The Performance of Indonesia’s Public Credit Guarantee Scheme for MSMEs: A Regional Comparative Perspective

Access to finance has been a key constraint for Indonesia’s micro, small and medium enterprises (MSMEs) that lack tangible assets to be used as collateral. Consequently, credit guarantee schemes (CGSs) are important instruments to meet MSMEs’ financial needs. This paper examines the effectiveness of the KUR (community business credit), a partial public CGS in Indonesia, by comparing it with similar schemes in other ASEAN member states (AMS). The findings suggest that the KUR programme, despite its limited coverage, has been quite effective throughout the country. Some of the critical factors behind its success include: wide dissemination of the programme; simplicity of the application procedure; full participation and support from banks; and strong coordination between all stakeholders.

Number: 2 Publisher: ISEAS - Yusof Ishak Institute