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Jakarta Post

Govt aims for 10 million MSMEs to go digital by year end  

  • Eisya A. Eloksari

    The Jakarta Post

Jakarta   /   Thu, July 2, 2020   /   09:03 am
Govt aims for 10 million MSMEs to go digital by year end   A customer pays with a QR code in China. (Shutterstock.com/StreetVJ/File)

The government aims to have 10 million micro, small and medium enterprises (MSMEs) go digital by the end of the year to help them ease the financial burden of the pandemic, a high-ranking official has said.

Cooperatives and Small and Medium Enterprises Minister Teten Masduki said there were currently only around 8 million MSMEs that had an online selling platform, either through e-commerce or social media. The number represents around 13 percent of all MSMEs in the country.

“Businesses that can survive and thrive during this pandemic are those that have an online presence,” he said during a keynote speech at an Indonesian Fintech Association (Aftech) online discussion on Tuesday.

Teten said that MSMEs also needed to integrate their businesses with digital payment solutions because consumers were switching to cashless payments due to fears of contracting the coronavirus.

“Digitalizing payments for small businesses allows them to have transaction records that can be used to apply for loans,” he added.

According to a recent survey by YouGov, 75 percent of Indonesian respondents have mostly used digital payments, such as e-wallet OVO, in the last three months, followed by debit or credit cards, which indicates that a large portion of consumers is accustomed to e-payments.

Bank Indonesia assistant director Ronggo Gundala Yudha said there were 3.7 million merchants in Indonesia that used the Quick Response Indonesia Standard (QRIS) code, 2.5 million of which were small and medium enterprises, while 600,000 were micro merchants.

“During the pandemic, we did door-to-door QRIS education and eliminated the QRIS transaction fee to accelerate MSMEs’ digitalization,” he said.

Financial technology firm Xendit co-founder and COO Tessa Wijaya said that small and medium entrepreneurs who were already familiar with social media could easily adapt to digitalization.

“Partnering with start-ups and companies that focus on MSMEs is also important as they can further incentivize small businesses to go digital,” she said.

Read also: Start-ups help SMEs digitalize during pandemic

Small businesses, which make up around 60 percent of the country’s economy, are losing sales because of coronavirus restrictions, which are now being phased out in some places.

To help MSMEs, the government has allocated part of its Rp 641.17 trillion economic recovery stimulus to soften the impact of COVID-19. It also planned to spend $49.7 billion on procuring SME products and services.