Equalising banking access could boost MSME financing

Jakarta (ANTARA) - The Indonesian MSME Industry Association (AKUMANDIRI) has stated that access to financing for Micro, Small, and Medium Enterprise (MSME) players must be standardised to trigger growth.

“The treatment of MSMEs in Jakarta compared to Maluku, for example, is different, even though it is the same bank,” said the Chairperson of AKUMANDIRI, Hermawati Setyorinny, when contacted in Jakarta on Wednesday.

According to her, the obstacles faced by MSME players in accessing financing are not uniform between one region and another.

She stated that based on findings and reports from MSME players, their reluctance to access bank financing is due to several burdensome requirements.

For this reason, Herma primacy stated that the government must provide oversight regarding the People’s Business Credit (KUR) programme implemented by various banks.

Although the government has issued policies regarding unsecured loans, she added that some banks still request collateral or guarantees from MSME players when accessing KUR financing, even when the collateral value is small.

“The government must provide supervision; banks that can implement the terms and procedures agreed upon by regulations or policies should receive rewards, and vice versa,” she said.

With such standardisation, she hopes that MSME players who previously faced difficulties in accessing financing will find the process easier, thereby increasing MSME credit within the banking sector.

Previously, the Indonesian National Banking Association (Perbanas) stated that 88 per cent of informal MSME players prefer using personal funds rather than bank credit.

“Looking at the survey, they (MSMEs) prefer using their own funds,” said the Head of Research and Banking Economic Studies at Perbanas, Aviliani, in Jakarta on Thursday (18/6).

Aviliani noted that the use of personal funds for financing by informal MSMEs also affects the distribution of credit from banks.

She explained that research by Perbanas in recent years shows a slowdown in MSME credit growth, which even experienced a contraction at certain points.

According to Perbanas surveys, the use of personal funds by MSME players reaches 88 per cent, while 12 per cent use external funds, which includes 49 per cent from banks, 9 per cent from friends or relatives, 32 per cent from microfinance, and 11 per cent from other sources.