Kemenkop UKM Reveals The Cause Of Low Contribution Of MSMEs To Global Supply Chains

Expert Staff for Inter-Institutional Relations of the Ministry of Cooperatives and SMEs Riza Damanik. (Photo: Theresia Agatha/VOI)

BOGOR - Expert Staff for Inter-Institutional Relations of the Ministry of Cooperatives, SMEs Riza Damanik, said that there were three things that caused the contribution of Indonesian MSMEs to the global supply chain to be still low.

First, is a matter of quantity of the product. The second is the quality and the third is the continuity or sustainability of the product.

"If a limited MSME enters the global supply chain for three reasons. The partnership of MSMEs into big businesses has three main subtants, one is the quantity of the product, the quality of the product and the continuity of the product. If one of these three has partnership problems, it is impossible," Riza said at the 2024 Journalists Orientation in Bogor, West Java, Thursday, May 16.

Riza assessed that if the exporter wants to enter the global supply chain, three things were needed.

"He can't make factories, suddenly tomorrow there won't be any raw materials. So, the most important thing in the context of meeting the quality, quantity and continuity is how to encourage MSME actors to scale up the economy," he said.

He even gave an example, for example, there are MSME actors who focus on oil palm or agriculture. So, it is certain that they are talking about food products.

"So, they can no longer manage other products. In order to maintain the three things, namely quality, quantity and continuity," he said.

According to Riza, the cause of the low contribution of MSMEs to the global supply chain is due to the fact that quality, quantity and continuity have not been fulfilled.

"Not because there are no products, but the products are still limited, the production volume is still limited, the quality is also. That, the need for partnerships. We call it supply chain partnerships in accordance with Government Regulation (PP) Number 7 of 2021 concerning Ease, Protection and Empowerment of Cooperatives and Micro, Small and Medium Enterprises," he added.

Previously reported, Minister of Cooperatives and SMEs (Menkop UKM) Teten Masduki said that the contribution of Indonesian MSMEs to the global supply chain was still low.

In fact, based on data from the World Economic Outlook IMF, Indonesia's economic growth in 2024 is estimated to reach 5 percent.

"Only 6.3 percent of our MSMEs are involved in the global value chain," said Minister Teten in a speech delivered via video at the Inabuyer B2B2G Expo 2024 event at the Smesco Building, Jakarta, Wednesday, May 15.

Teten said that strengthening the supply chain is a crucial element in the MSME business ecosystem. Thus, collaboration is needed between the government, BUMN, the private sector and associations, both at home and abroad.

"With the support of the allocation of government goods and services expenditures, SOEs and other retail sectors, MSMEs must be able to compete to become the main suppliers in the national economy," he said.