JAKARTA - The Indonesian government has introduced a special micro-loan for entrepreneurial women from low-income families to help them grow their small businesses, as the country works towards economic recovery from the Covid-19 pandemic.

Since its launch in early September, around one trillion rupiah ($91.8 million) have been disbursed by 34 banks, cooperatives and financing firms to nearly 200,000 women, mostly housewives.

Mr Iskandar Simorangkir, the Coordinating Ministry of Economic Affairs' deputy for macroeconomic and financial coordination, said laid-off workers are also eligible for the micro-loans, which do not require collateral.

"During the pandemic, housewives are the most flexible in launching businesses, by setting up small trades or selling food like cookies," Mr Simorangkir told The Straits Times.

"We aim to help them build up their business, and not just give them the funds. It's like providing them with the hook instead of just the bait."

The loans, worth up to 10 million rupiah each, are interest-free until December this year. The women will be charged a 6 per cent rate next year, said Mr Simorangkir.

Around 12 trillion rupiah have been earmarked for the programme, with the fund looking to target up to three million beneficiaries.

Finance Minister Sri Mulyani Indrawati, who has taken a gender-based approach in her policies, including those to mitigate the impact of the pandemic, said policies should not be gender neutral.

These include a social aid initiative launched as part of the national economic recovery programme. It is currently being distributed to 29 million low-income families through the women who head the households.

"We do it with a strong awareness that female heads of household must get it, as their first instinct is to protect their children and families," Dr Sri Mulyani, formerly the World Bank managing director, said in a virtual discussion hosted by the Indonesian Parliamentary Women's Caucus in August.

She also referenced the financial assistance channelled to micro businesses, and small and medium-sized enterprises through financial institutions.

Dr Sri Mulyani said 6.2 million women, who are business owners, have received funds under the Mekaar programme, which is run by state-owned micro-lending firm PT Permodalan Nasional Madani (PNM).

Jakarta resident Soleha, who goes by one name, secured a two million rupiah loan through the programme to launch her food business in 2018 after her husband died.

Operating from her home, she at first served up to 15 people a day.

"I was desperate, fearing I could not make a living for my four children. I also did not know where to get a loan.

"Thankfully, I was told about Mekaar," said the 48-year old, who is hoping to open a restaurant next year.

With more orders and double the customers she had at the start, Madam Soleha has managed to repay her current loan of seven million rupiah. She also now earns between 100,000 and 200,000 rupiah each day, quadruple what she did in the past.

Another Mekaar beneficiary, Madam Ratiah, used the two million rupiah credit she received in 2017 to expand the food stall she had set up in 2012 at her home in Indramayu, West Java.

While she could wait on only a maximum of 20 customers at a time in the past, she now serves dozens, including those in other cities, who order her rendang and beef jerky online.

From making 500,000 rupiah a month, the 50-year-old now makes a net profit of up to 4.5 million rupiah a month.

"Despite the pandemic, my business still runs well thanks to the online platform," said the mother of three, two of whom are university students.

The experiences of Madam Soleha and Madam Ratiah confirm studies around the world that have shown the benefits of micro-credit that are channelled to women. With the loans, the women go on to play a bigger role in household decision-making and gain bargaining power within the family, the studies said.

PNM president and director Arief Mulyadi said that aside from the micro-loans, the company has been providing subsidies for its customers between May and this month.

It will receive 1.5 trillion rupiah in capital injection from the government's economic recovery funds in mid-October to strengthen its capacity to reach out to more micro-sized enterprises, he added.

"It is estimated that the fund will be disbursed completely in just one month," said Mr Arief, who added that PNM gave out 3.8 trillion rupiah in loans under the Mekaar programme in September alone.

The firm had also successfully recommended around four million of its Mekaar clients to receive up to 2.4 million rupiah each in funds from the Cooperatives and Small and Medium-Sized Enterprises Ministry to help with their business. This was on top of the micro-loans they received under the Mekaar programme.

South-east Asia's largest economy is grappling with the impact of the coronavirus that has killed more than 11,000 and infected nearly 300,000 of its nearly 270 million people, pushing the country into a potential recession.

The economy contracted 5.32 per cent in the second quarter of this year, compared with the same period last year, its first quarterly contraction since 1999.

At least 3.5 million workers have been laid off, taking the overall unemployment level to 10.3 million people, Manpower Minister Ida Fauziyah said in early September.

Ms Diah Pitaloka, who leads the Indonesian Parliamentary Women's Caucus, said women have played a strategic role in many past crises, describing the micro-loans for women as a necessity during the current crisis.

"It is very important to support women at the micro-level because any move in the real economy will affect the resilience of not only families, but also our macro-economy. This will make our entire economy sustainable," she said.