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Jakarta Post

Majority of SMEs in Indonesia halt operations, some close permanently: ILO survey

  • Ivany Atina Arbi
    Ivany Atina Arbi

    The Jakarta Post

Jakarta   /   Thu, June 4, 2020   /   12:21 pm
Majority of SMEs in Indonesia halt operations, some close permanently: ILO survey An ojek (motorcycle taxi) is parked in front of a closed shop in the Green Ville housing complex in Tanjung Duren, West Jakarta. Many stores in the area had closed indefinitely following the coronavirus outbreak in the capital. (JP/Sutrisno Jambul)

A recent survey by the International Labor Organization (ILO) has revealed that the majority of small and medium enterprises (SMEs) in Indonesia had been forced to close their businesses, either temporarily or permanently, due to COVID-19. 

They need support from the government, in the form of assistance and financial aid, to survive, according to the ILO.

A total of 571 enterprises across the country took part in the online survey, which was conducted between April 6 and 24. The survey showed that two out of three participants stopped their operations as orders declined. 

"Sixty-five percent of the participants temporarily halted their operations, while 3 percent permanently closed their businesses," the survey said, adding that four out of five enterprises saw their revenue decline.

Thirty-four percent of the surveyed enterprises lost 25 percent of their revenue, 18 percent of them lost between 25 and 50 percent, and 28 percent of them lost more than half of their revenue, according to the survey.

Read also: Small businesses resort to online channels to survive pandemic

The majority of the enterprises, about 63 percent, opted to reduce their workforce as their finances were hit hard by the crisis. At the time of the survey, more businesses were considering doing the same in order to survive.

With the survey, the ILO urged the government to provide small businesses with the needed assistance and financial support. 

The organization further suggested that authorities support small businesses with web-based training programs as the social restrictions policy had forced them to change their business models and operations. The training programs would include digital marketing and service delivery.

In response to the suggestion, the National Development Planning Agency’s (Bappenas) SMEs and cooperative development director, Ahmad Dading Gunadi, said the government would facilitate small businesses in building partnerships with e-commerce companies, allowing them to tap into online business models to eventually make it through the crisis. 

"Our main focus now is to bridge the process of adaptation or transformation," Ahmad said on Wednesday during a teleconference organized by the ILO. He added that the government would continue providing the SMEs with financial assistance, such as subsidies and loan relief.