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Construction SMEs' Non-Performing Loan Ratio Reaches 10%

Adi Ahdiat 22/07/2024 18:15 WIB

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Based on OJK data, the non-performing loan (NPL) ratio for MSMEs in the construction sector reached 10% in April 2024, considered unhealthy.

Top 10 Indonesian UMKM Sectors with the Highest Non-Performing Loan Ratios (April 2024)

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Top 10 Indonesian UMKM Sectors with the Highest Non-Performing Loan Ratios (April 2024)

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Based on data from the Financial Services Authority (OJK), the total outstanding debt or principal loan balance owed by micro, small, and medium enterprises (MSMEs) nationwide reached Rp1,461 trillion in April 2024.

Of this amount, Rp62.23 trillion was classified as non-performing loans (NPLs), equivalent to 4.26% of the total outstanding debt.

By sector, the highest NPL ratio was in the construction sector.

In April 2024, the construction MSME sector had an outstanding debt of Rp50.2 trillion, with non-performing loans valued at Rp5.4 trillion.

Thus, the construction MSME sector generally had an NPL ratio of 10.8%, categorized as "unhealthy."

Other MSME sectors with high NPL ratios include financial intermediaries; and real estate, rental, and business services.

However, these two sectors are categorized as "fairly healthy" because their NPL ratios are in the 5-8% range.

Other sectors in the top 10 are also categorized as "healthy" with NPL ratios ranging from 2-5%.

Meanwhile, the only MSME sectors categorized as "very healthy" are education services and government administration, with NPL ratios below 2%.

The following is a complete list of MSME NPL or non-performing loan ratios by sector in April 2024:

1. Construction: 10.80%
2. Financial Intermediaries: 5.49%
3. Real Estate, Rental, and Business Services: 5.06%
4. Fisheries: 4.69%
5. Wholesale and Retail Trade: 4.60%
6. Mining and Quarrying: 4.49%
7. Manufacturing Industry: 4.36%
8. Accommodation and Food Service Providers: 3.77%
9. Transportation, Warehousing, and Communication: 3.74%
10. Individual Services Serving Households: 3.60%
11. Community, Social, Cultural, Entertainment, and Other Individual Services: 3.46%
12. Electricity, Gas, and Water: 2.51%
13. Agriculture, Hunting, and Forestry: 2.46%
14. Health Services and Social Activities: 2.14%
15. Government Administration, Defense, and Mandatory Social Security: 1.36%
16. Education Services: 1.23%

Currently, the OJK is drafting a Government Regulation (RPP) regarding the write-off or cancellation of non-performing loan charges for MSMEs.

However, there is no definite information on when this regulation will be finalized and implemented.

"That RPP [MSME write-off] is currently underway, meaning it's being finalized along with several other RPPs; hopefully, it can be done more quickly," said Dian Edina Rae, Executive Head of Banking Supervision at the OJK, as reported by *Bisnis.com* on Friday (28/6/2024).

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."