Minister Teten Reveals Digitally Connected MSMEs Have Better Endurance

Illustration (Photo: Doc. Antara)

JAKARTA - Minister of Cooperatives and SMEs Teten Masduki said that the initiative of micro, small and medium enterprises (MSMEs) to connect their businesses to the virtual realm was considered a smart step to survive during the pandemic. According to him, these efforts can be a surefire strategy in forming more sustainable business activities.

"We note that based on a World Bank survey, 80 percent of MSMEs that are connected in the digital ecosystem have better resilience," he said in the webinar for Indonesia's MSMEs, Thursday, August 5.

Teten added that this fact was also recognized by the association of domestic e-commerce entrepreneurs who stated that the use of digital technology made MSME entrepreneurs have unlimited market coverage.

"The Indonesian e-commerce association noted that during the pandemic there was an increase in sales on e-commerce platforms by 25 percent. This means that the Indonesian people, especially MSME actors, have come out of their comfort zone and adapted to survive," he said.

However, Teten does not deny that there are a number of challenges that must be overcome to encourage MSME actors to enter the virtual realm.

“Digitalization challenges such as the lack of digital literacy, production capacity and quality of production, as well as market access are collective work that must be resolved. Digital transformation is one of the government's main agendas and continues to encourage MSMEs to go digital," he said.

To note, data from the Ministry of Cooperatives and SMEs states that the number of MSMEs currently reaches 64.2 million with a contribution to gross domestic product (GDP) of 61.07 percent or Rp. 8,573.89 trillion.

The contribution of MSMEs to the Indonesian economy includes the ability to absorb 97 percent of the total workforce and can collect up to 60.4 percent of the total investment.

However, the COVID-19 pandemic, which has been going on since the beginning of 2020, has hit the sustainability of Indonesia's MSME businesses.

A survey published by the Asian Development Bank in July 2020 showed that 50 percent of MSMEs closed their businesses, 88 percent of micro businesses did not have cash or savings or ran out of financial financing, and around 60 percent of micro businesses reduced their workforce.

"The government will continue to embrace all stakeholders in order to establish synergies to encourage Indonesian MSMEs to succeed through digital," concluded Minister Teten.