Minister Airlangga: Capitalization is an Important Factor of SME Development

INDUSTRY.co.id - Jakarta, Capitalization is one of the important factors for Small and Medium Industry (IKM) in developing business, but majority of IKM have difficulty in accessing financing sources. This is because the majority of SMEs do not meet the banking requirements despite the type of business prospectively have a viable business to be given access to banking.

This was stated by Minister of Industry, Airlangga Hartarto when opening ceremony of Synergy Development of Small and Medium Industry (IKM) at the Office of the Ministry of Industry, Jakarta, Monday (28/8/2017).

"The difficulty of access to bank financing is caused by the incapability of SMEs in complementing the legality of business in the industry, high interest rates on loans, and the limitations of banks in providing loans with low plafond," said Airlangga.

He added that efforts to improve access to finance for SMEs have been undertaken by the government. "One of the priority programs in supporting the provision of financing to the IKM sector and directed to other productive sectors of business," he explained.

As is known, the IKM sector is one of the backbone of the national economy. By 2016, the number of SME business units reaches 4.4 million units and absorbs 10.1 million workers. It contributes to the national economic growth of 4.27 percent. "With these contributions, IKM has a role to drive economic growth, social stability, and contribute to the development of a dynamic private sector," Airlangga said.

Furthermore, Airlangga explained, until July 2017, the total disbursement of KUR reached Rp52, 2 trillion or 47 percent of the target KUR Rp110 trillion. "With this achievement, we would like to express our appreciation to KUR's policy committee and KUR channeling banks," he added.

According to Airlangga, another thing that needs to be observed is the target of KUR allocation in the productive business sector by 40 percent. Until now, the distribution of KUR for non-service production sector reached 31.2 percent. "The achievement has increased from the December 2016 performance with the distribution of KUR production sector by 22 percent," said Minister of Industry.

It is noted that KUR distribution is still dominated by some province such as Central Java, East Java, West Java, South Sulawesi, and North Sumatra. While based on the island, is still dominated by the island of Java, Sumatra Island and Sulawesi Island. "The portion of KUR distribution reflects the spread of SMEs as well as IKM throughout Indonesia so that the growth of SMEs outside Java Island also needs to be our concern," he concluded.