Jakarta. State-owned banks have disbursed Rp 1,088 trillion (approximately $69 billion) worth of the government’s microloans, better known by its Indonesian acronym KUR in 2020-2023.

KUR mainly targets Indonesia’s micro, small and medium enterprises (MSMEs), which largely contribute to the country’s gross domestic product (GDP). The microfinance program targets Indonesian MSMEs who are productive and feasible but lack collateral to borrow money to grow their businesses. 

“State-run banks were responsible for 92 percent of the disbursed microloans so far. Private-owned banks granted 8 percent of the remaining KUR loans,” State-Owned Enterprise Minister Erick Thohir said in a hearing with the House of Representatives in Jakarta on Monday.

Indonesia's state-owned banks include Mandiri, BNI, and BRI. These three banks have also merged their respective sharia units into a single entity called Bank Syariah Indonesia (BSI). Bank Mandiri offers super microloans worth up to Rp 10 million with an annual interest rate of 3 percent. The bank also lets MSMEs take out loans starting from Rp 10 million and can go up to Rp 100 million. 

The government is currently reviewing the targeted disbursed microloans for next year. 

“We are mulling to disburse between Rp 200 trillion and Rp 300 trillion in microloans for agricultural and food security sectors. I think this aligns with [the state banks’] track record [of disbursing] Rp 1,088 trillion. We will push for figures that are similar to what we have achieved so far,” Erick said.

Indonesia is home to 65 million MSMEs, which contribute 61 percent of Indonesia’s gross domestic product (GDP) and absorb 97 percent of the country’s total workforce, government data showed.

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