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Jakarta Post

Youths face myriad challenges as budding entrepreneurs

Youths face myriad challenges as budding entrepreneurs Government subsidies for MSMEs. (JP/Hengky Wijaya)
Dzulfiqar Fathur Rahman
Jakarta   ●   Mon, November 2, 2020 2020-11-02 07:26 185 e22cd4161040e111d73a5626c4dd8802 1 Business Youth,entrepreneurship,SMERU,UNDP,COVID-19 Free

Meybi Agensya Neolaka, born and raised in Kupang, East Nusa Tenggara, started her drumstick leaves company Timor Moringa two years ago with the simple thought that farmers’ welfare and stunting in her region is a huge issue to address.

“Most youngsters [in my region], when they grow up, they think of leaving to earn a decent income. They don’t think of what they can do or contribute to their region,” Meybi said. “Ironically, in their own home, they don’t feel secure.”

Meybi, whose enterprise now produces drumstick leaf-based tea, chocolate and powder, said there was a wide range of complex issues a young entrepreneur had to deal with when starting a business.

Other than the aforementioned mentality, issues related to capital, infrastructure and understanding consumers are also making it harder for young people to become entrepreneurs, Meybi explained.

SMERU Research Institute researcher Rika Kumala Dewi said the youth’s difficulty to access capital from banks was related to their limited assets and experience, making them appear risky for loans. This was based on findings from a SMERU online survey of 432 young entrepreneurs and interviews with other stakeholders.

“The majority of surveyed young entrepreneurs said they faced difficulty in accessing capital. This is likely because of the youth’s character,” Rika said in a virtual discussion, referring to their assets portfolio, experience and financial literacy.

Young entrepreneurs also face challenges in navigating the digital ecosystem and marketing their products once they have started their business.

Around 35 percent of the surveyed youths used the internet to run their business and only one-fourth used it to promote and sell their products, according to Rika, quoting a 2019 survey by Statistics Indonesia.

The lack of supporting infrastructure like transportation and good internet access also poses a challenge to young entrepreneurs, especially those in eastern Indonesia.

Some young entrepreneurs also said they faced difficulty getting information on the procedures to obtain a license and considered taxes burdensome in starting their business.

The challenges lead to a gap between the number of youths interested in becoming entrepreneurs and the actual number of young entrepreneurs.

While some 81 percent of surveyed youths said they were interested in starting a business, only 8 percent actually own a business, according to Rika, who quoted data from a 2019 survey by the United Nations Development Program (UNDP).

With the COVID-19 pandemic battering the economy, young people face yet another obstacle in running a business on top of the existing ones. Some have faced a decline in revenue and were forced to close, while others had trouble buying raw materials, according to Rika.

To help small businesses stay afloat amid the economic downturn, the government launched a program in August called Productive Social Assistance, under which it provided Rp 2.4 million (US$163) to unbankable micro enterprises.

“There are many sources of capital that we can access now,” said Meybi of Timor Moringa, whose small business has gained grants from several institutions and prizes in competitions.

"Though we have overcome the capital [hurdle], we are still grappling with human resources. How can we develop competitive human resources with a high level of familiarity and fluency in technology in a world that keeps changing so fast?” added Meybi, highlighting the impending challenge for young entrepreneurs in scaling up.