Regulation 47/2024: Enhancing Financial AccesThe Indonesian government has taken a significant step toward supporting micro, small, and medium enterprises (MSME) by introducing a policy to write off certain non-performing receivables. This initiative was enacted through Regulation No. 47 of 2024 (“Regulation 47/2024”), which has been in force since November 5, 2024.
Regulation 47/2024 is a targeted policy aimed at addressing the financial challenges faced by MSME. It will remain in effect for six months, ending on April 5, 2025. The regulation provides a framework for various forms of write-offs, including book write-offs, invoice write-offs, conditional write-offs, and permanent write-offs.
The mechanisms of Regulation 47/2024 are available through various grantors, such as non-state-owned enterprises (BUMN), banks, non-bank financial institutions, and the government. These institutions are required to implement the Write-off Policy for non-performing MSME receivables. Initially, this involves book write-offs, allowing financial institutions to adjust their records while retaining the right to collect outstanding debts. The policy sets specific criteria for book write-offs, including prior restructuring attempts and exhaustive collection efforts.
Subsequently, financial institutions must transition to invoice write-offs under certain conditions. For instance, receivables eligible for this process must be associated with completed government programs, arise due to natural disasters, or meet specific financial thresholds. This aspect of the policy includes strict criteria, such as certification of optimal management efforts and compliance with existing laws. The financial limits for conditional write-offs are set at Rp 300 million per individual guarantor and Rp 500 million for corporate or project-related debts. Eligible programs must have been active for at least ten years, with evidence of diligent management and compliance with central government financial reporting standards.
The Write-off Policy provides critical relief to MSME struggling with financial burdens, allowing them to remain viable in a challenging economic environment. At the same time, it benefits financial institutions by alleviating the strain of non-performing loans while preserving their rights to future debt recovery. However, the temporary nature of the policy necessitates swift and meticulous implementation of legal compliance. Financial institutions must ensure that loans meet all stipulated criteria and maintain detailed records to comply with regulatory and reporting requirements.
Regulation 47/2024 represents a proactive measure by the Indonesian government to enhance financial accessibility for MSME. By addressing non-performing receivables, the policy supports economic sustainability in key sectors while encouraging responsible financial management among stakeholders. As the regulation is time-bound, its success will depend on effective collaboration between financial institutions, legal experts, and the government. This initiative not only reinforces the resilience of MSME but also underscores the importance of equitable and sustainable economic policies in driving national development.sibility for Indonesian Enterprises
Martin Patrick Nagel ([email protected]) & Ramos Romatua Sidjabat ([email protected])
