JAKARTA: The Financial Services Authority (OJK) has projected micro, small and medium enterprise (MSME) credit to grow between 7% and 9% year-on-year this year, following a moderation at the start of the year.
Lending to the sector is expected to rebound on the back of improving consumer confidence, stronger economic prospects and the expansion of financing policies.
OJK banking supervision chief Dian Ediana Rae said on Tuesday that the authority aims to continue encouraging broader, easier and more inclusive access to financing for MSMEs, which will become one of the main pillars in maintaining financial system stability and supporting sustainable economic growth.
The agency’s data showed that MSME credit outstanding stood at 1,482.9 trillion rupiah in January, equivalent to around 17.33% of total lending by the country’s banks, but contracted by 0.53% compared to the same period last year.
According to Dian, the slowdown partly reflected global and domestic economic dynamics, as well as the relatively slower recovery of the MSME sector following the Covid-19 pandemic compared with the corporate sector.
Despite the short-term challenges, the banking industry remains optimistic that MSME lending will recover this year, supported by improving consumer sentiment.
OJK noted that the Consumer Confidence Index at the beginning of 2026 stood at a positive level of 127, while the Consumer Price Index reached 109.75.
Both indicators have shown an increasing trend over the past year, reflecting public optimism toward current and future economic conditions.
Seasonal effects from the Hari Raya Aidilfitri celebration are also expected to encourage economic growth in the first quarter of this year through a surge in household consumption that will increase demand for working capital credit, especially from MSMEs.
To strengthen access to financing, OJK has issued Regulation No 19/2025 on easier financing access for MSMEs.
The regulation requires banks and non-bank financial institutions to apply principles that make financing more accessible, including being easy, accurate, fast, affordable and inclusive, while also providing dedicated financing schemes for MSMEs.
As part of the commitment, OJK established a new department focused on MSME regulation and development as well as Islamic finance.
The department will focus on developing financing business models, optimising the use of credit scoring and improving segmentation and profiling of MSMEs.
“At present, OJK continues to coordinate with the banking industry regarding the implementation of MSME regulation in banks’ business plans,” Dian said.
The authority is also supporting government programmes aimed at expanding MSME financing, including the Kredit Usaha Rakyat (KUR) programme.
The government has set a target of 308.41 trillion rupiah in KUR and other lending programmes in 2026.
In February, Finance Minister Purbaya Yudhi Sadewa decided to extend the state liquidity injection to the local banking industry for another six months.
OJK welcomed the move, reasoning that the initial six-month placement of state funds in commercial banks was “not enough” to boost lending, especially in the MSME segment.
“If credit becomes more affordable, we hope it will boost (lending) to MSMEs this year,” Dian said. — The Jakarta Post/ANN
