Indonesia Introduces Enhanced KUR Scheme for 2026

Strengthening Governance in Microfinance

The Indonesian government is set to implement a new Kredit Usaha Rakyat (KUR) scheme in 2026, maintaining a fixed interest rate of 6% while increasing the budget allocation to Rp300 trillion. To ensure the program's sustainability, the Institute for Development of Economics & Finance (Indef) has emphasized the need for strengthened governance mechanisms.

Key Recommendations for Enhanced Governance

1. Integrated Credit Scoring System: Implementation of a comprehensive credit assessment framework
2. Real-time Monitoring: Continuous oversight to detect early signs of potential defaults
3. Risk-based Credit Limits: Dynamic plafon allocation based on risk assessment
4. Business Assistance: Enhanced support for UMKM (Ultra Micro, Micro, and Small Enterprises) development

Policy Changes and Economic Implications

The new KUR scheme introduces significant changes to support economic growth while maintaining financial stability:

1. Removal of withdrawal limits for productive sectors such as agriculture and export-oriented businesses
2. Increased allocation to productive sectors - targeted at 65% of total KUR distribution
3. Continued focus on UMKM development with specific targets for new debtors and sectoral absorption

Implementation Progress and Future Plans

As of November 2025, KUR distribution has reached Rp238 trillion, approximately 83% of the Rp286 trillion target for the year. The Ministry of UMKM has successfully achieved 60.7% allocation to production sectors, exceeding the 60% target. Moreover, the program has recorded 1.3 million graduated debtors, with new debtor acquisition reaching 96% of the 2.34 million target.

The Ministry is also planning to implement programs to formalize informal sector workers, with projections of supporting 8-11 million jobs in the UMKM sector. For 2026, the target has been set at Rp320 trillion with a planned increase in allocation to production sectors to 65%.