Honesty – integrity – Trust

Encouraging MSMEs to Upgrade

April 3rd,  2023



  Translated by: PO

Written by : Risdiana Wiryatni notes


Encouraging MSMEs to Upgrade



“The portrait of Indonesia’s future MSMEs is described as businesses that can upgrade from the dominance of micro-enterprises to the dominance of small and medium enterprises, based on research, close to technology, value creation (creating added value), market driven, understanding the market, recognizing change, and innovative,” wrote the Ministry of Cooperatives uploaded through social media.
It is a noble goal to strengthen Micro, Small and Medium Enterprises [MSMEs], which in the last decade have continued to grow.
Micro, Small and Medium Enterprises (MSMEs) are one of the business units that play an important role in the growth and development of the economy in Indonesia. MSMEs are also one of the most important economic supports, especially for the lower middle class.
The existence of MSMEs has a strategic role in reducing poverty and unemployment, because MSMEs are able to absorb labor and are a very broad business field.
The phenomenon of layoffs (termination of employment), which is rampant as a result of production reductions and industrial closures, has encouraged the increase of MSMEs in large numbers. The Ministry of Cooperatives and SMEs shows that the number of SMEs in Indonesia has reached 64.2 million units with a contribution to Gross Domestic Product (GDP) of 61.07% or Rp. 8,573.89 trillion.
This means that the Indonesian economy is largely supported by the activities of SMEs. If 1 SME unit is carried out by an average of 3 people (owner and 2 employees) then the absorption of labor has reached 192.6 million people or reached 69.68% of the Indonesian population. This condition shows that the important role of the MSME sector in labor absorption and the national economy cannot be ignored. A big leap to strengthen the construction of the national economy.
Given the strategic role of MSMEs, a series of programs and activities incorporated in the MSME policy are indeed part of a special strategy so that micro business actors can ‘upgrade’. The government, the private sector, and the National MSME driving community such as the Upgrading MSME Community continue to try tirelessly, encouraging MSME players to upgrade. This means that MSMEs are upgraded if they succeed in increasing sales and or capital to the criteria above, for example from Mirko businesses to Small businesses and so on.
To make MSMEs upgrade, of course, it is not as easy as turning your palm. Launching from the social media account of the Ministry of Cooperatives and SMEs, it is explained how to manage micro businesses so that they can quickly ‘upgrade’ and be able to compete in the global market and have strong endurance to face further economic disruptions, namely:

1.Have Business Legality
Business owners should know that legality is always an important aspect that must be prioritized in building a business. With legality, consumer confidence in a product will increase, making it easier for a business to apply for capital or loans. For this reason, it is important for business actors to take care of the NIB (Business Identification Number). Not only as a business identity, NIB is also valid as a Company Registration Certificate (TDP), Import Identification Number (API), Customs Access, especially if the business owner conducts export and import activities.
2.Utilize Digital Technology
Doing business in the era of digital technology like now, makes business people must be able to adapt to new technology. Likewise, in carrying out an effective sales strategy, you can use certain applications. Starting from utilizing social media, marketplaces, online payment methods, barcode technology for product information and so on. Not only that, most MSMEs also use online advertising, ranging from FB Ads, TikTok Ads, IG Ads, and others. In this way, they are able to reach more consumers, which in turn can increase profits.
3.Innovative and Prioritize Research
Research is very important for a business. By doing research, business owners can get to know the character of the target market more deeply, analyze strategies carried out by competitors, find out the needs and demands of the market to overcome obstacles and risks. In fact, by conducting market research, a business can increase opportunities to produce innovative products that can have their own value and uniqueness. As for conducting market research, you can contact or meet directly a number of people who are potential customers in the business and offer products and services to the target market that has been determined. Of course, the information obtained will be useful for preparing the right marketing plan https://entrepreneur.bisnis.com/read/20220725/88/1558843/kiat-agar-umkm-naik-kelas-rekomendasi-kemenkop-ukm.
*) Risdiana Wiryatni, MSME activist, Director of Kinerjaekselen.co

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