THE EFFECTIVENESS OF BANKING CREDIT RESTRUCTURING PROGRAM FOR COOPERATIVES TO STIMULATE MICRO ENTERPRISES IN INDONESIA

Abstract

Covid-19 pandemic has had a significant impact on the world economy, especially for micro enterprises. Most micro-enterprises are struggling to maintain their financial position during the pandemic. This study aims to determine the level of effectiveness of the credit restructuring program in helping micro-enterprises to survive during the pandemic. This study focuses on micro-enterprises that obtain funding from sharia-based cooperatives in East Java. Based on the results of online surveys and Focus Group Discussions (FGD), information was obtained that the impact of the Covid-19 pandemic on micro-enterprises was greater in 2021 than in 2020. This is because they still have savings so that they can assist in managing finances in 2020. The high number of Covid-19 cases at the end of 2020 and the policy of large-scale restrictions between regions made micro-enterprises even worse in 2021. Credit restructuring can be one solution in helping micro-enterprises to survive. With the credit restructuring, the cooperative can provide flexibility to its members in paying installments. However, the cooperative was unable to provide high leeway due to pressure from the installment period to the bank. The low level of leniency is certainly still burdensome for micro-businesses in paying installments. This has an impact on the high number of non-performing financing in sharia cooperatives themselves. Thus, there needs to be some more specific adjustments related to credit restructuring. The adjustment is mainly related to the customer's business sector. Cooperatives whose member businesses are mostly engaged in the primary sector (for example, grocery stores, frozen food, and telecommunications) may still be able to follow the credit restructuring system that is currently being carried out. However, cooperatives whose members are mostly factory employees, entrepreneurs in the fields of education, transportation and tourism must get a more flexible behavior.