The micro, small, and mediums enterprises (MSMEs) constitute a vital part of Indonesia’s economy. 

According to data from Bank Rakyat Indonesia quoted by the Straits Times, MSMEs contribute 61% of Indonesia’s GDP but employ 116.9mn people or around 97% of the total workforce in the country. MSMEs also dominate the enterprise landscape in Indonesia, with around 62.1mn entities as of 2018, most of which micro and small enterprises, compared to 5,550 large enterprises. As of 2019, loans to MSMEs amounted to INR 1.1tn, which made 19.6% of total outstanding loans or 7% of GDP. 

The Indonesia Premium database offers a thorough look into MSMEs credit, including monthly time series of MSMEs credit by industry, type of credit, business criteria and specific guarantee scheme. Accessible credit to MSMEs is extremely important for their survival in light of the COVID-19 pandemic. According to a UNDP Indonesia report, MSMEs in all industry sectors cannot survive more than 10 months on average if the pandemic persists. 

Total MSMEs credit for 2020 amounted to IDR 13,140tn, growing by 2% y/y. However, for the period January-May 2021, total MSME credit declined by 1.4% y/y.  The growth of MSMEs credit was constantly negative between August 2020 and April 2021. Credit eventually rebounded in May 2021 and increased by 1.6% y/y. 
 

As of 2020, almost half of all MSMEs credit (49.8%) went to the wholesale and retail trade industry, followed by agriculture, forestry and fishery (11.9%) and manufacturing (10.3%). In July 2020, the Indonesian government approved an INR 100tn scheme to boost credit for priority sectors. MSMEs credit data reveals that the enterprises that benefitted the most from the scheme are in the agricultural sector where credit has been growing at double digits since August 2020. At the same time, credit to MSMEs in the wholesale and retail trade and manufacturing industries has been declining.

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