Indonesia targets Rp2,000 trillion MSME credit allocation by 2027

The Indonesian government is pushing to increase banking credit allocation for micro, small, and medium enterprises (MSMEs/UMKM) from approximately Rp1,500 trillion to Rp2,000 trillion by 2027. This initiative aims to expand financing access, though officials noted that increased funding must be paired with market access support and prudent management to prevent rising non-performing loans.

In the digital sector, fintech lending to MSMEs grew 23.25% year-on-year to Rp35.12 trillion as of June 2026, accounting for over 33% of total fintech financing. The Financial Services Authority (OJK) reported that the aggregate bad credit risk rate remains below the 5% threshold at 4.26%.

Regional efforts are also underway, with West Kalimantan reporting Rp2.60 trillion in People's Business Credit (KUR) distribution through the first half of 2026. Additionally, the Bandung City government has partnered with Bank BJB to provide credit ranging from Rp5 million to Rp1.5 billion to help local MSMEs scale their businesses and absorb labor.