Financial Institutions to Write-Off Non-Performing UMKM Loans until April 2025: Offering a Lifeline to Small Businesses

In an effort to ensure improved access to financing for the country’s micro-, small- and medium-scale enterprises (Usaha Mikro Kecil Menengah –“ UMKM ”), the government has now decided to write off certain qualifying, non-performing receivables (piutang) for said enterprises (“ Write-off Policy ”) through the issuance of Regulation of the Government No. 47 of 2024 (“ Regulation 47/2024 ”), which has been in force since 5 November 2024. [1] According to the Indonesian President, this new initiative is being fueled by input from various stakeholders (particularly farmers and fishermen throughout Indonesia), who believe that the write-off policy is vital in terms of efforts to help UMKM operating within the agriculture and fisheries sectors to remain sustainable in the present economy. [2]