Jakarta, 14 October 2021 — Most of Micro, Small and Medium Enterprises (MSMEs) across Indonesia have been profoundly impacted by this year’s emergency lockdown or PPKM with a drop in demand, profit and income asset value, according to a pandemic and green economy-related survey launched today, conducted by the United Nations Development Programme (UNDP) with the Ministry of Cooperatives and SMEs of Indonesia and telecom company Indosat Ooredoo.
But the survey also revealed promising results on the green economy’s potential. Approximately 95 percent of MSMEs expressed an interest in green practices, with women-owned businesses showing stronger interest. Another 90 percent said they were interested in implementing inclusive business practices – an essential component of the Sustainable Development Goals (SDG) agenda.
Approximately 3,000 MSMEs were polled via text message (SMS) sent via Indosat Ooredoo and other providers in a 58-question survey on the impact of the COVID-19 pandemic on the MSME sector, particularly in the early months of the pandemic in 2020 and during the Indonesian government’s emergency lockdown period, or PPKM Darurat, in July and August 2021.
The questions focused on demand for products, profits during the early days of the pandemic from March to June 2020 and compared similar findings during the emergency lockdown period. Questions were also raised on the potential of green economy and digitalization in Indonesia.
Among the survey’s key findings was that some suffered a loss of over 50 percent between the initial months of the pandemic in 2020 and the emergency PPKM in mid-2021, particularly in the provinces of Java and Bali.
Speaking at the report’s launching, Minister of Cooperatives and Small and Medium Enterprises of Indonesia, Mr. Teten Masduki, called on the MSMEs to adopt green and sustainable business practices.
“Profit-seeking measures that harm our environment must be abandoned. Economic activities including production, consumption and distribution must prioritize the need to improve the long-term quality of human development,” said Mr. Masduki, adding “Many young entrepreneurs have already launched businesses that produce environmentally-friendly goods, we must continue supporting these green business”.
The study also revealed the short-term benefits of digitalization, with MSMEs which joined online platforms to market their products during the COVID-19 pandemic reporting higher demand for products — which resulted in larger profit — compared to their counterparts who had already established an online presence before the pandemic, and those who had conducted their operations entirely offline.
While the pandemic has had a similar impact on MSMEs owned by women and men, the survey revealed that women were prone to job losses. Furthermore, only 19.7 percent of women-owned MSMEs reported seeking assistance from the Government’s cash assistance program (BPUM) compared to 26.9 percent of MSMEs owned by men.
According to the survey, , 45.2 percent of MSMEs are still operating normally, 30.9 percent are still operating partially, and none plan to permanently close their business due to the Emergency PPKM. Government intervention has also been successful in increasing the resilience of MSMEs, though the scope of the intervention still needs to be expanded.
UNDP Indonesia Resident Representative. Mr Norimasa Shimomura called on stakeholders to work together to improve the MSME sector as the country’s economy builds forward better.
“The ball is now in our court. We must seize the opportunity for a bolder and transition towards green economy with more inclusive practices. The release of this study confirms that most players in the highly influential MSMEs sector want the game to change. I hope this report—and the policy dialogue today— provides sharper insight into the sector, and encourages discussion on policies that can help MSMEs overcome their current challenges,” said Mr. Shimomura.
Mr. Vikram Sinha, Director & COO Indosat Ooredoo noted the importance of accelerating digital transformation in Indonesia, including the MSME sector.
“Our partnership with UNDP and the Ministry of Cooperatives and MSMEs has also helped us understand the benefits of digitalization in our society. Our collaboration can help inform the MSME sector of best practices to withstand future disasters, no matter the magnitude. We are proud to present this joint study which we hope will be used by policy makers to capitalize on opportunities in digitalization and green economy,” he said.
The survey is the second consecutive study conducted on the pandemic’s impact on MSMEs. A 2020 study on the impact of the early months of the pandemic revealed similar results with a majority of MSMEs reporting that they experienced a severe impact on demand and other factors.
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