Recovering from the Covid-19 Blow, the Government Disburses Rp 112 Trillion for MSMEs

Micro, Small, and Medium Enterprises (MSMEs) received government aid to recover after the Covid-19 pandemic. In the Covid-19 Pandemic Handling and National Economic Recovery Program (PC-PEN), the government disbursed Rp 112.26 trillion to support MSMEs in 2020.

The details are as follows: Rp 66.75 trillion allocated to banks, Rp 28.65 trillion for the BPUM (Pre-employment Card Program), Rp 12.81 trillion for UMKM interest subsidies, and Rp 1.29 trillion for investment financing from the Revolving Fund Management Institution (LPDB).

Government support also included Rp 1.09 trillion in UMKM loan interest compensation (IJP), another Rp 1.29 trillion in investment financing, Rp 670 billion in final UMKM income tax (PPh), and Rp 1 trillion in capital guarantees.

MSMEs were among the sectors hardest hit by the Covid-19 pandemic. This is reflected in the 17.5% year-on-year (yoy) contraction in Micro and Small Industry (IMK) production in Q4 2020. This figure is deeper than the national economy's 2.19% (yoy) contraction.

Approximately 7.06% of IMK businesses were temporarily closed, and 11.25% were not producing in Q4 2020. This was due to restrictions on public activities to curb the spread of the Covid-19 virus.

MSMEs are a vital sector in community business activities, contributing significantly to the national economy. During the 1997-1998 economic crisis, small industries supported the national economy. However, with restrictions on public activities due to the pandemic, many small businesses struggled and even went bankrupt, unable to continue operations.