Sharia financial products can reduce investment risk for MSMEs: minister


Sharia financing can also be designed not through leverage or loan mechanisms, but through equity-based financing, so that risks can be truly structured.

Jakarta (ANTARA) – Digitally-enabled Islamic financial products could help reduce the risks of investing in micro, small and medium-sized enterprises (MSMEs), which often deter investors, said Finance Minister Sri Mulyani Indrawati.

“The portfolio of Islamic financial products available to MSMEs, including financing, guarantees, savings, money transfers and cash management services, combined with digital technology, has the potential to be a solution for the financing of MSMEs”, noted the Minister during the 6th annual meeting. Islamic Finance Conference here on Wednesday.

MSMEs seeking Shariah financing usually provide all information about their business to potential investors so that they can reduce the risk to investors in the future.

“Sharia financing can also be designed not through leverage or loan mechanisms, but through equity financing, so that risks can be truly structured,” the Minister of Finance said. Finance.

In addition, large Islamic financial institutions can also provide much cheaper funds, while Islamic microfinance institutions can provide funds directly to MSMEs through asset-based financing on the basis of takaful (Islamic substitute for insurance).

“With this model, Islamic microfinance institutions can play an (important) role not only in the provision of financial services, but also in the provision of technical (advice) and coaching as well as in solving the risk problems encountered by MSMEs and investors,” Indrawati informed.

Islamic social finance that provides cheaper financing to MSMEs could increase the resilience of MSME actors during a financial crisis.

“Through this digital-enabled Islamic finance, we can also track the behavior of MSMEs, the characteristics of their owners and the development of their assets. These are all very valuable insights for the high-risk financing model for MSME can be significantly improved reduced,” explained the Minister.

The difficulty faced by MSMEs in accessing financial services needs to be addressed as they contribute up to 60% of Indonesia’s total Gross Domestic Product (GDP) and employ up to 97% of the workforce.

“The design of our national economic recovery program also places the recovery of MSMEs as one of the most important (tasks and prioritization between sectors) to benefit from government assistance, in addition to the health and protection sectors. social,” Indrawati added.

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