Sustaining Micro Enterprises During the COVID-19 Pandemic

The COVID-19 pandemic has had a serious impact on the sustainability of micro, small, and medium enterprises (MSMEs) in terms of financing, production, distribution, and market demand. In other words, the COVID-19 pandemic has impacted supply and demand and resulted in a slowdown in national economic growth and a fall in state revenue. Based on BPS data, economic growth in the second quarter of 2020 contracted by 5.32 percent. In response, the government, through the National Economic Recovery (Pemulihan Ekonomi Nasional: PEN) Program has initiated a series of activities for national economic recovery as a component of state financial policy.

To support micro, small and medium enterprises that contribute almost 60 per cent of GDP so they can continue to survive and prosper during the COVID-19 pandemic, the government launched the Presidential Productive Assistance for Micro Enterprises Program (Banpres Produktif Usaha Mikro: BPUM). This provided assistance in the form of working capital grants to operators of micro enterprises who were not receiving credit or bank finance in the form of KUR and working capital loans and other investments.

The Ministry of Cooperatives and Small and Medium Enterprises (SMEs) regulated procedures for disbursement of the BPUM Program funds in the Regulation of the Minister of Cooperatives and SMEs No. 6/2020 and General Guidelines for the Disbursement of Government Assistance for Micro-Entrepreneurs (No. 98/2020). This regulation clarified in detail the duties and responsibilities of each party in the disbursement of BPUM funds. The Ministry of Cooperatives and SMEs as the budget holder distributes BPUM funds through channeling bank ((BNI, BNI Syariah, and BRI) who verify the correctness of data on BPUM recipients as the responsible beneficiary and BPUM proposer.

The Ministry of Cooperatives and SMEs, in collaboration with the TNP2K Secretariat, conducted monitoring of the BPUM Program and coordination with various stakeholders, including proposer institutions, local governments, banks, and reported program developments to the National Economic Recovery and COVID-19 Management Committee. To ensure that the program was aligned with the initial objectives, the joint monitoring was carried out from the initial program planning stage up to
the field implementation stage.

This document reports the implementation of the joint monitoring of the BPUM Program in detail based on all stages of program implementation. This report also provides conclusions and recommendations for future implementation of assistance distribution to micro entrepreneurs.

We express our deepest gratitude to all parties who have assisted in the implementation of this joint monitoring project, especially to all local governments and their staff in the joint monitoring areas (12 provinces), as well as all the banks involved (BRI, BNI, and BNI Syariah) and their partners. We hope that this report will be useful for the distribution of assistance to micro entrepreneurs in Indonesia and can serve as input and supporting material for various stakeholders in the delivery of future
MSMEs assistance programs.