Bank lending to micro, small and medium enterprises (MSME) remains sluggish despite multiple policy efforts to invigorate the segment. Analysts blame weak consumer spending power and the risky credit profile of many small businesses.
A micro, small and medium enterprise (MSME) entrepreneur takes a photo of the QR code used for digital payments of his products on Sept. 9, 2023 during the Malang Brewtiful Festival 2023 in Malang Town Square, East Java. (Antara/Ari Bowo Sucipto)
Bank lending to micro, small and medium enterprises (MSME) remains sluggish despite multiple policy efforts to invigorate the segment. Analysts blame weak consumer spending power and the risky credit profile of many small businesses.According to a monthly report published by Bank Indonesia (BI), bank loan issuance to MSMEs grew by 0.6 percent year-on-year (yoy) in May. While that marks an increase from the 0.2 percent recorded in April, the figure is tiny when compared to overall bank credit growth of 11.51 percent yoy in the same month.
In September last year, the government moved Rp 200 trillion (US$11.14 billion) of its cash deposited at BI to government accounts of five state-owned banks to spur credit growth, which hovered at around 7 percent at the time, low by Indonesian standards.
