President Prabowo Subianto has signed Government Regulation No. 47 of 2024, granting debt forgiveness to approximately one million farmers, fishermen, and micro, small, and medium enterprises (MSMEs).  

 

The total value of the canceled loans, held by state-owned banks under the Association of State-Owned Banks (Himbara), amounts to IDR 10 trillion. This policy is aimed at alleviating financial burdens and boosting productivity in sectors critical to Indonesia’s economy. 

 

"The government hopes this will help our brothers and sisters in farming, MSMEs, and fisheries, who are very important food producers," Prabowo stated during the signing ceremony at Merdeka Palace on Tuesday, November 5, as quoted by The Jakarta Post. 

 

The regulation targets debts that have been overdue for at least ten years, providing relief to those who are no longer financially viable. Loan forgiveness is capped at IDR 500 million for business entities and IDR 300 million for individuals.  

 

According to MSME Minister Maman Abdurrahman, the program specifically focuses on sectors hit hardest by major events like the COVID-19 pandemic and natural disasters.  

 

“This applies to MSMEs in farming, fisheries, and plantation sectors who went through some trouble, such as earthquakes or other natural disasters,” Maman said, as quoted by Katadata. He emphasized that not all MSMEs qualify, but only those who are beyond recovery. 

 

Maman also clarified that the initiative does not involve state budget funds. Instead, the loan cancellations operate through a bank write-off mechanism, allowing state-owned banks to legally clear their records of these non-performing loans. "Banks already have records of MSME actors listed for debt cancellation," Maman noted.  

 

Following the issuance of the regulation, banks have been instructed to begin the write-off process immediately. 

 

The issue of unresolved debt had long been a barrier for many borrowers, excluding them from formal credit systems. Prabowo’s adviser, Hashim Djojohadikusumo, pointed out that while these debts had been previously written off in the banks’ books, the legal obligation for repayment remained.  

 

"These debts have been written off in the banks’ books, but the right of claim has not been removed, preventing borrowers from accessing new loans," Hashim said. As a result, many were forced to turn to informal lenders, including loan sharks and online platforms, to meet their financial needs. 

The debt forgiveness aims to provide a fresh start for eligible borrowers, allowing them to regain access to formal financial services and avoid the high risks associated with informal lending. By providing this relief, the government not only aims to bolster domestic food production but also seeks to strengthen the country’s broader economic resilience.