JAKARTA. The government will revise the People’s Business Credit (KUR) program in this year by targeting the allocation of Rp 110 trillion KUR funds to the productive small scale enterprises.

During the hearing session with the Commission XI of DPR (the House of Representatives), Thursday (9/2), Coordinating Minister of Economic Affairs Darmin Nasution said that the government intends to increase portion of the KUR’s allocation in production sector from 22% to 40%. The allocations of KUR will be targeting agriculture, forestry, fishery, and manufacturing industry sectors.

Last year, the realization of KUR’s allocations amounted to Rp 94.4 trillion of the target of Rp 100 trillion. Meanwhile, the realization of KUR’s interest subsidies amounted to Rp 9.22 trillion.

At the same time, BI (the Central Bank) recommended five revisions on the allocation of KUR. First, the distributions of KURs should be expanded. To date, about 54.6% of the credits are distributed to Java.

Second, the government needs to refocusing the distribution of KUR. This kind of credit should be targeted to startup, creative business, or super micro enterprises.

Third, the government should minimize the credit allocation to the debtors that have obtained bank’s commercial credit. In this case, the banks should not be allowed to grant KUR to their commercial customers.

Fourth, KUR’s interest rate should be reduced in a gradual manner, on the grounds that the authority should protect the banks, which are active in allocating KUR.

Lastly, the budget of KUR’s interest subsidy should be re-included in the State Budget. Otherwise, KUR’s interest rate, which has dropped from 12% to 9%, is potentially to increase again.

Despite the government has not determined the KUR’s interest rate in this year, the Chairman of Commission XI of DPR Melchias Markus Mekeng hopes that the KUR’s interest rate will be adjusted to the decrease in BI’s interest rate. “It has to be flexible,” he said.

According to the politician of PAN (the National Awakening Party) Mohammad Hatta, KUR’s interest rate may drop to 7%. However, Darmin said that the government is unlikely to reduce KUR’s interest rate.

The economist of Bank Central Asia (BCA) David Sumual said that the rate of KUR’s interest will depend on the amount of government’s subsidy. In other words, the larger the subsidy, the lower the interest rate. “This will impact to the banks, which are focusing to small and medium enterprises,” David told KONTAN. (Muhammad Farid/Translator)

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Editor: Barratut Taqiyyah Rafie