MSMEs to Conduct Marketing Digitalization to Survive Amid Pandemic: Cooperatives Ministry Special Staff

By Office of Assistant to Deputy Cabinet Secretary for State Documents & Translation
Date 23 September 2020
Category: News
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Infographic on Productive Presidential Assistance for Micro Enterprises. (Source: Ministry of Finance)

Micro, small, and medium enterprises (MSMEs) players require the Government’s role to keep their business running during the COVID-19 pandemic, Special Staff of Ministry of Cooperatives and MSMEs, Riza Damanik said.

According to Riza, there are 3 optimal ways for MSMEs to adapt to a pandemic situation, among others, by

reducing working hours, reducing production hours, and shifting to digital marketing.

He also pointed out that more than 90% of MSMEs need a financing solution to survive or rise.

“Data from the Asian Development Bank (ADB) shows that 91.8% percent of MSMEs expect loans without interest and/or without collateral. In addition, 89.5% percent of MSMEs also need grants from the Government. Ministry of Cooperatives and MSMEs want to equip MSMEs to be able to survive and rebuild the economy,” he said in a talk show entitled “Encouraging Micro Enterprises to Survive the Pandemic”, Tuesday (22/9).

The Ministry, he continued, has prepared two schemes that are also consistent with the National Economic Recovery (PEN) Working Committee.

First, strengthening MSMEs that are already bankable or integrated into the banking system, schemes such as loan restructuring, tax incentives, facilitating access to financing and new working capital, including cooperative financing.

Second, MSMEs that are not bankable or have not been integrated into the banking system sustained by social assistance and presidential assistance.

“On one hand, MSMEs can survive, and on the other, it can be a provision for micro businesses to transform into bankable schemes so that they can be stronger later,” he said.

As for the first stage of distribution of productive presidential assistance until the end of September, he continued, as many as 9.1 million MSMEs will receive the assistance with a value of Rp22 trillion. Each UMKM received assistance amounting to Rp2.4 million. For the realization, as of 21 September, more than 5.9 million MSMEs have received the assistance amounting to Rp14 trillion with a realization of 64.5%. Today, it is targeted at 72.85% with 1.7 million recipients amounting to Rp4.2 trillion, he added.

“As many as 1.4 million recipients will receive the assistance by the end of September amounting to Rp3.5 trillion,” he said, adding that for the second stage, the remaining 12 million recipients will receive the presidential assistance.

The Ministry, he said, continues to push for innovation by providing online-based trainings for MSMEs so that it is hoped that domestic MSMEs can innovate such as utilizing e-commerce in marketing their products.

Meanwhile, state-owned bank Bank Rakyat Indonesia (BRI) Director of Micro Business Supari said that MSMEs strive to survive in various ways.

“MSME players have had their savings run out in the second month of the pandemic. Now, they need the Government’s role to keep their business running,” he said.

According to Supari, social assistance from the Ministry of Cooperatives and MSMEs and productive presidential assistance (Banpres) from President Joko “Jokowi” Widodo is one way to save MSMEs.

BRI, he said, has the MSMEs data network that the Government needs, adding that currently, MSMEs ecosystem is divided into four segments.

First, MSMEs players are vulnerable and need to be assisted by social assistance or productive presidential assistance. Second, those who can only survive and if they have a loan must be restructured.

“If the situation improves, they need working capital, otherwise they will just be stuck there. Once the business competition has started, they will lose,” he said, adding that the Government has prepared soft assistance in the form of People’s Business Credit (KUR) for this segment.

Third, MSME players who have sufficient savings funds but have not yet developed their business even though they have found new business potential.

“Maybe in the past, they only sold apparel, and when they see the growth in sales of clothes such as house dress, then they will sell it too,” he said.

Once that happens, such MSME players need additional venture capital because the cash flow is disrupted and restructuring is very important. Therefore, the Government must immediately provide full support to business players, either selling products or services, and their attractive growth needs to be supported by working capital.

Fourth, MSME players who have large savings funds and have small or no loans and can last for the next 12 months. These business players are growing and may have found new business models.

He also cited an example that blacksmith business players such as welders, iron fence makers and so on may not receive orders anymore. However, they can divert his savings and switch his business to selling sinks or hand washing equipment, which currently has a high need.

“The Government plays a role in various programs through stimulus scheme,” he said.
(Communication Team of the COVID-19 Mitigation and PEN Working Committee/EN)

 

 

Translator: Muhardi
Reviewed by: Mia Medyana B.

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