JAKARTA, RAKYAT NEWS – Economists are urging President Prabowo Subianto to exercise caution in implementing his new policy to forgive non-performing loans for micro, small, and medium enterprises (MSMEs) within agriculture, plantation, livestock, fishery, and maritime sectors. The policy, grounded in Government Regulation No. 47 of 2024, was enacted by Prabowo on Tuesday, November 5.

 

Wijayanto Samirin, an economist from Paramadina University, expressed concerns over the potential for high moral hazard. He suggested that the government consider alternative options, such as launching new subsidized loan schemes for fishers, to have a more substantial impact on the economy. According to Wijayanto, a government-backed fund of Rp 10 trillion could support loans totaling more than Rp 100 trillion, thereby creating a far-reaching economic benefit.

 

“This Rp 10 trillion funding should ideally come from the state budget rather than relying on state-owned or private banks,” Wijayanto said

 

Rully Arya Wisnubroto, a senior economist at Mirae Asset Sekuritas Indonesia, emphasized that any debt relief program for farmers must be backed by clear legal protections. Over the years, state-owned banks have faced challenges in canceling debts due to fears of being seen as financially detrimental to the state. Rully stated that if the debt cancellation framework is formalized, banks could resume lending to farmers whose debts have been cleared.

 

From a broader perspective, Toto Pranoto, a state-owned enterprise analyst from the University of Indonesia, believes that debt forgiveness for the People’s Business Credit (KUR) program could accelerate food self-sufficiency. With their debts erased, farmers, fishers, and livestock owners would be able to apply for new loans and quickly reinvest in their businesses. He also recommended that state-owned banks should set aside reserves to handle these debt cancellations.

 

Toto further suggested that the government could provide refinancing options to these state-owned banks through equity participation. Such funding could help relieve the banks of any financial burdens associated with the policy.

 

President Prabowo hopes that the debt forgiveness program will boost production in the agricultural and fishery sectors, both of which are critical to Indonesia’s domestic food supply. By forgiving debts, Prabowo envisions farmers, fishers, and MSME owners working without financial stress and contributing more effectively to the nation’s food security.

 

“Our people respect and value these vital food producers, who play an essential role in sustaining our nation,” Prabowo said during a press statement at Merdeka Palace. He noted that many farmers and fishers have previously been barred from traditional bank loans due to outstanding debts. Without bank access, many resort to loan sharks or online lenders, further compounding their financial difficulties.

 

The Minister of Cooperatives and Small and Medium Enterprises, Maman Abdurrahman, stated that the program targets around one million farmers, fishers, and MSME operators with an estimated budget of Rp 10 trillion. The debt forgiveness covers loans up to Rp 500 million for businesses and Rp 300 million for individuals, specifically for those affected by the COVID-19 pandemic or natural disasters, such as earthquakes.

 

Maman clarified that the policy is intended only for borrowers who have faced insurmountable financial setbacks and have not been able to repay their debts for up to ten years. “This program is not a blanket forgiveness; it’s designed for those who genuinely cannot recover financially,” Maman noted at a press conference following the issuance of PP 47/2024. ( Uki Ruknuddin) Warn President Prabowo: Proceed Carefully with MSME Debt Forgiveness Policy

Can Debt Cancellation Boost Indonesia’s Food Security? Experts Advise Caution

JAKARTA, RAKYAT NEWS – Economists are urging President Prabowo Subianto to exercise caution in implementing his new policy to forgive non-performing loans for micro, small, and medium enterprises (MSMEs) within agriculture, plantation, livestock, fishery, and maritime sectors. The policy, grounded in Government Regulation No. 47 of 2024, was enacted by Prabowo on Tuesday, November 5.

Wijayanto Samirin, an economist from Paramadina University, expressed concerns over the potential for high moral hazard. He suggested that the government consider alternative options, such as launching new subsidized loan schemes for fishers, to have a more substantial impact on the economy. According to Wijayanto, a government-backed fund of Rp 10 trillion could support loans totaling more than Rp 100 trillion, thereby creating a far-reaching economic benefit.

“This Rp 10 trillion funding should ideally come from the state budget rather than relying on state-owned or private banks,” Wijayanto said

Rully Arya Wisnubroto, a senior economist at Mirae Asset Sekuritas Indonesia, emphasized that any debt relief program for farmers must be backed by clear legal protections. Over the years, state-owned banks have faced challenges in canceling debts due to fears of being seen as financially detrimental to the state. Rully stated that if the debt cancellation framework is formalized, banks could resume lending to farmers whose debts have been cleared.

From a broader perspective, Toto Pranoto, a state-owned enterprise analyst from the University of Indonesia, believes that debt forgiveness for the People’s Business Credit (KUR) program could accelerate food self-sufficiency. With their debts erased, farmers, fishers, and livestock owners would be able to apply for new loans and quickly reinvest in their businesses. He also recommended that state-owned banks should set aside reserves to handle these debt cancellations.

Toto further suggested that the government could provide refinancing options to these state-owned banks through equity participation. Such funding could help relieve the banks of any financial burdens associated with the policy.

President Prabowo hopes that the debt forgiveness program will boost production in the agricultural and fishery sectors, both of which are critical to Indonesia’s domestic food supply. By forgiving debts, Prabowo envisions farmers, fishers, and MSME owners working without financial stress and contributing more effectively to the nation’s food security.

“Our people respect and value these vital food producers, who play an essential role in sustaining our nation,” Prabowo said during a press statement at Merdeka Palace. He noted that many farmers and fishers have previously been barred from traditional bank loans due to outstanding debts. Without bank access, many resort to loan sharks or online lenders, further compounding their financial difficulties.

The Minister of Cooperatives and Small and Medium Enterprises, Maman Abdurrahman, stated that the program targets around one million farmers, fishers, and MSME operators with an estimated budget of Rp 10 trillion. The debt forgiveness covers loans up to Rp 500 million for businesses and Rp 300 million for individuals, specifically for those affected by the COVID-19 pandemic or natural disasters, such as earthquakes.

Maman clarified that the policy is intended only for borrowers who have faced insurmountable financial setbacks and have not been able to repay their debts for up to ten years. “This program is not a blanket forgiveness; it’s designed for those who genuinely cannot recover financially,” Maman noted at a press conference following the issuance of PP 47/2024. ( Uki Ruknuddin)