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COVID-19 accelerates MSME digitalization despite inadequate connectivity
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Sole proprietor: A shoemaker in Tasikmalaya, West Java, photographs his products for online marketing on July 3, 2020. The Communications and Information Ministry has said that 9.4 million micro, small and medium enterprises (MSMEs) have gone digital. (Antara/Adeng Bustomi)
T
he COVID-19 pandemic has opened up an unexpected opportunity in digitalization as more local micro, small and medium enterprises (MSMEs) go online than before, but the lack of internet infrastructure in parts of Indonesia has made it difficult for some businesses to bounce back.
That was the summary of a Jakpost UpClose webinar on Thursday, titled “Report launch: COVID-19’s impact on Indonesian MSMEs”. The report was the result of a joint study by the United Nations Development Program (UNDP) and the University of Indonesia’s (UI) Faculty of Economics and Business Institute for Economic and Social Research (LPEM FEB UI).
The study covered 1,180 MSMEs across 15 provinces of Indonesia and was conducted using in-depth interviews and focus-group discussion techniques. The study found that more than 45 percent of MSMEs surveyed had problems obtaining raw materials and had found it hard to distribute their products as a result of the pandemic.
At the same time, two thirds of the MSMEs suffered from steep revenue declines during the pandemic, while more than 80 percent had lower profit margins.
Amid such hardship, around 44 percent of the MSMEs surveyed had joined online marketplaces or e-commerce platforms such as Tokopedia and Shopee to survive the pandemic.
UNDP Indonesia Country Economist Rima Prama Artha said the pandemic had accelerated the digitalization of MSMEs.
“Prior to the pandemic, only 28 percent of the MSMEs had an online presence. Since the pandemic, the number has grown to 44 percent. Yet, the digital transition is not as high as we expected them to be,” Rima said during the webinar.
