were gaining access to additional capital. In his view, some subsidised financing could simply be replacing commercial microcredit that businesses had already accessed.

He therefore urged the government to ensure that expanded financing is accompanied by stronger market access and productivity.

One measure would be to involve MSMEs actively in the supply chains of strategic programmes, such as the Free Nutritious Meals programme, the Merah Putih Village/Sub-district Cooperatives (KDKMP), and local government procurement of goods and services.

Alongside opening up market access, ensuring prompt payment to MSME suppliers is crucial so businesses do not face cash-flow problems after receiving large orders.

Yusuf also underscored the importance of integrating all support programmes—from halal certification and BPOM permits to digitalisation and financing—into a unified MSME database.

“With integrated data, the government can precisely monitor which businesses have received support, how their businesses are progressing, and which programmes have proved effective in raising their incomes,” he said.