Indonesia Implements New KUR Scheme for 2026 Amid Concerns

Policy Overview

The Indonesian government has unveiled a new Kredit Usaha Rakyat (KUR) scheme for 2026, featuring several significant changes aimed at boosting UMKM financing. The new policy includes a fixed 6% interest rate and allows for repeated withdrawals without limits for productive sectors such as agriculture and trade ¹

. The 2026 allocation for KUR has been set at Rp300 trillion, representing a substantial financial commitment to supporting micro and small enterprises.

Expert Analysis and Concerns

Institute for Development of Economics & Finance (Indef) analyst M. Rizal Taufikurahman expressed concerns that the new scheme could lead to increased credit pressure and moral hazard if not properly managed ¹

. Rizal noted that while the policy could expand UMKM financing massively, it also risks encouraging excessive borrowing and lenders rushing to meet targets. "Without adequate risk mitigation, this policy could increase pressure on credit quality and encourage moral hazard," Rizal warned ¹

Source 1

https://finansial.bisnis.com/read/20251120/90/1930394/kur-2026-indef-nilai-skema-baru-buka-ruang-ekspansi

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Sectoral Impact and Implementation

The policy is expected to particularly benefit productive sectors such as agriculture and export-oriented businesses. Minister of UMKM, Maman Abdurrahman, reported that KUR disbursement had reached Rp238 trillion by November 2025, approximately 83% of the Rp286 trillion target for the year ¹

. The ministry has also achieved 60.7% allocation to productive sectors, slightly above the 60% target.

Legislative Oversight and Recommendations

Members of DPR (Indonesia's parliament) have urged for more focused KUR distribution. Andhika Satya Wasistho from Komisi VII DPR emphasized the need for proper monitoring and guidance for KUR recipients, stating that state-owned banks should not merely chase new debtor targets but ensure clear and measurable assistance for borrowers ²

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Future Projections

The government is optimistic about the scheme's potential, with projections to increase the KUR allocation to Rp320 trillion for 2026 and targeting to channel 65% to productive sectors, representing a 5% increase from the current allocation ¹

. The ministry also aims to formalize informal sector workers and targets 8-11 million jobs to be absorbed in the UMKM sector.