Easier Payment Access Facilitates Growth for SMEs in Indonesia

JAKARTADAILY.ID – Easy capital provision and payment access is the key to helping Small and Medium Enterprises (SMEs) expand in Indonesia, which can stimulate the country's economic growth.

This is because according to data provided by the Ministry of Cooperatives and SMEs in March 2021, Indonesia is now home to 64,2 million SMEs - which contribute to the country's Gross Domestic Product as high as 61.07 percent.

Unfortunately, only 29.5m SMEs receive sufficient venture capital through Kredit Usaha Rakyat (KUR). Although Kredit Usaha Rakyat (KUR) provides SMEs loans with low interest, many find applying for the program is rather complicated.

So how exactly does access to loans or payments can affect the country's economic growth?

First, easier payment access can increase the employment rate by providing higher compensation. According to Nailul Huda of the Institute for Development of Economics and Finance (INDEF), in the business world, compensations had risen to Rp4,56bn due to easier payment access.

Also Read: What You Need to Know about 'Buy Now, Pay Later,' the Alternative to Credit Cards

Next, easier payment services help to educate the public about the importance of financial services. If the conventional credit method is too complicated for some to understand, new financial technology (fintech) services now offer the option of financial services at the palm of their hands - including applying for capital loans. This could push businesses to contribute more to national GDP.

With easier payments, businesses can thrive, and the poverty level can diminish little by little. E-commerce platforms also help push these businesses by providing them a free space that is accessible for both business owners and potential buyers. Hence at the same time, increasing the level of household consumption.

In June 2019, fintech loan value in Indonesia skyrocketed to 97.6 percent in 1 year, proving how essential easier payment service is. Although many utilized the service for smaller capital loans, the number of businesses applying for the program continues to grow.

Follow us on Google News