Global economic pressures, increasing international trade competition, and the influx of low-cost imported products have reduced the competitiveness of domestic industries, particularly labor-intensive industries. These conditions have directly led to a decline in production capacity, weakened corporate cash flow, delays in the modernization of machinery and equipment, as well as an increased risk of layoffs and low absorption of new workers. These issues underscore the need for government intervention focused on strengthening the industrial business climate through effective and sustainable financing schemes.
The government has demonstrated a strong commitment through the President’s directive on March 19, 2025, by providing Labor-Intensive Industry Credit (KIPK) totaling Rp20 trillion with a 5% interest subsidy for 8 years, as well as through various other financing schemes stipulated in Articles 45–47 of Law No. 3 of 2014 on Industry, as amended by Law -Law No. 6 of 2023. These schemes include loan interest relief, discounts on the purchase of machinery and equipment, and assistance with machinery and equipment (machinery restructuring).
However, the implementation of industrial financing has not yet achieved optimal results. The disbursement of People’s Business Credit (KUR) and credit for agricultural equipment and machinery (Alsintan) remains below target, indicating the need to strengthen outreach, management, and oversight of financing disbursement. On the other hand, the implementation of machinery restructuring is currently spread across various directorates general and is sector-specific, resulting in a lack of coordination and preventing it from being fully positioned as an integrated facility to foster an industrial business climate.
Pursuant to Ministry of Industry Regulation No. 1 of 2025 on the Organization and Work Procedures of the Ministry of Industry, the Directorate of Industrial Resilience and Business Climate holds the policy mandate regarding industrial business climate facilities. The regulation also provides for the establishment of a Technical Implementation Unit (UPT) to carry out technical and operational tasks. However, to date, there is no work unit specifically and exclusively dedicated to carrying out the operational functions of industrial financing, whether for the Industrial Financing Program (KIPK) or cross-sectoral machinery restructuring.
The complexity and ongoing nature of industrial financing tasks require institutional capacity that is operational in nature, not merely policy formulation. Therefore, the establishment of the Industrial Financing Center (UPT) has become an urgent necessity to centralize the implementation of KIPK and cross-sectoral restructuring in a coordinated, accountable, and effective manner, while allowing technical directorates general to remain focused on formulating sectoral policies and fostering industrial development.
The establishment of the Industrial Financing Center (UPT) is also in line with the national policy direction outlined in the 2025–2029 National Medium-Term Development Plan (RPJMN), particularly National Priority 5 on strengthening labor-intensive industries and National Priority 3 regarding the enhancement of business capacity and access to productive financing. To ensure equitable service delivery and proximity to industry players, the UPT needs to be established in four strategic regions—namely, Medan, Tangerang, Semarang, and Makassar—in line with the distribution of national industrial growth centers.
Thus, the establishment of the Industrial Financing Center (UPT) has a strong legal basis, high policy relevance, and strategic urgency to support the competitiveness of the national industry, job creation, and the sustainable growth of Indonesia’s industry.
