President Prabowo Subianto has officially launched a policy to cancel debts owed by Micro, Small, and Medium Enterprises (UMKM) in critical sectors such as agriculture, plantations, livestock, and fisheries. This initiative is outlined in Government Regulation (PP) No. 47/2024, which provides for the removal of non-performing loans (NPLs) for UMKM operating in these sectors and other related industries.

Under this regulation, businesses that had fallen into financial distress and were unable to repay loans will see their debts wiped out. Specifically, the policy applies to customers of state-owned banks (BUMN), such as Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI), Bank Mandiri, Bank Tabungan Negara (BTN), and Bank Syariah Indonesia (BSI).

Several banks have expressed positive reactions to the new regulation. Supari, Director of Business Micro at BRI, welcomed the government’s swift action, emphasizing that the bank is currently awaiting the official document to prepare its internal policies for smooth implementation. He noted that this debt relief would offer a chance for UMKM owners, especially those blacklisted by credit agencies, to access financing again.

He added that the policy could help revitalize small businesses and create opportunities for growth. "We believe this cooperation between the government and financial sectors will drive the progress of UMKM and contribute to an inclusive economy," Supari said.

Similarly, Ramon Armando, Corporate Secretary of Bank BTN, expressed strong support for the policy, noting that it would help struggling UMKM recover and grow their businesses through fresh financing. The regulation includes clear conditions to mitigate risks such as moral hazards. BTN is currently studying the regulation to better understand how to implement it within its operational framework.

Bank Mandiri’s Corporate Secretary, Teuku Ali Usman, also backed the government initiative, emphasizing that the policy targets strategic sectors, which is crucial for national economic growth. He noted that this aligns with Bank Mandiri’s commitment to supporting Indonesia’s grassroots economy, which is a key pillar of the nation’s long-term development.

Furthermore, Maman Abdurrahman, Minister for Small and Medium Enterprises (UMKM), clarified the criteria for UMKM eligible for debt cancellation. According to Maman, only UMKM clients of state-owned banks (Himbara) qualify for this debt relief, which includes banks like BRI, BNI, Bank Mandiri, BTN, and BSI. This clarification aims to prevent misunderstandings and ensure transparency in the implementation process.

The debt cancellation program is seen as a crucial move to help UMKM recover from financial difficulties exacerbated by the COVID-19 pandemic and other economic challenges. Many small businesses had struggled to repay loans due to declining revenues, which led to their inclusion in the blacklists of banks. By removing these debts, the government aims to restart their access to credit, allowing them to expand operations and contribute to the country’s economic recovery.

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