Gilbert Nathaniel Virantau, The Technology Increasing MSMEs In Indonesia (2021)

Summary

A student paper by Gilbert Nathaniel Virantau for a class on the Indonesian economy, titled The Technology Increasing MSMEs In Indonesia. It says the Central Bureau of Statistics of the Republic of Indonesia reported deflation in July 2020, partly because Covid-19 eroded people's income and purchasing power, and that the income of micro and small businesses fell by 84% and that of medium and large businesses by 82%. The paper argues that the recovery of MSMEs cannot be separated from information technology, that digitalization is the key for entrepreneurs to survive and develop, that e-commerce companies should provide consistent mentoring, and that the government is obliged to direct, guide, protect and foster the business climate, including for small traders such as stalls, street vendors and small shops operating informally. A reference list dated 2021 closes it.

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Nama           : Gilbert Nathaniel Virantau
NRP            : 130218067
Kelas          : Perekonomian Indonesia / KP – A


               The Technology Increasing MSMEs In Indonesia

        The Central Bureau of Statistics of The Republic of Indonesia declare that
the Indonesian economy experienced deflation of 0,1% in July 2020. One of the
reason is because the Covid-19 has further eroded people’s income and purchasing
power. There was a decrease in the income of micro and small businesses by 84%
and in medium and large businesses was decrease by 82%. The recovery of MSMEs
cannot be separated from the information technology, considering that
digitalization is the key so that enterpreneurs can survive and develop amid the
Covid-19. Efforts to digitize MSMEs need to be maintained in various ways,
including consistent and routine mentoring by e-commerce companies.

        The Government is obliged to direct, guide, protect and foster the business
climate. In addition, the capacity of MSMEs including agricultural businesses from
time to time need to be considered. Expert state that small traiders are business
actors with relatively small capital who carry out production activities or sell goods
and services to meet the needs of certain groups in society. Form perspective of
business development, small traiders, such as stalls, street vendors or hawkers,
small-scale shop are micro businesses that operate informally. The policy of the
government’s to provide business credit to ultra-micro and small businesses as well
as social assistance for the poor and victims of termination of employment is
believed to be capable to save Indonesia’s economy from recession. MSMEs have
a very big role in the Indonesian economy. The facts of the Indonesian economy
show that 62.4 million MSMEs in Indonesia are able to absorb 97% of the
workforce, contribute to Gross Domestic Product around 61%, and also contribute
to exports 14%.

        Based on the current developing conditions, the government should be more
focus to controlling the Covid-19 so that confirmed cases can decreasing and give
confidence to the Indonesian society, especially the middle and upper class, to shop
again and restore consumption, given that Indonesia’s economic growth is always
supported by household consumption expenditures. The consumption and
purchasing power growth of the Indonesian society well prevent Indonesia from an
economic recession, considering that economic recovery with the graph V scenario
is still possible. The government has prepare the various scenarios to save small and
ultra-micro business affected by Covid-19, including formulating MSME
protection and rescue schemes, ranging from social assistance, tax incentives,
relaxation and credit restructuring, to expanding financing.

       The rapid penetration of the internet in Indonesia has raised hopes for
information technology that can empower individuals who have been far from
economic and political centers. More than 50% of Indonesia’s population is
currently connected to the internet, and various aspects of people’s lives are
increasingly connected in the digital space for business, finance, social interaction,
health care and education. Digital financial service user has the opportunity to drive
the internet economy and is expected to support the financing of the productive
sector. But, the low number of MSMEs using digital technology is due to
technology mastery constraints and unequal knowledge of online payment
technology. Corporation with technology-based continue to synergize with ultra-
micro, micro, small and medium entrepreneurs in order to increase competitiveness
in the market since the concept of digitalization and high creativeness is an absolute
requirement for market development at this time. Therefore, MSMEs should join
the organizers of electronic commerce.

       So far, the number of business actors who have entered the digital ecosystem
is still relatively small. This means that solutions and innovation are ungently
needed for digitizing MSMEs. Efforts to digitize MSMEs need to be maintained in
various ways, including consistency and routinity mentoring by e-commerce
companies. MSMEs must continue to be developed because their strategic role in
development. therefore, there should be mutual reinforcement between MSMEs and
large businesses in the context of equitable distribution and realizing the greatest
possible prosperity for the entire community and the government is obliged to
direct, guide, protect and foster the business climate. One of the efforts to overcome
with this problem is through business partnerships between macros, small and
medium entrepreneurs and related parties. Through that business partnership, it is
hoped that a mutualistic symbiosis will soon be formed so that the shortcomings,
limitations above can resolved immediately. Favorable relationships should
continue to be developed, for example with fellow MSMEs, coorperatives, private
sector, state-owned enterprises or regional-owned enterprises, and large businesses.
In general, it is known that economic activities in Indonesia are simultaneously
carried out by coorperative, the private sector, and state-owned enterprises and
regional-owned enterprises.

       The conclusion is digitalization has proven to be able to open up inclusivity
and electronification in Indonesia. Electronification have an impact on improving
domestic consumption as the main support for national economic growth. MSMEs
must be able to work on local advantage to produce special products so that they
can be more competitive in both the domestic market and the international market.
This kind of pattern has long been applied in Japan, China, and South Korea. The
market for special products is a form of market that must be worked on by MSMEs,
considering that the uniqueness or locality of MSME products in the creative field
has its own selling value compared to mass manufactured products. Thus, MSMEs
need to develop these unprocessed products into special products to fill the global
market. In Indonesia, there are several successful MSMEs because they use
technology in their business. Technology makes MSMEs in Indonesia more
developed, either because of digital promotions or other things related to
technology.

REFERENCES :
Tayibnapis, Ahmad Zafrullah, Lucia Endang Wuryaningsih, and Radita Gora.
    2021. “Medium, Small and Medium Enterprises and Digital Platforms.”
    South Asian Journal of Social Studies and Economics 10 (2): 10–19.
    https://doi.org/10.9734/sajsse/2021/v10i230258.


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