Digitization Encourages MSMEs to be Higher-Quality

Jakarta, 08 August 2022 – It is inevitable that Micro, Small, and Medium-Sized Enterprises (MSMEs) undergo a digital transition. Online transactions have replaced face-to-face transactions as a result of rapid technological advancements.

For this reason, Indonesia keeps working to encourage MSME actors to enter the digital ecosystem. In this way, it is hoped that national MSMEs will not only transform their business transaction but also advance their operations as a result of wider market penetration and rising trade transaction values.

Teten Masduki, the minister of cooperatives and small and medium enterprises (SMEs), during the G20 Indonesia side event titled Digital Economy to Support SDGs on Monday, 8 August said that 83 percent of national MSME players currently depend on digitalization. Of that number, 73 percent already have an account with an e-commerce platform, and as many as 82 percent have used digital marketing to promote their goods.

As of June 2022, 19.5 million MSMEs, or 30.4 percent of the total MSMEs, which are estimated to number approximately 64 million business actors, had entered the digital ecosystem.

In the meantime, the government aims to have 30 million MSME players participate in the digital ecosystem by 2024. According to Teten, the government will keep encouraging the creation of new economic value in order to integrate MSMEs into the digital ecosystem.

He continued, “The government is also speeding the onboarding of one million MSMEs into the government’s platform for procuring goods and services and prioritizing local products.

Making sure that the domestic market for MSMEs may be effectively safeguarded is another equally vital matter. To ensure that these things happen, the Ministry of Cooperatives and SMEs develops strategies and completes the necessary policy processes from upstream to downstream.

Encouragement of MSMEs to enter the digital ecosystem is regarded as having significant economic growth potential. Additionally, it is well known that MSME operations can account for up to 61 percent of the country’s GDP.

The government maximizes MSMEs’ potential for digitization.

Indonesia needs to seize and use this huge potential. To maximize this potential, effective initiatives are therefore required.Tedi Bharata, Deputy for Human Resources, Technology, and Information at the Ministry of SOEs, stated, “We support and collaborate with other ministries and state-owned companies.”

The Ministry of SOEs, he added, has carried out various initiatives to encourage the growth of domestic MSMEs. The ministry’s initiatives to digitize MSMEs and integrate financial solutions for MSME actors are some of them.

The merger of BRI, PNM, and Pegadaian through the formation of an ultra-micro holding is one of the concrete efforts the Ministry of SOEs has also done. Financing and funding for micro businesses can function significantly better through this step.

Additionally, starting in 2020, the Ministry of SOEs created a PaDi (Digital Market) for SMEs that can open doors for business actors to enter the supply chain. From PaDi SMEs, the ministry invites a number of MSME actors to participate in procurement within the scope of SOEs.

“At least the transaction value from suppliers reaches Rp18 trillion from the involvement,” said Tedi.

Kadin encourages SMEs to go digital.

Meanwhile, the Indonesian Chamber of Commerce and Industry (Kadin) encourages the digitization of MSMEs as initial support that can be done by stakeholders. How to support business actors in the sector in their ability to move up in class after entering the digital ecosystem is something that shouldn’t be overlooked.

“Therefore, it goes beyond simply entering the marketplace. To enable MSMEs to advance, several other factors must be taken into account,” said Bambang Brodjonegoro, the head of the People’s Economic Empowerment Agency of the Indonesian Chamber of Commerce and Industry. He also encouraged the digitization of MSMEs to be carried out from upstream to downstream and did not stop at the entry of business actors into market workshops. The ability of MSMEs to grow with quality in the digital ecosystem depends on a number of factors, including production, capacity building, management, marketing, and encouragement to maintain production quality.

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