THE ROLE OF CREDIT FOR SMALL BUSINESS (KREDIT USAHA RAKYAT) PROGRAM IN DEVELOPING INCLUSIVE INDONESIAN ECONOMIC GROWTH

Abstraksi

Law Number 20 of 2008 concerning Micro, Small and Medium Enterprises, Article 7 and Article 8, mandates that the Government and Regional Government are expected to grow the business climate by establishing laws and policies that support the economic activities of the Indonesian people. In order to implement this, the Government launched the Credit for Small Business (Kredit Usaha Rakyat/KUR) program in 2007 which aimed to expand access to finance for Micro, Small and Medium Enterprises (MSMEs). In its development, the KUR program has undergone several changes in both the scheme and regulation. One of the changes that has been determined by the Government to continue to support the development of MSMEs is the reduction in interest rates. The KUR interest rate in 2015-2016 was 12%, which in 2017 was reduced to 9% and in 2018 the Government reduced the KUR interest rate to 7% per year. Changes to the scheme, regulation and information system of the KUR program had a positive impact on the performance of the KUR program. Recorded from 2015-2018, KUR has been channeled to 13,258,016 MSMEs with a total distributed fund of Rp317 trillion. The quality of the KUR program is also reflected by the maintained level of NPL of KUR program until 2018 which is 1.24% (http://kur.ekon.go.id/pemerintah-memberikan-apresiasi-kinerja-pendukung-program-kur-tahun-2018). However, the above achievements have not yet answered whether the distribution of the KUR program has succeeded in achieving its goal of increasing incomes of household that receive KUR and those who do not receive KUR. Therefore this study is important because to find out whether the average income of households that receive KUR can increase the average income of the entire Indonesian households. Meanwhile ADB Sustainable Development Working Paper Series Number 14 in June 2010: Inclusive Growth Criteria and Indicators: An Inclusive Growth Index for Diagnosis of Country Progress states that inclusive economic growth (inclusive growth) is one of the three pillars of a long-term strategic framework 2008-2020 (Strategy 2020). Inclusive growth has a concept that is more than just all-encompassing economic growth (broad-based growth) but also multidimensional which includes education, health, environment, and others. Economic growth not only creates new economic opportunities but must provide equal access to opportunities created for all segments of society, especially for the poor (Ali and Hwa Son, 2007, in the Report on The OECD Framework for Inclusive Growth, OECD 2014). Therefore, this study is important because it aims to find out besides whether KUR can increase Indonesia's household income, it also aims to find out whether KUR supports inclusive economic growth which is whether income of household-receiving KUR increases all layers of income of households, and whether income of household-receiving KUR increases income of households in rurals and urbans and households in whole provinces of Indonesia. The purpose of this study is to find out whether the average monthly income of households that receive KUR can increase the average monthly income of the entire Indonesian households. The potential contributions of this study are information about whether the average monthly income of households that receive KUR can increase the average monthly income of the entire Indonesian households and also information about which are experiencing the higher increase in average monthly income, whether urban households or rural households, which quintile and which province. This study uses descriptive qualitative analysis method using 2010 and 2018 Susenas data. Data on household income is proxied by household expenditure data because in Susenas 2010 and 2018 there is no data on household income. The control variable is average income per month of all Indonesian households. The testing variable is average income per month of households that do not receive KUR program. Average income per month of all Indonesian households is subtracted by average income per month of households that do not receive KUR program. If the results is positif then average income per month of households who receive KUR program can increase average income per month of all households and it is stated that KUR program can increase average income per month of all households, and vice versa. The underlying assumption is that decrease and increase of average income per month of households who receive KUR program is caused merely by KUR program, not other causes. The results of this study are that households that receive KUR can increase the average income per household per month: (a) from all Indonesian households in the amount of Rp25,899.34 per month per household, (b) households in rural areas amounting to Rp68,238.70 per month per household and households in urban areas amounting to Rp6,625.08 per month per household, (c) based on the province, the highest is Bengkulu Province which is amounting to Rp149,242.28 per month per household and the lowest is Gorontalo Province at minus Rp10,725.77 per month per household, (d) based on quintile, the highest is the bottom quintile which is amounting to Rp5,581.87 per month per household and the lowest is the top quintile which is amounting to minus Rp74,584.43 per month per household. This study concludes that: (a) the KUR program is a program that increases Indonesian household income, (b) the KUR program supports Indonesia's inclusive economic growth because the KUR program increases household incomes from the bottom to the top of income layer of Indonesian households, and increases the household income in rurals and urbans and in almost all provinces in Indonesia. This study recommends that the government maintain and increase the amount of households which are receiving KUR and increase the nominal amount of KUR funds so that Indonesian household income can increase even higher.