LPEM FEB UI Questions Effectiveness of Government's Rp381 Trillion Liquidity Injection for MSMEs
The University of Indonesia’s Institute for Economic and Social Research (LPEM FEB UI) has assessed that the government’s plan to inject Rp381 trillion in liquidity into state-owned banks (Himbara) may not effectively stimulate lending to the micro, small, and medium enterprise (MSME) sector. The institute argues that the additional funds will not automatically translate into increased credit disbursement because the underlying risks associated with MSMEs remain unchanged.
In its Trade and Industry brief titled ‘Dukungan Kredit Gencar, Mengapa Belum Tersalur Maksimal ke Pasar?’, LPEM FEB UI highlighted that the liquidity injection, which is scheduled to reach up to Rp400 trillion by June 2026, is not guaranteed to be effective. The institute identified at least four major obstacles preventing banks from channelling credit to MSMEs. Firstly, the non-performing loan (NPL) rate for the micro segment stands at 10%, which is four times the banking industry average. Secondly, many informal MSMEs lack a Business Identification Number (NIB), financial reports, or collateral. Thirdly, there is an information asymmetry where banks lack sufficient data to assess the creditworthiness of MSMEs. Finally, the cost of serving small, geographically dispersed customers remains prohibitively high.
On the demand side, LPEM FEB UI noted that weak purchasing power, exacerbated by food inflation reaching 5.88% in May 2026, is dampening appetite for credit. The institute also pointed out that lengthy application processes drive many MSMEs to seek faster alternatives such as loan sharks or online lenders. Furthermore, micro-enterprises tend to prioritise speed, ease of access, and business mentoring over low interest rates, and many do not understand the procedures for the People’s Business Credit (KUR) programme or feel they are ineligible to apply.
Deputy Minister of Finance Juda Agung confirmed that the government will re-place Rp281 trillion in Himbara banks and has prepared an additional Rp100 trillion as a standby fund. He stated that the decision was made after an evaluation and that the funds will be extended until the end of 2026. Juda noted that credit growth reached 11.5% as of May and that the banking sector requires sufficient liquidity to meet the continued high demand for loans.