Small and medium enterprises (SMEs) in Indonesia are upbeat going into the second semester, with over 80 percent of them expecting to increase their spending in the second half of the year, a survey reveals.
The survey, conducted by the Hong Kong and Shanghai Banking Corporation Ltd (HSBC), shows that most of the small and medium businesses expect the economy to perform even better in the second half of the year.
“The key drivers of business confidence are the nation’s economic growth, the SME’s smaller reliance on exports and the SMEs’ ability to maintain market demand by producing quality products that meet local demand,” said HSBC senior vice president of business banking Jeffrey C. Tjoeng, on Tuesday.
The survey, which is based on the bank’s business deals with SMEs during the first six months of the year, involves 301 SMEs with a turnover of less than US$10 million in Greater Jakarta, operating in sectors ranging from import and export, finance, manufacturing and transportation.
There are 300,000 SMEs in Greater Jakarta, excluding informal and micro sectors.
Sixty-percent of the SMEs surveyed are confident the country’s GDP will continue growing, as they believe local demand will rise as a result of people’s strong purchasing power.
The country’s GDP is expected to grow by about 4 percent this year, which will make Indonesia the third fastest growing economy in Asia after China and India.
Fifteen percent of the SMEs surveyed are even aiming to boost their employee numbers, while 77 percent will try to at least maintain employee numbers in the second semester.
HSBC Indonesia’s head of business banking Steve Miller said that SMEs, as proven time and time again, were expected to be resilient to the global economic downturn.
“During the first semester, SMEs clearly preferred taking a wait-and-see approach after the global economic crisis at the end of 2008,” he said.
He predicted SMEs in the creative industry, including those involved in music, books, jewelry, film and games, were the ones most likely to expand in the second quarter because of their use of technology.
“Companies in the creative industry are using the Internet widely to advertise and sell their products, which enables them to increase their overall sales,” he said.
Sandiaga S. Uno, deputy chairman of the Indonesian Chamber of Commerce and Industry (Kadin) for small and medium businesses and cooperatives, said one of the obstacles preventing growth in the SME sector was the difficult and expensive procedures SMEs encountered when applying for a business license. These procedures often cost more than 20 percent of their total investments.
“Jakarta is more friendly toward SMEs. It’s easier to obtain a business license in the city than in any other region in the country,” he said. (nia)
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