REPUBLIKA.CO.ID, JAKARTA -- The government has set a target to enhance the credit target under its smallholder's credit (KUR) scheme to about Rp100 trillion-Rp120 trillion while lowering the interest rate from 12 percent to nine percent in 2016.

Deputy for Business Development and Restructuring of the Ministry of Cooperatives and Small and Medium Enterprises, Braman Setyo, said here on Thursday that the government is increasing the volume of its KUR distribution target in an effort to encourage businesses under the KUR program.

"The government has set aside a fund from the state budget as interest subsidy, amounting to Rp10.5 trillion, and guarantee service fee (IJP) worth Rp2.1 trillion ," Setyo said.

The Ministry of Cooperatives and Small Scale Enterprises has been utilizing and cooperating with the Business Development Services in 27 provinces to provide assistance to small and medium size businesses (UMKM) find access to the KUR program at banks.

"A total of 42 Integrated Business Service Centers have been set up and manned by 252 personnel ready to make the KUR program a success," he said.

This year, the government has set a target of distributing Rp30 trillion credits in the KUR program at an interest rate of 12 percent a year, far lower than the 22 percent interest rate previously.

The KUR scheme was launched in August 2015. Till October 5, 2015, a total of Rp4.35 trillion had been distributed to 267,686 recipients.

Setyo said matters related to the KUR that needed attention included customers' criteria, business sectors which could be financed under the KUR scheme and the mechanism to distribute KUR credits.

"Based on the Economic Minister's Regulation No. 6/2015, the sectors that could be financed with KUR credits are agriculture, fisheries and processing industries, and trade related to these sectors," he said.

He said that relaxation in some norms was needed so that more productive sectors could be brought into the ambit of KUR credits. KUR credits should be given to productive business sectors run by families which have regular income.

"The criteria of identifying KUR credit recipients are not linked to Law No. 20/2008 but to a maximum ceiling, namely Rp25 million for businesses that are feasible but without access to banking facilities, such as street vendors and road side stalls (warteg)," he said.

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