Indonesia's UMKM Sector Receives Boost through Regulatory and Digital Initiatives

Regulatory Support for UMKM Credit

The Financial Services Authority (OJK) has proposed a bad debt write-off policy for state-owned banks to help UMKM businesses recover from non-performing loans ¹

. OJK Chairman Mahendra Siregar emphasized that this policy would help state-owned banks to more effectively channel new financing to productive UMKM enterprises. The proposal has been discussed with various ministers, including the Minister of Finance and the Coordinating Minister for Economic Affairs.

Digital Platform for UMKM Development

The Ministry of UMKM is developing a digital platform called Sapa UMKM that will serve as an integrated hub for micro-enterprises to access information and business facilities ²

. Minister Maman Abdurrahman explained that this platform represents a shift from traditional outreach methods to a more inclusive approach where UMKM businesses can join voluntarily. The platform is expected to be launched by December 2025.

Business Matching Success for UMKM Exporters

The Ministry of Trade's business matching program for UMKM exporters has achieved significant success, with USD 130.17 million in transactions recorded by October 2025 ³

. This includes USD 56.99 million in confirmed purchase orders and USD 73.18 million in potential transactions. Minister Budi Santoso highlighted that this performance demonstrates consistent international buyer interest in Indonesian UMKM products.

Enhanced Credit Access for Productive Sectors

The Ministry of UMKM has reported a significant milestone in Kredit Usaha Rakyat (KUR) distribution, with 60.6% of KUR funds allocated to productive sectors for the first time ⁴

. Minister Maman Abdurrahman emphasized that this achievement aligns with government plans to maximize the economic multiplier effect through production-oriented lending. The government has allocated Rp300 trillion for KUR programs, with a subsidized interest rate of 6% compared to commercial rates of up to 16%.

Challenges and Future Directions

Despite these positive developments, challenges remain in UMKM lending. Bank Indonesia reported that while credit growth for small-scale enterprises reached 7.2% year-on-year, there was a contraction in micro and medium-scale enterprise credit ¹

. OJK Executive Director Dian Ediana Rae noted that banks remain cautious in UMKM lending due to perceived higher risks. To address this, OJK is developing new regulations, including POJK Nomor 19 Tahun 2025, to facilitate easier UMKM credit access while maintaining prudential banking practices.