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Small businesses improve, but demand, access to capital left wanting
Micro, small and medium enterprises in Indonesia have seen improvements a year into the coronavirus pandemic, but many still struggle to find buyers and working capital, the Asian Development Bank (ADB) says.
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Workers remove the fine hair on cowhide by burning it off at a workshop in Depok, West Java, in February. Home industries have suffered a hit due to the pandemic, but many still manage to keep going. (JP/P.J.Leo)
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any micro, small and medium enterprises (MSME) were seeing improvements one year after the coronavirus plunged the country into a deep financial crisis, but many are still struggling with a sharp drop in demand, and a prolonged pandemic would delay their recovery.
In the March-to-April period, the share of MSMEs that were temporarily closed was between 1.8 and 6.3 percent across all size categories, down sharply from up to 54.4 percent a year earlier, according to an Asian Development Bank (ADB) survey of 2,509 MSMEs nationwide.
But the share of MSMEs reporting a drop in demand surged to more than 60 percent in that period from between 27.9 percent and 43.8 percent in the March-April period last year, depending on the firms’ sizes.
“Throughout the year [following the start of pandemic response measures in Indonesia], MSMEs have continued to face a sharp drop in demand and revenue,” ADB senior economist Shigehiro Shionzaki said during a virtual presentation of the survey findings on Thursday.
“The Indonesian economy would gradually shift to the recovery stage toward the end of 2021, but it is accompanied by downside risks [to] the economy caused by the prolonged pandemic.”
MSMEs, especially those relying on in-person transactions, have been hit hard by the COVID-19 mobility restrictions, which the government recently tightened and extended to late August in a bid to limit the spread of the virus.
Read also: BI holds policy rate at 3.5%, prepares MSME financing boost
