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MSMEs greatly benefit economic recovery, growth through digitalization: study
MSMEs that have gone online are able to earn 1.1 times more revenue compared with those that only have an offline presence.
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Many of those who have lost jobs during the pandemic have started their own MSMEs or became gig workers in order to secure their finances. (Grab/File)
F
rom the lunch you bought through an online food delivery service to the batik shirt you wear on Fridays; micro, small and medium enterprises (MSMEs) are an integral part of Indonesia’s daily life and economy.
According to a recent study by e-commerce platform Blibli in collaboration with Boston Consulting Group (BCG) and Litbang Kompas, 99 percent of all business entities in Indonesia are MSMEs, contributing 60 percent of the national GDP.
In his keynote address at the JakPost UpClose #43: What Awaits MSMEs in Indonesia’s Digital Supremacy webinar, Cooperatives and Small and Medium Enterprises Minister Teten Masduki noted that digitalization was essential for MSMEs, which employ 97 percent of Indonesia’s workforce, to rise and grow in their capacity as pillars of the national economy.
“To date, approximately 19.95 million MSMEs are connected to the digital ecosystem. The President has also mandated that 30 million MSMEs are on board the digital ecosystem in 2024. We believe that by increasing the number of MSMEs in the digital ecosystem, we can optimize the potential of the digital economy that is projected to be worth Rp 4.531 trillion [US$56.95 billion] in 2030,” he said.
Haikal Siregar, managing director and partner at Boston Consulting Group’s Jakarta office, explained that the government’s sentiments are in line with the study’s findings.
The study identified three main issues faced by MSMEs, which include high operating costs, difficulty in driving revenue growth and barriers in terms of scaling and competitiveness. These issues were exacerbated by the COVID-19 pandemic, which caused reduced sales volume, shrinking capital resources as well as distribution bottlenecking.
“If there comes a time when they face other challenges, digitalization can help MSMEs as it enables them to reach a national or global audience, create operational efficiency, as well as streamline their transactions,” he said.
