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[ANALYSIS] Helping MSMEs survive, sustain themselves and thrive
MSMEs account for 99.9 percent of all Indonesian enterprises, employ 117 million citizens — 97 percent of the labor force — and contribute 60 percent of the country’s gross domestic product.
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A shoemaker in Tasikmalaya, West Java, photographs his products for online marketing on July 3, 2020. (Antara/Adeng Bustomi)
Jakarta
Indonesia owes a great debt to its hardworking micro, small and medium enterprise (MSME) sector. According to figures from the Cooperatives and Small and Medium Enterprises Ministry, MSMEs account for 99.9 percent of all enterprises. They employ 117 million citizens – 97 percent of the labor force – and contribute 60 percent of the country’s gross domestic product (GDP).
A study by Boston Consulting Group (BCG), in partnership with the Financial Services Authority (OJK), found that the COVID-19 pandemic had triggered an unprecedented crisis for MSMEs, with over 75 percent of the 3,136 enterprises surveyed noting that COVID-19 was worse than any crisis they had experienced to date. Social distancing rules, changing customer behavior and fears of the virus have created a perfect storm of challenges, which MSMEs need support to overcome.
Supporting Indonesia’s MSMEs
The BCG study found that 80 percent of MSMEs had experienced a decrease in revenue during the pandemic, regardless of enterprise size, sector of operation or level of digitalization.
MSMEs often rely on face-to-face contact, requiring rapid transformation to new ways of working. Consumers are transitioning online, with 50 percent of survey respondents noting a plan to increase online spending in the month ahead. This explains why 41 percent of MSMEs surveyed expected a significant increase in digital sales in future.
Yanti, a food business owner, has spent nine years selling beef rendang from her stalls in Jakarta’s Central Business District. The report reveals how COVID-19 transformed life for her and her 12 employees. Yanti was forced to close her stores temporarily, paying employees out of her savings. She embraced a well-known food delivery platform to continue generating much-needed revenue.
