Minister of Cooperatives and Small and Medium Enterprises (Menkop UKM) Teten Masduki noted that non-performing loans for micro, small, and medium enterprises (MSMEs) have reached IDR 22.9 trillion. The number of troubled MSMEs with problematic loans is 421 thousand.

"Based on the evaluation of the implementation of the MSME restructuring program, the total problematic loans amount to IDR 22.9 trillion, involving 421 thousand MSMEs," Teten said during a working meeting with Commission VI of the Indonesian Parliament on Thursday (23/11).

The MSME credit restructuring program was launched during the Covid-19 pandemic, from March 2020 to March 2024.

Teten added that the evaluation results led to three directives from the president discussed in the cabinet meeting. First, finding solutions and evaluating issues related to MSME loans in favor of MSMEs. Second, increasing the share of MSME credit from 25 percent in 2023 to 30 percent in 2024. Third, resolving criteria for write-off, debt elimination, and MSME restructuring in less than a month.

Teten outlined several regulations that serve as the legal basis for debt elimination, namely Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (UU P2SK) and Government Regulation (PP) Number 7 of 2021 concerning Facilitation, Protection, and Empowerment of Cooperatives and MSMEs.

"This regulation states that non-performing loans can be resolved through credit restructuring," said Teten.

Previously, the Financial Services Authority (OJK) revealed that the total amount of MSME loans in Indonesia reached IDR 1,376 trillion as of May 2023. Meanwhile, the total non-performing loans amounted to IDR 53.81 trillion.

Looking at the numbers, the total amount of MSME loans and non-performing loans has been increasing over the past five years. In 2018, MSME loans reached IDR 969 trillion, with non-performing loans amounting to IDR 32.42 trillion.

These figures continued to rise in 2019, with MSME loans reaching IDR 1,044 trillion and non-performing loans reaching IDR 36.21 trillion.

In 2020, the total amount of MSME loans increased again to IDR 1,088 trillion, with non-performing loans reaching IDR 43.11 trillion.

The upward trend continued in 2021, with MSME loans reaching IDR 1,221 trillion and non-performing loans reaching IDR 46.75 trillion.

Furthermore, MSME loans increased again to IDR 1,348 trillion by December 2022, while the amount of non-performing loans reached IDR 46.8 trillion.