Indonesian SMEs That Resisted Digital Adoption Collapsed during Pandemic

JAKARTA, KOMPAS.com – The coronavirus pandemic caused the collapse of 30 million Indonesian SMEs especially among business owners who resisted digital adoption.

M. Ikhsan Ingratubun, Chairman of the Indonesian Small and Medium Enterprises (SMEs) Association, said that the growth of Indonesia SMEs has been slow because the average age of these business owners is above 40 years old.

Read also: Sales of Indonesian SMEs Plunge by As Much As 60pct during Coronavirus Pandemic

However, Ikhsan explained that certain age groups demonstrated a pronounced resistance to learn about product marketing via online platforms.

“The age group of above 40 years old was resistant to digital sales, claiming it was complicated or they outright declined. This is difficult especially if there is an unwillingness to learn. There was more enthusiasm among Indonesian SME owners aged 30 years old and under to opt for digital adoption.”

Based on the Indonesian SMEs Association’s data, around 30 million SMEs in the country have collapsed during the coronavirus pandemic.

Read also: 12 Million Indonesian SMEs to Get Cash Assistance from Government Soon

“The pandemic has resulted in the collapse of around 30 million Indonesian SMEs due to the changing business climate, lockdowns, whatever you name it, it has negatively impacted these smaller businesses. Indonesia’s Finance Minister Sri Mulyani has admitted it.”

Another factor that has caused difficulties in the progress of Indonesian SMEs was the shortage of qualified human capital that understands e-commerce or online sales.

Ikhsan further explained that the common obstacles among Indonesian SMEs are a lack of capital.

Read also: Industry 4.0 Answer to Indonesia’s Economic Ambitions in 2030

“The classic reason is lack of capital, particularly when an SME receives a large order thus needing large financing assistance. Not all SMEs in Indonesia will succeed after taking out a loan, thus it is important to improve access to financing for these players.”

Ikhsan added, “One example is the movement to encourage buyers to feel proud of having purchased a product from an SME in Indonesia. But for us at the association, don’t just encourage people to feel proud, but get them to purchase from Indonesian SMEs.”

(Writer: Ade Miranti Karunia | Editor: Bambang P. Jatmiko)

Source: https://money.kompas.com/read/2020/10/26/205700426/akumindo--ada-30an-juta-umkm-rontok-selama-pandemi-karena-tak-mau-beralih-ke