USAID: MSMEs Still Need the Support from the Government

The development of Micro, Small, and Medium Enterprises (MSME) in Indonesia still faces obstacles. The government seems to be lack of optimal support on the development.  In fact, several problems such as the limited work opportunity and limited goods production in Indonesia can be solved by developing the MSMEs.

Thus Daniel Bellefleur – a researcher in AmCham Indonesia from the program Strengthening Business Association for Reform (SEBAR) – stated in the seminar entitled “A Snapshot of Indonesia Entrepreneurship and Micro, Small, and Medium Sized Entreprise Development” held by American Corner of Universitas Muhammadiyah Yogyakarta (Amcor UMY) in collaboration with the American Embassy for Indonesia and United States Agency for International Development (USAID) on Thursday (6/14) in Assembly Room of AR Fahruddin B Building in UMY Integrated Campus.

Businessmen in Indonesia face the obstacle in funding their business development. Most MSMEs, Bellefleur asserted, are not really productive because of the lack in technology that results in low-quality products, which are sold only in local markets. Bellefleur added that the consequence is that the development of MSMEs in Indonesia in 2010, for example,   is only 2.01%; smaller than the development of large-scale businesses which reached 3.43%.

Bellefleur explained that one of the efforts the government can make is building a business incubator for MSME owners in Indonesia. To date, the government has successfully created several entrepreneurship programs, but the problem is that there is lack of monitoring and evaluation.

Meanwhile, according to Patrick Tangkau – a member of Indonesian Chambers of Commerce and Industry (KADIN) – another problem in Indonesia is that only few MSME owners register their business to the government. SEBAR, which is an economic development program from USAID shows that only as much as 36.9% of MSMEs in Indonesia are registered to the government. One of the causes is the complicated procedure of the registration. Tangkau added that it is also because the Office of Integrated Licensing Service (KPPT), which actually was built to simplify the registration process does not really work. Of the 500 regencies in Indonesia, less than 160 operate their KPPT. It is even worsened by the lack of socialization.

Tangkau said that this business registration actually can benefit the MSMEs. The registration provides security for costumers, workers, owners, investors, and creditors. It can also gives control to a number of market and industry functions. However, in Indonesia, the registration fee and the many requirements have made many MSME owners choose not to register. Another issue is the difference between the local regulation and central regulation on this registration procedure.  

Tangkau also saw a problem in the Indonesian people’s mindset. Many university graduates, for instance, tend to seek jobs in government offices or big companies. Few Indonesians choose to take the risk of building their own business. As a matter of fact, entrepreneurship and MSMEs give many benefits to the owner and the surrounding society, especially in providing job opportunity. 

Mariska – Amcor UMY Director – hoped that students and other participants gain knowledge from the information given by the presenters. Therefore, they will get the benefits for the future. Entrepreneurship is one of the bright prospects for the students in Indonesia

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