Letter: Pay more attention to SMEs

The fundamental economy of Indonesia is actually supported by small and medium enterprises (SMEs). Therefore, the Indonesian economy is relatively stronger than countries that do not have adequate numbers of SMEs.

Statistics have shown that in Indonesia, SMEs make up about 99.8 percent of the total number of business units in Indonesia. Approximately 91.8 million people are involved in SMEs, comprised nearly 97.3 percent of the total Indonesian workforce.  

Two years ago, there were about 52.8 million SMEs, increasing to 55.2 million last year, employing between three and five people each.

We can see that SMEs play a significant role in developing an equitable Indonesian economy because they mostly play very strong roles in real sectors.

Indonesia, which has rich natural resources and the fourth biggest population in the world, needs an economy based on real sector activities. As we are all aware, the number of educated unemployed people in Indonesia is growing rapidly from year to year.

Meanwhile, the number of jobs is limited and cannot accommodate the growing number of job seekers. Therefore, the government should try to empower SMEs to overcome the unemployment problem.

The SMEs in the country have a strong track record, and currently provide a primary source of support for our country’s economy, just as they did during the monetary crisis in 1998.

Learning from the phenomenon above, it is high time for the government to pay more attention to SMEs.

The banking industry is always happy to work with great businessmen with assets in the billions or even trillions of rupiah. Logically, it is true that enterprises with such businessmen will be very profitable. But risks are also high.

In reality, SME prospects are open and promising. Based on my empirical observations, many SMEs are financially successful even though their business management is still very simple.

By supporting SME’s business management skills, the financial sector can help to create a win-win situation in which SMEs gain new skills, and banks benefit from increasingly successful SMEs.

When the monetary crisis occurred in 1998, many big companies and conglomerates collapsed. Consequently, the situation severely affected our banking industry because most of funds from banks were invested in big companies.

As a result, the number of non-performing loans soared in many of the country’s banks.

According to the Constitution, the national economy should be used for the people’s benefit. Therefore, the government has a constitutional mandate to encourage the banking industry to assist SMEs not only financially, but also to improve their business management.

Professional management should be introduced to SMEs by those who have expertise in order to develop professional work ethics and a culture adhering to best practices in their daily operations.    

If our SMEs had access to adequate credit and opportunities to improve their business management skills, they will develop more rapidly and improve the overall economic outlook of the country.

Aries Musnandar
Malang, East Java