Government Plans to Cut KUR Interest Rate to 12 Percent

Jakarta Globe, Arientha Primanita, Jun 18, 2015

The government has focused on local small businesses to boost employment.
(JG Photo/ Yudhi Sukma Wijaya)

Jakarta. Small businesses that take out a micro loans, or KUR, will be offered a subsidy that will effectively mean interest rates will be cut to 12 percent, a minister announced Wednesday.

Sofyan Djalil, coordinating minister for the economy, said during a limited cabinet meeting led by President Joko Widodo on Wednesday that the government sees the current KUR interest rate — 22 percent — as far too high.

“The government will give a subsidy … so that KUR can only be given 12 percent interest and the gap will be subsidized,” he said.

The plan will be implemented later this year, with the subsidy funds to be drawn from money saved by the cut to fuel subsidies earlier this year.

AA Gede Ngurah Puspayoga, Minister of cooperatives and small and medium enterprises, said the new rate would start in July.

“We are waiting on the technical regulations at the Ministry of Finance,” he said.

In the 2015 State Budget the government allocated Rp 30 trillion ($2.2 billion) for KUR with state-controlled Bank Rakyat Indonesia assigned to distribute them.

The government is focusing on small businesses as a means to boost employment and eradicate poverty.

GlobeASia