TEMPO.CO, Jakarta - Hermawati Setyorinny's cell phone has been ringing more frequently since late last year. The Chair of the Indonesian Micro, Small, and Medium Enterprises Industry Association has been receiving a stream of messages and phone calls. Most contain complaints about the sluggish economy, which has left members of the association struggling to keep up with installments on working-capital loans from banks and financing institutions. "Sales are down, capital is not returning, so loan installments have also stalled," she told Tempo on Wednesday, March 11, 2026.
Hermawati said the decline in sales has been felt since late last year. Hopes had briefly been pinned on a string of shopping seasons, from the Christmas and New Year holidays to Lunar New Year, Islamic holy month of Ramadan, and end of fasting month celebration Idul Fitri. But the long-awaited surge in sales never came. "It was only half of the target usually achieved during those moments," she said.
Instead, she added, business burdens have soared because of rising raw material and food prices, as well as other production costs. As revenue declines and operating costs rise, small businesses are losing their last buffer. As a result, the money on hand is no longer used to pay loan installments, but to survive and keep the business from shutting down.
In line with conditions on the ground, banking data show the same pressure. The ratio of troubled loans, or non-performing loan (NPL), in the micro, small, and medium enterprise (MSME) segment has continued to climb. In its March 2026 edition of the Assessment Report on the Transmission of Policy Rates to Bank Lending Rates, Bank Indonesia recorded the MSME NPL ratio at 4.68 percent in February 2026, up from 4.60 percent in January. The figure is far above the banking industry's average NPL ratio of 2.14 percent and is drawing ever closer to the maximum threshold of 5 percent.
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