More Indonesian SMEs Poised to Gain Access to Social Assistance Programs

JAKARTA, KOMPAS.com – The number of Indonesian small and medium enterprises (SMEs) gaining access to social assistance programs is expected to increase.

Indonesian SMEs are considered the most affected sector during the coronavirus pandemic, and the government predicts that a significant number will be unable to weather the coronavirus pandemic without assistance.

Read also: The Covid-19 Crisis and Its Domino Effect on Indonesia

Minister of Indonesian Cooperatives and SMEs Teten Masduki confirmed the outlook.

“There are 40 surveys about the impact of Covid-19 on SMEs around the world which expects around 50 percent of SMEs will close,” said Teten.

The figure is troubling considering the impact Indonesian SMEs can have in salvaging the Indonesian economy.

SMEs were deemed to be the lifesaver of Indonesia’s national economy during the 1998 Asian Financial Crisis.

“At the time, SMEs were the heroes of the national economy because they recorded a 350 percent growth in exports,” said Teten.

Unlike the Asian Financial Crisis, the coronavirus pandemic has posed limitations on the free movement of people.

Therefore, the existence of Indonesian SMEs has been put at risk especially since most depend on daily income.

Read also: Morgan Stanley: Indonesia Could Rank in Second-Fastest Group of Economies to Recover

For this reason, Teten gave reassurance that micro-level and ultra micro-level enterprises will gain access to the government’s social assistance programs.

“We will increase the number of SMEs eligible for social assistance programs. The Village Fund will also become a direct cash assistance program. We are trying to help ease the financial troubles of our SMEs,” the Minister of Indonesian Cooperatives and SMEs said.

Teten is also pushing for credit restructuring for Indonesian SMEs. This measure would alleviate some of their debt burden.

“Indonesian SMEs are also exempted from taxes. Around 60.66 million SMEs are connected to formal financing institutions and thus are eligible for credit restructuring,” said Teten.

Misguided government focus

Similar to Teten Masduki, Indonesia’s Coordinating Minister of Economic Affairs and Investment Luhut Panjaitan emphasized that Indonesian SMEs are the backbone of the national economy.

However, the government tends to focus elsewhere when considering the national economy's key drivers.

Luhut Panjaitan admitted earlier this week that the Indonesian government mostly saw the upper-class and large-scale corporations as drivers of the country’s economy.

Read also: Luhut Panjaitan: Indonesian SMEs are the Backbone of Indonesia’s National Economy

Indonesian SMEs are the biggest SME groupings in all of ASEAN and employ a large share of the nation’s workforce.

The Indonesian government has been pushing for more initiatives to alleviate the burdens of its SMEs as a result of the coronavirus pandemic.

Read also: Ministry of Tourism’s #BeliKreatifLokal Campaign to Support SMEs

Indonesia’s tourism ministry has also shown support for SMEs through its #BeliKreatifLokal campaign.

Through the campaign, the ministry aims to provide an online platform for Indonesia SMEs’ products by working with a bluechip client list. 

(Writer: Rully R. Ramli | Editor: Yoga Sukmana) 

Source: https://money.kompas.com/read/2020/06/27/161000226/menkop-janji-tambah-jumlah-umkm-penerima-bansos