Bank of Indonesia projects big increases in SME loans

Small businesses are set to reap benefits and new finance opportunities by the launch of a new holding company named “Ultra Mikro” (owned by three state-owned enterprises) to serve the SME sector in Indonesia. The Bank of Indonesia projects a US$14.3 billion increase in loans for SMEs annually by 2024.

At the moment, SMEs in Indonesia are able to access an average amount of US$700 in finance and credit each. This average is expected to increase by 4% over the next two years.

As of June 2021, SMEs held a total balance of around US$76 million in loans and credit facilities, up by 2.1% from June 2020.

The loosening of credit is expected to support the government’s National Development Plan, that specifically encourages the growth of SMEs in cities and smaller towns across the country.

According to the Indonesian Central Bureau of Statistics, there are around 64 million SMEs in Indonesia. However, 30% of them have been greatly impacted by the pandemic.Indonesia’s Investment Minister, Bahlil Lahadalia, has said SMEs in Indonesia accounted for 61% of the workforce in 2020, making it the highest employment contributor in the country.

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