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Jakarta Post

SMEs switch to producing PPE to survive COVID-19 economic fallout

  • Dzulfiqar Fathur Rahman

    The Jakarta Post

Jakarta   /   Tue, June 16, 2020   /   03:17 pm
SMEs switch to producing PPE to survive COVID-19 economic fallout People wear face masks and gloves as they shop on May 26, 2020 at a supermarket in Tangerang, Banten. While the capital city of Jakarta has started easing the large-scale social restrictions (PSBB), the neighboring province of Banten has extended the PSBB until June 28. (Reuters/Willy Kurniawan)

Small and medium enterprises (SMEs) have shifted to producing personal protective equipment (PPE), which remain in high demand, to survive the economic impacts of the COVID-19 health crisis.

Abdul Manaf, who owns a small business that produces motorcycle accessories in Bogor, West Java, has turned his fortune around from declining sales as a result of the epidemic to a more than six-fold increase in revenue by switching to producing face shields.

“As we join the fight against the COVID-19 pandemic, we are trying to develop a business. But our [effort] is not easy, because our prior business used metal while we use other materials to make face shields,” he said at an virtual discussion on June 12.

Since Abdul switched Karunia Mandiri's business to the new production line a month after the disease emerged Indonesia in March, he said that his monthly revenue had increased from the usual Rp 7 million (US$500) to Rp 45 million.

He recently hired three more employees to keep up with the demand and fulfill an order for 2,000 face shields from the National Disaster Mitigation Agency (BNPB).

SMEs, which contribute more than half of the country’s economy, were losing up to 57 percent of their sales in late April due to the coronavirus restriction policies, according to data from the Cooperatives and Small and Medium Enterprises Ministry.

The health emergency has disrupted economic activity across the nation with the government calling on its citizens to implement physical distancing measures and forcing offices, factories, shops and schools to close temporarily to contain the spread of the disease.

The country has surpassed a cumulative total of 39,000 confirmed cases to date as it reels from the economic impacts of the epidemic.

Indonesia’s economy grew just 2.97 percent in the first quarter of 2020, the lowest in 19 years.

The government has also allocated part of its Rp 641.17 trillion ($45.1 billion) economic recovery fund to soften the COVID-19 economic impact on micro, small and medium enterprises (MSMEs). It has already earmarked Rp 34.15 trillion in interest payment subsidies for ultra-micro businesses under its UMi and Mekaar programs.

Tri Retno, who owns the Citra Handicraft SME that produces patchwork bags in Depok, West Java, is also using leftover fabric to make face masks and house dresses to offset the declining sales during the health crisis.

While she initially produced the face masks to donate, Retno later decided to monetize the products as orders started to come in. Citra Handicraft is a partner of Astra International's CSR arm, Yayasan Dharma Bakti Astra.

“To maintain revenue, I just use the materials available at home because it’s hard to get raw materials [now],” she said at the June 12 virtual discussion.

Retno added that she hoped to gain assistance in selling her products online, as she was experiencing difficulties in marketing her products during the crisis.

YDBA head Sigit Kumala said on the same occasion that the foundation planned to optimize online platforms to market the SME's products.

“With this collaboration, we hope it can facilitate us in [working] together and developing independent SMEs to ready them for the international market,” he said.

Leading Indonesian start-ups like Grab, Gojek and LinkAja have also added features and promotions to help MSMEs digitize their businesses to survive the current economic downturn.

Ride-hailing company Grab Indonesia has introduced a new app called GrabMerchant that aims to provide a one-stop service platform for MSMEs – including those in the food and beverage industry – to digitally manage their operational hours, orders, employees, menus and promotions.