Jakarta. The Indonesian government has written off Rp 486.1 billion ($29.2 million) in debt owed by micro, small, and medium enterprises (MSMEs) to state-owned banks as of April, an official announced on Thursday.

The amount represents only a small portion of the proposed Rp 14.8 trillion ($890 million) in non-performing MSME loans slated for forgiveness under a directive from President Prabowo Subianto.

MSME Minister Maman Abdurrahman said the relief had been granted to 19,375 eligible MSMEs that had been unable to repay their loans for years.

In November last year, shortly after taking office, President Prabowo signed a government regulation encouraging state banks to forgive loans under specific conditions. The regulation targets around 1 million MSMEs and entrepreneurs in sectors such as agriculture, fisheries, and plantations, with a combined debt totaling Rp 14.8 trillion.

The debt relief is capped at Rp 500 million per corporate borrower and Rp 300 million for individual borrowers, particularly those whose businesses collapsed due to natural disasters or the COVID-19 pandemic.

Speaking at a hearing with lawmakers, Maman acknowledged that implementation of the policy has faced obstacles, particularly due to bank-imposed requirements for debt restructuring.

“For many MSMEs with small loans, the cost of restructuring exceeds the value of the debt itself,” Maman said, without going into further detail.

He noted that only 67,668 debtors have qualified so far -- well short of the 1 million MSMEs targeted by the program.

Maman urged the Financial Services Authority (OJK) to swiftly approve the removal of restructuring requirements to expand the program's reach. Many MSMEs remain unable to resume businesses due to being blacklisted in the national banking system over unpaid debts.

“Without these requirements, the debt forgiveness could reach the full 1 million MSMEs and entrepreneurs targeted by the program,” he said.