Small and medium enterprises (SMEs) in Indonesia are coping challenges varying from an unstable internet connection and logistics disruptions to funding difficulties and weakening buying power as they manage the COVID-19 crisis, a recent survey programs.
Carried Out by Sea Insights, the research study discovered that 50 percent of business owners saw an uptick in the use of digital media– such as social networks, e-commerce and online knowing– for their operations during the pandemic. However, 63 percent of 2,200 entrepreneur who participated in the study said it had actually been tough to work from house.
” According to the survey, the three primary obstacles of working from house are an unsteady internet connection and high web expenses. Some SMEs likewise need physical interaction with consumers,” Sea Indonesia chairman Pandu Sjahrir informed an online press briefing on July 2.
” Other issues in the supply side relate to logistics and disruptions in the schedule of stocks and raw materials.”
Technical difficulties, he added, primarily took place to SMEs in rural areas.
Adding to interruptions in the supply side are compromising demand and cashflow issues, the survey found. Pandu stated the majority of SMEs reported declining demand from customers following the increase in joblessness, market volatility and the nation’s damaging economy.
With households keeping back on costs and opting to save cash, need for SME products has decreased, he added, which was evident in Indonesia’s customer price index, which reached its least expensive level in 20 years at 1.96 percent in June.
On the cashflow side, declining earnings and increasing expenses have actually positioned significant obstacles to SMEs. Around 26 percent of SME respondents in the Sea Insights survey stated they faced difficulties getting access to financing and loans.
” During this pandemic, external capital funding such as government support and online financing is more important for them in facing cash flow challenges,” Pandu stated.
The government will support and alleviate loan interest payments for micro, small and medium enterprises (MSMEs), covering loan interests ranging from 2 to 6 percent for as much as six months. The government will also roll out working capital loans for MSMEs.
Cooperatives and SMEs Minister Teten Masduki said that going digital could assist SMEs access a broader market and consequently maintain their business throughout the health crisis. Nevertheless, he acknowledged that infrastructure-related problems such as unstable web connection and high internet expenses were still significant difficulties for lots of SMEs trying to go digital.
” We recommended to the Communications and Details Ministry [the idea of] offering an internet aid for SMEs. As we are now refocusing our resources on COVID-19 mitigation, the idea was put on the back burner. Ideally, we can act on it in the future,” Teten stated in the very same instruction.
He added that digital transformation for SMEs could assist to accelerate Indonesia’s economic recovery in the post-pandemic era.
” Unfortunately, only 13 percent of SMEs in Indonesia or only around 8 million have gone digital. The government intends to have 10 million SMEs go digital this year. Digitalization is essential for SMEs as it would assist them access a larger market and also financing.”
The Sea Insights survey found that 45 percent of SMEs actively sell their products on e-commerce platforms; one out of five of which are novice sellers. Around 70 percent of SMEs likewise said they would continue to use e-commerce and social media to sell their product in the future.
Joko Purnomo, who owns a keepsake shop in Bali, stated that due to the decrease in travelers as an outcome of travel restrictions, his organisation had experienced an extreme decline in sales. Profits from his offline store has decreased by 90 percent up until now.
” Prior to the pandemic, we were open from 7 a.m. to 11 p.m. Now we are just open from 8 a.m. to 6 p.m. because there aren’t numerous visitors,” he said.
” Nevertheless, I feel lucky due to the fact that my store is available online and the good news is, our sales are now increasing thanks to digital platforms.”