Government Reorganizes the People’s Business Credit Ecosystem under Regulation of the Coordinating Minister for Economic Affairs Number 1 of 2026

Introduction

On January 13, 2026, the Coordinating Ministry for Economic Affairs issued and enacted Regulation of the Coordinating Minister for Economic Affairs Number 1 of 2026 on Guidelines for the Implementation of People’s Business Credit (“Regulation 1/2026”). Regulation 1/2026 governs the implementation of the People’s Business Credit (Kredit Usaha Rakyat, "KUR") program for all stakeholders, including distributors, guarantors, and credit recipients, to expand access to productive financing, enhance the competitiveness of micro and small enterprises, and support economic growth and labor absorption.

Regulation 1/2026 was formulated to align the implementation of the KUR program with regulatory developments and prevailing conditions. Under this regulation, the Government reorganizes the KUR disbursement mechanism to expand access to financing, enhance data reliability through the use of electronic systems, and impose sanctions on Distributors to ensure that government subsidies are disbursed only to businesses that meet the prescribed criteria.

Comparison

Regulation 1/2026 revokes and declares invalid Regulation of the Coordinating Minister for Economic Affairs Number 1 of 2022 on Guidelines for the Implementation of People’s Business Credit (“Regulation 1/2022”), as lastly amended by Regulation of the Coordinating Minister for Economic Affairs Number 12 of 2025 on the Fourth Amendment to Regulation of the Coordinating Minister for Economic Affairs Number 1 of 2022 on Guidelines for the Implementation of People’s Business Credit. The following table sets out a comparison between Regulation 1/2026 and Regulation 1/2022, including all amendments thereto:

Key Provisions

Business Criteria, Turnover Limits, and Profession Prohibitions

Regulation 1/2026 sets out detailed criteria for recipients of KUR subsidies, as summarized below:

1. KUR recipient subjects include micro and small businesses, prospective Indonesian Migrant Workers, and Business Groups as stipulated in Article 3 paragraph (1).

2. Micro and small business scales are determined based on an annual turnover of at most IDR 4,800,000,000.00 (four billion eight hundred million Rupiah) as stipulated in Article 3 paragraph (2).

3. Profession restrictions apply to State Civil Apparatus (Aparatur Sipil Negara), members of the Indonesian National Armed Forces (Tentara Nasional Indonesia), and members of the Indonesian National Police (Kepolisian Negara Republik Indonesia), except for those who have retired or are entering the pension preparation period as stipulated in Article 3 paragraph (4).

4. Mandatory Social Security Administrator for Employment (BPJS Ketenagakerjaan) applies to KUR Recipients with loan values above IDR 100,000,000.00 (one hundred million Rupiah) as stipulated in Article 6 paragraph (2).

Digital Infrastructure Obligations for Business Partners/Offtakers

Article 5 governs electronic system obligations for companies acting as business partners or offtakers for Business Groups. Article 5 paragraph (2) requires business partners to use electronic systems integrated via a closed loop with the KUR Distributor system. Furthermore, Article 5 paragraph (3) stipulates that such electronic systems must fulfill the following provisions:

1. Fund flow monitoring, enabling real-time tracking of fund movements between business partners, KUR Recipients, and Distributors.

2. Transaction validation, in the form of automatic validation of production proceeds payments or purchases of goods and services from KUR Recipients.

3. Sales fund tagging, ensuring such funds are recognized by the Distributor system to support financing repayment.

KUR Disbursement through Linkage and Fintech Patterns

Article 12 paragraph (2) stipulates that KUR Distributors may disburse credit through a linkage scheme involving Linkage Institutions. Such Linkage Institutions include cooperatives, rural banks/sharia rural banks, financing companies, venture capital, information technology-based joint funding services companies, and digital-based financing companies. Under this scheme, KUR Distributors remain responsible for submitting disbursement data to the Program Credit Information System, while the interest rate imposed on the final debtor must comply with the applicable KUR provisions.

Collateral Provisions and Consequences for Distributors

Article 20 paragraph (1) prohibits KUR Distributors from requiring additional collateral beyond the principal collateral for KUR disbursement with a ceiling of up to IDR 100,000,000.00 (one hundred million Rupiah). Furthermore, Article 21 stipulates that if a KUR Distributor persists in requiring additional collateral, the Interest Subsidy or Margin Subsidy shall not be paid, or the Distributor must return the KUR Interest Subsidy or Margin Subsidy already received to the state treasury.

Trade Sector Graduated Interest Scheme

Regulation 1/2026 differentiates interest rate treatment based on business sectors. For the production sector, the interest rate is set at 6% (six percent) effective per year as stipulated in Article 37 for Micro KUR and Article 44 for Small KUR. Meanwhile, for businesses in the trade sector not oriented towards exports, a graduated interest rate scheme applies for recurring loans as follows:

1. First agreement: 6% (six percent);

2. Second agreement: 7% (seven percent);

3. Third agreement: 8% (eight percent), specifically for Small KUR; and

4. Fourth agreement: 9% (nine percent), specifically for Small KUR.

Reporting Obligations for Distributor and Guarantor Corporations

KUR Distributor and Guarantor business entities must submit periodic reports in accordance with the provisions of Article 62 and Article 63. Such reports are compiled based on the format and scope of information as listed in the Annexes, with the following provisions:

1. Annex I: As stipulated in Article 62, Distributors must report total disbursement realization, outstanding debit, number of debtors, and non-performing loan/financing (NPL/NPF) ratios in detail.

2. Annex II: Distributors must detail disbursement realization based on Project Codes and Economic Sectors per Province (e.g., Agriculture, Fisheries, Industry, Trade) to monitor production targets.

3. Annex III: Specifically for disbursement to Indonesian Migrant Workers, the report must detail the Destination Country and Type of Field of Work of the debtor.

4. Annex IV: Distributors must transparently report interest-forming components, including Cost of Funds (CoF), Overhead Cost (OHC), Insurance Premiums, LPS Premiums, Statutory Reserve Requirement (GWM) Costs, Credit Costs, and Collection Fees (specifically for Indonesian Migrant Worker Placement KUR).

5. Annex V: Distributors report the number of new debtors and debtors experiencing business scale improvements, including transitions from Super Micro to Micro, from Micro to Small, or migration to commercial credit.

6. Annex VI: As stipulated in Article 63, Guarantee Companies must report guarantee values, Guarantee Service Fees (IJP), claim numbers (submitted, approved, rejected, paid), and Non-Performing Guarantee (NPG) ratios.
   

Transitional Provisions

Based on Article 73 letter a, all cooperation agreements between KUR Distributors and KUR Guarantor or Insurance companies made prior to the entry into force of Regulation 1/2026 remain valid and binding on the parties until the expiration of the cooperation agreement period. Furthermore, Article 73 letter b stipulates that extensions, suppletions, and restructuring of KUR disbursed prior to the entry into force of Regulation 1/2026 shall remain subject to the provisions of the previous regulations until the credit agreement period expires, namely:

1. Regulation of the Coordinating Minister for Economic Affairs Number 11 of 2017 on Guidelines for the Implementation of People’s Business Credit as lastly amended by Regulation of the Coordinating Minister for Economic Affairs Number 6 of 2019 on the Second Amendment to Regulation of the Coordinating Minister for Economic Affairs Number 11 of 2017 on Guidelines for the Implementation of People’s Business Credit;

2. Regulation of the Coordinating Minister for Economic Affairs Number 8 of 2019 on Guidelines for the Implementation of People’s Business Credit as lastly amended by Regulation of the Coordinating Minister for Economic Affairs Number 2 of 2021 on the Second Amendment to Regulation of the Coordinating Minister for Economic Affairs Number 8 of 2019 on Guidelines for the Implementation of People’s Business Credit; or

3. Regulation of the Coordinating Minister for Economic Affairs Number 1 of 2022 on Guidelines for the Implementation of People’s Business Credit as lastly amended by Regulation of the Coordinating Minister for Economic Affairs Number 12 of 2025 on the Fourth Amendment to Regulation of the Coordinating Minister for Economic Affairs Number 1 of 2022 on Guidelines for the Implementation of People’s Business Credit.
   

Closing

Regulation 1/2026 reorganizes the implementation framework of the KUR program for all stakeholders. For Distributors, the governed provisions affirm the limits of authority and responsibility, particularly through the prohibition on requesting additional collateral for financing up to IDR 100,000,000.00 accompanied by the obligation to return Interest Subsidy or Margin Subsidy if violated. On the businesses side, such regulation differentiates interest rate treatment based on sector and financing history, including the application of a graduated interest scheme for trade sector KUR not oriented towards exports. The role of business partners or offtakers is also adjusted through the obligation to use electronic systems integrated via a closed loop with the Distributor system. Additionally, continued participation in the KUR program is contingent upon the fulfillment of periodic reporting obligations by Distributors and Guarantors as stipulated in Article 62 and Article 63 and their respective Annexes. Meanwhile, cooperation agreements and KUR facilities already in progress remain subject to the previous regulatory provisions until the relevant credit agreement periods expire.