Indonesian MSMEs Need Fintech Companies to Grow Business, Minister Says

JAKARTA, KOMPAS.com – Indonesia’s Cooperatives and Small and Medium Enterprises Minister Teten Masduki said that fintech companies play an important role in boosting the development of micro, small and medium enterprises (MSMEs).

Teten argued that fintech companies can help new developments of tech startups and promote the effectiveness and efficiency of business operations — recording transactions, inventory management — to access financial services.

“We hope that fintech companies can work together with the [MSMEs] community by helping them to obtain financial services,” said Teten in a statement on Friday, November 13.

Also read: Government Offers Debt Restructuring to Cow Milk Producers in Indonesia: Teten Masduki

“Half of MSMEs are bankable and this can bring impact to fintech business to go grow rapidly,” he added.

Teten explained the Financial Services Authority (OJK) data said that there has been an increase in the growth of fintech and lending companies.

The increase comprises public financial literacy, especially MSMEs in obtaining financial services and financial transactions.

“Fintech company is needed by MSMEs. Indonesia’s digital financial literacy rate has only reached 35.5 percent,” he said.

Also read: Cash Transfers for Indonesian MSMEs to be Extended to Next Year 

He went on to say that about 16 percent of MSMEs were connected to digital platforms or around 10.2 million MSMEs. However, the main problem faced is related to MSME financial reports.

“About 16 percent of MSMEs have already been connected to digital platforms. There is an increase of 13 percent or 10.2 million MSMEs at the start of this year,” the minister said.
“The main problem of MSMEs is their financial statement. It is hoped that the problem will be resolved.” 

The minister also said that various programs and access to financial services were provided by the government to help MSMEs affected by the Covid-19 pandemic.

Under this program, debt payments will be delayed by six months for micro-loan credit for MSMEs affected by Covid-19. The government also provides interest-free microcredit programs (KUR) under 10 million rupiahs ($706) and provides cash transfer of 2.4 million rupiahs ($169) to MSMEs.

He stressed the importance of obtaining financial services for micro-businesses as they need easy access to financing. He also said that the new job creation law will help in digital transformation and the creation of single integrated data for MSMEs.

(Writer: Elsa Catriana | Editor: Erlangga Djumena)

Source: https://money.kompas.com/read/2020/11/13/123900926/menkop-teten--fintech-sangat-dibutuhkan-pelaku-umkm.