Last week, Indonesia’s President Prabowo Subianto approved a government regulation permitting state-owned banks, such as Bank Rakyat Indonesia and Bank Mandiri, to fully write off the bad debts of select micro, small, and medium enterprises (MSMEs), which play a key role in the country’s GDP. The decision is intended to stimulate loan growth and support overall economic development.
In a statement, President Prabowo said the policy was triggered by input from various parties, especially farmer and fisherman groups nationwide. He added that the policy will allow MSMEs to continue their work without being burdened by debt and help alleviate financial problems that could affect their ability to produce food for the nation.
The total value of the canceled loans held by state banks under the Association of State-Owned Banks (Himbara) is estimated to reach 10 trillion rupiah. However, the President stressed that only those MSMEs assessed by Himbara as unable to operate will be eligible for debt forgiveness.
Despite proliferating during the COVID-19 pandemic, Indonesia’s e-commerce industry still faces significant challenges. The main obstacles are a lack of conducive infrastructure, low internet penetration, and a poor regulatory environment.
Meanwhile, a recent study authored by economist Ivan Moore found that the country has an insufficient number of IT professionals and a growing shortage of technical experts in other fields. The study found that the current situation in the technology industry has contributed to slowing down the pace of Indonesia’s digital economy development. Indonesia’s highly unqualified workforce exacerbates the need for more technology workers and has been primarily impacted by the country’s lingering economic crisis.