Jakarta. Strengthening capital is key for Indonesian micro, small, and medium enterprises to level up, according to the government.

Deputy Minister for MSMEs Helvi Moraza made the comment when launching the 2025 Lokamodal Roadshow in Pasuruan on Tuesday. 

"We recognize that expanding access to credit and strengthening capital for MSMEs is crucial. Every financing scheme disbursed not only encourages business growth but also directly contributes to job creation, poverty reduction, and improving public welfare," Helvi said.

Helvi revealed that the lack of additional collateral had made it difficult for MSMEs to access bank financing.

"Around 59.6 percent of MSME loan applications are rejected due to insufficient collateral," he said.

Through the Lokamodal program, MSME entrepreneurs, especially micro-scale ones, are facilitated in certifying their land assets to obtain land rights certificates that could serve as collateral. This provides them with greater opportunities to obtain financing and develop their businesses.

Lokamodal also enables MSMEs to access other financing alternatives besides the microcredit program KUR. Some examples include sharia financing. Other facilities, such as intellectual property, are also available.

"Capital is important, but it's not the only key. There are three things we must collectively focus on: MSMEs must be strong in the domestic market, have the courage to penetrate the export market, and actively support national strategic programs," he said.

Helvi also pointed out the influx of imported goods, which he said had prompted the government to provide space that prioritizes local products, be it in marketplaces, modern brick-and-mortar stores, or public procurement.

Pasuruan Regent Rusdi Sutejo reminded local MSMEs to understand the difference between capital loans and grants.

"Capital assistance is not a grant. This means that beneficiaries are required to repay the loan according to the terms and conditions and must not use it for consumptive purposes," he said.