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Jakarta Post

10m SMEs now online as pandemic speeds up digitalization

  • Dzulfiqar Fathur Rahman

    The Jakarta Post

Jakarta   /   Sat, November 7, 2020   /   08:26 am
10m SMEs now online as pandemic speeds up digitalization Illustration of e-commerce. (Shutterstock.com/one photo)

The number of small and medium enterprises (SMEs) using online platforms for their business has risen to around 10.2 million as the COVID-19 pandemic speeds up digitalization, a minister has said.

The share of SMEs using online platforms relative to the overall number of small businesses thus rose to 16 percent, up from 13 percent as recorded early this year, said Cooperative and SMEs Minister Teten Masduki.

“This is quite a big improvement,” Teten said in a virtual discussion on Thursday. “SMEs that successfully adapt to the new consumer patterns and create product innovation are expected to get out of this crisis.”

With such an increase the government has met its target of having 10 million small businesses utilizing online platforms this year.

The country’s small businesses, which account for more than 60 percent of gross domestic product (GDP) and employ a majority of the labor force, have been hit by the COVID-19 outbreak, as the economy enters into recession following economic contractions recorded in the second and third quarter.

At the same time, the rise in online commerce among small businesses has taken place as many consumers avoid visiting bricks-and-mortar stores and move to online shopping platforms to comply with the social-distancing orders during the coronavirus pandemic.

The volume of transactions on e-commerce rose by around 39 percent to 383 million in the first and second quarters, according to Creative Economy and Tourism Minister Wishnutama, quoting data from Bank Indonesia.

The Creative Economy and Tourism Ministry has launched a movement to promote local culinary and fashion businesses as part of the government’s national campaign to promote local products. The movement has led to an increase of 170 percent in revenue among participating businesses, according to the minister.

“We don’t just move to a digital platform, we also need to learn how to optimize it, carrying out integrated marketing and mentoring on how to raise revenue,” said Wishnutama.

Online ride-hailing company Grab Indonesia reports its customers are now buying more menu items on GrabFood, its food-delivery service platform, according to Neneng Goenadi, the company’s managing director.

The shift to online commerce has also taken place among sellers, leading to a growth of 153 percent in the number of merchants on the ride-hailing company’s food-delivery service platform in July and August.

“We note that consumers are faster in adapting to online than ever before, suggesting they are getting used to the ease in food delivery,” said Neneng.

“Food delivery will keep growing in the long run. When consumers move online, this gives an opening to the merchants to tap new customers,” she added.

Like other startups, Grab Indonesia is partnering with the government to nudge small businesses to go online, aiming to involve over 400,000 small businesses by the end of this year.