People's Business Credit for MSMEs: “Oasis” for MSMEs and Challenge for Microfinance Institutions: Case Study of Upakara (Offerings) MSEs in Bali, Indonesia

Abstract

Social restrictions due to the Covid-19 pandemic have an impact on various sectors, especially the tourism sector. Bali's economy, which is driven by the tourism sector, is so affected. However, it turns out that traditional and religious activities in Bali are still being carried out, and MSMEs providing religious facilities or offerings (Upakara) still exist. The existence of the People's Business Credit (PBC) program should be able to be put to good use by MSMEs. The first objective of this research is to find out and map the key factors that determine Upakara MSEs in Bali's decision to apply People's Business Credit, which is analyzed using the MICMAC technique. Meanwhile, the second research objective is to capture opportunities for conflict between stakeholders related to and affected by the People's Business Credit program, especially MFIs, and answered with MACTOR analysis. Data collection was carried out through Focus Group Discussions (FGD) with experts. The results of the analysis show that the policy of interest rate of PBC is a key driver in Upakara MSMEs' decision to apply PBC. The government is the main actor related to PBC for MSMEs, together with PBC distributing banks and supervisory institutions. The actors who have high dependence are guarantee institutions, MSMEs actors, and MFIs. The analysis results also show that MFIs have divergence with the government and PBC channeling banks. Objectives related to the number of PBCs distributed were responded negatively by MFIs because they could reduce MFI's market share.