Threat of recession in Jokowi’s eyes and hundreds of trillions for SMEs

Jakarta, CNN Indonesia –

The anguish of the president Joko Widodoagainst threatsrecession increasing. Because the outlook for global economic growth is increasingly gloomy and the positive case of Covid-19 continues to rise.

To that end, early last week he again urged his ranks not to be “ cowardly ” until the vaccine against the corona virus or SARS-CoV-2 is found.

In addition, a number of countries have plunged into a phase of recession due to negative economic growth for two consecutive quarters, including the United States, Singapore, Germany, Hong Kong and South Korea.

“Be careful, don’t let the aura of crisis go away,” Jokowi said.

He also reminded his ministers of the minimum absorption of the national economic recovery budget (PEN). The reason is that, apart from controlling the spread of Covid-19, economic recovery efforts depend on how quickly the government delivers aid to the community.

One thing that needs to be encouraged, according to Jokowi, is helping small and medium-sized entrepreneurs (MSMEs) which are the backbone of the national economy.

Based on data it received as of July 22, the realization of the stimulus budget has pushed MSMEs stretching amid a new pandemic to around 25% of the allocation of Rs 123.46 billion. While the Covid-19 and PEN program as a whole only reached 19%.

“The stimulation of the handling of Covid-19 is still not optimal and the speed is still lacking. The last data that I received on July 22, from the handling of the stimulus of Covid-19 was 695 trillion of rupees, only 136 trillion rupees were made, or only 19 percent, “he said.

For the MSME sector, the program designed by the government itself is actually quite comprehensive, ranging from interest subsidies, placement of funds for credit restructuring, payment for guarantee services (IJP), incentives in the form of an exemption from the MSME final income tax (PPh) of 0.5%.

Finally, the government is preparing investment financing for cooperatives through the cooperative finance institution and the UMKM revolving fund (LPDB KUMKM) amounting to Rp 1 trillion.

Of the total, the funds disbursed by the LPDB amounted to 381 billion rupestres. This budget is prepared to maintain cooperative liquidity in the expansion of working capital loans to SMEs.

Slow realization

The President of the Indonesian Association of MSMEs (Akumindo), Mr. Ikhsan Ingratubun, said that the slow implementation of the PEN program has forced many MSMEs to try to find their own capital. Some of them even chose to close temporarily because they could not access cheap financing.

He noted that until mid-July 2020, only around 26% of MSMEs had received assistance. Although the pandemic effect of the corona virus has been affecting small communities since March-April.

Further, he said that those who are assisted through the tranche restructuring, the suspension of the final PPh, or even the LPDB are just a handful, namely having a bank and being registered as taxpayer (WP).

Meanwhile, he said, many SMEs do not have (non-bankable) bank accounts. So inevitably they have to be independent and find their own solutions, either by selling in the midst of a pandemic or by owing money to third parties.

Minister of Cooperatives and SMEs Teten Masduki acknowledged that the number of SMEs that have not been connected to banks or other financial institutions has blocked the distribution of government stimulus measures. He even thinks that around 20 million MSMEs out of a total of 64 million MSMEs in Indonesia are still not bankable as reported by the SMERU Research Institute.

To facilitate aid distribution, Teten said in a webinar hosted by BPIP some time ago, the government will consolidate funding for MSMEs.

In the future, LPDB funds will be focused on supporting cooperative liquidity so that MSMEs who want cheap government funding need to be registered with a savings and credit cooperative (KSP).

“We set up 100% of the LPDB funds at the start of the year for cooperatives. In doing so, MSMEs are expected to join existing cooperatives and new ones, ”he said.

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[Gambas:Video CNN]