By: Andi Mahesa)*
During the administration of President Prabowo Subianto, one of the policies that attracted public attention was the effort to write off debts for Micro, Small, and Medium Enterprises (MSMEs). This policy certainly provides great hope for the MSME sector, which has been an important pillar of the Indonesian economy. Data from the Ministry of Cooperatives and SMEs, that MSMEs contribute around 60% of Indonesia’s Gross Domestic Product (GDP) and absorb more than 97% of the workforce. Therefore, policies that can strengthen this sector will have a significant impact on the national economy, including debt relief for MSMEs.
With the MSME debt cancellation policy, the government is trying to ease the financial burden of MSMEs affected by various economic crises. Amidst the current global dynamics, the debt cancellation policy gives them the opportunity to restart their businesses without the burden of inhibiting debt. Not only that, this step can also increase MSMEs’ trust in government policies and strengthen a more inclusive business climate.
Senior Economist & Associate Faculty of the Indonesian Banking Development Institute (LPPI), Ryan Kiryanto said that the policy of writing off debt for MSMEs will have a significant impact on the national economy. According to him, the amnesty of bad debts for MSMEs can make them try and have access to financing again.
When the accumulated debt is written off, MSMEs will have more liquidity to use in developing their businesses. Capital that previously had to be allocated to pay debts can be diverted to improve product quality, expand distribution networks, or even innovate in the face of market competition. This will directly increase the competitiveness of MSMEs both at the national and international levels.
Many MSMEs are experiencing economic difficulties due to the impact of global economic instability. Some of them are even unable to survive due to the increasing accumulation of debt. The debt cancellation policy will provide a breath of fresh air for MSMEs to continue their business operations without being burdened by mounting financial obligations. Thus, these businesses can contribute more to the economy, create jobs, and reduce unemployment.
Meanwhile, Minister of SMEs, Maman Abdurrahman said the debt cancellation policy aims to help SMEs that are really squeezed by unexpected economic conditions, such as actors who experience financial difficulties due to external factors such as earthquakes, natural disasters, or the impact of the COVID-19 pandemic. As a note, this debt cancellation does not apply to SMEs that still have the ability to pay debts.
This is in line with the University of Indonesia (UI) Economist, Ninasapti Triaswati, who said that the policy of debt forgiveness or amnesty for MSMEs in various sectors could reduce the poverty rate in Indonesia, which as of March 2024 was at 9.03 percent. Through this policy, President Prabowo also aims to increase people’s purchasing power, considering that the beneficiaries of this policy are the lower middle class.
This policy will have a significant impact on national economic growth. Debt write-offs have the potential to help around 1 million MSMEs in Indonesia. On average, the amount of debt written off ranges from IDR 300 million to IDR 500 million per MSME, depending on the status of the business entity or individual. With an estimated total write-off of receivables reaching around IDR 10 trillion, the government hopes that this policy can ease the burden on MSMEs that have long been in debt, while also giving them the opportunity to restart their businesses without the burden of financial obstacles.
Often, MSMEs have difficulty accessing financing from formal financial institutions because they are considered risky. With this debt cancellation policy, the government not only provides direct assistance to MSMEs, but also opens up opportunities for them to access financing in the future. In return, the government can implement more affordable financing schemes with low interest rates or with a more flexible system so that MSMEs can develop better without being trapped in burdensome debt.
The debt cancellation policy has great potential to boost the national economy. MSMEs who are no longer burdened by debt will have room to invest in expanding their businesses, opening new branches, or introducing new, more innovative products.
MSMEs are the sector that absorbs the largest workforce in Indonesia. With policies that provide opportunities for MSMEs to develop faster, unemployment rates can be reduced, because more businesses can absorb workers. In addition, more stable MSME development can expand job opportunities, both for formal and informal workers, which ultimately contributes to reducing poverty rates.
When MSMEs feel they are benefiting from government policies, they will have a sense of security and trust in the existing economic system. This trust will encourage them to be more active in entrepreneurship and involve more people in economic activities. The social and economic stability created by this policy will have a positive long-term impact on Indonesia, making this country more resilient in facing global economic challenges in the future.
Thus, the policy of eliminating MSME debt initiated by President Prabowo is the right and relevant step amidst increasingly complex global economic challenges. This policy has the potential to provide a positive impact on the Indonesian economy as a whole. To achieve optimal results, it is important for the government to implement this policy carefully and ensure that there is assistance for MSME actors so that they can develop better in the future, as well as strong support from all elements of society so that this policy can be implemented properly and on target.
)* Student of one of the PTS in Jakarta.
