Faisal Basri Criticizes UMKM Holding: The Government Only Thinks About Capital, Even Though It Needs More About Innovation

Indef's senior economist, Faisal Basri. (Photo: Doc. Antara)

JAKARTA - The government plans to form a holding for UMKM affairs. The goal is to assist in increasing the capacity of MSMEs in general. However, this step is considered insufficient to solve the problems in the business sector, both during the pandemic and post-COVID-19 pandemic.

Senior economist from the University of Indonesia, Faisal Basri said, Faisal Basri there are seven types of business difficulties experienced by MSMEs today. The main problem faced is capital. Both small and large businesses are bound to experience this difficulty.

Based on BPS data, said Faisal, 29.3 percent of MSME actors viewed that the main problem faced was capital. However, capitalization is not the only problem. MSMEs also experience problems in terms of marketing, namely 21.1 percent.

Then, another problem is the raw material of 20.7 percent. Not only that, there were also problems with energy-related problems as much as 9.1 percent. As many as 5.4 percent of MSME actors also admit to having problems related to skills. Then, related to wages of 3.8 percent and transportation of 2.3 percent.

"This is a general picture experienced by MSMEs. It seems that these MSMEs are used as the main reason for this holding process," said Faisal, in a virtual discussion, Wednesday, January 13.

According to Faisal, if you look at the holding scheme, the only problem for MSMEs that is targeted is capital. In fact, MSMEs do not only need financial assistance from a description of the types of problems they are facing. However, he admitted, capital must be a common problem experienced by small and large entrepreneurs.

"When asked for the first time the problem of capital is indeed in many surveys. It does require financing to invest, grow and create new jobs, to develop. But we also realize that MSMEs need more than just financing to develop. They also need access to information, markets, and technology to be more productive, efficient and more resilient, "he said.

In addition, said Faisal, MSMEs also need access to resources that can help strengthen their welfare and access to training. And, he said, government support for innovations.

Furthermore, Faisal explained, innovation is the key word for surviving the COVID-19 epidemic. Because during this pandemic, the resilience of millions of MSMEs was tested, not only in Indonesia but throughout the world. Thus, non-financial support can help them ensure a strong recovery.

"This is post-smart again, the issue is not just financial. So then how can we or not start the digital transformation of MSMEs, this is what is needed. So it is too simple to help MSMEs by establishing this holding," he said.

Increase the Capacity of MSMEs

Previously, an economist and researcher at the Institute for Development of Economic and Finance (Indef), Nailul Huda, said that the government believes that the establishment of a holding for UMKM affairs can help the government increase the capacity of MSMEs in general.

However, the step in forming the holding is arguably too far from ideal. This is because the formation of a holding which consists of three BUMNs that have types of activities may cause a mismatch in the holding process.

The SOEs that will join the BUMN UMKM Holding are PT Bank Rakyat Indonesia (Persero) Tbk, PT Pegadaian (Persero), and PT Permodalan Nasional Madani (Persero), with the parent company, namely BRI.

So far, said Huda, the holding held by the government has always been based on the same activity sector. Mining holding, oil and gas holding, plantation holding and sharia bank holding plan have relatively the same business. So, the holding for UMKM and UMi affairs is considered to be unsuitable considering there is a gap in business schemes between the three.

Furthermore, Huda said, even if it is forced, what will be created is a holding conglomerate, where the parent company will enjoy more benefits than its subsidiary companies.