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By: Wahyu Pratama )*

The Micro, Small and Medium Enterprises (MSME) sector is very strategic in the Indonesian economy. Based on data from the Ministry of SMEs and Cooperatives in 2021 the contribution of the MSME sector to GDP will reach 61.97%, an increase compared to 2020 which was recorded at 61.07% of GDP.
Along with the high contribution of the MSME sector to GDP, based on data from the Central Statistics Agency (BPS) the number of working people will reach 131.05 million people in August 2021, of which 59.45% or 77.90 million people work in the informal sector. This data proves that the MSME sector has a potential role in encouraging the national economy and in absorbing productive workers. However, currently the development of the MSME sector is still experiencing various problems.

The Head of the Sharia Finance and MSME Ecosystem Development Task Force of the Financial Services Authority (OJK), Ahmad Buchori said that in the midst of the Covid-19 pandemic, 84.2% of MSMEs experienced a decline in income, while 62.21% of MSMEs faced financial constraints. Gadjah Mada University (UGM) Economic Observer Prof. Dr. Sri Adiningsih, M.Sc said that MSME actors were still weak in business management capabilities, limited quality of Human Resources (HR), and weak access to financial institutions, especially banking. Meanwhile, PhD in Economics from Stanford University, Shujiro Urata said that among the main problems faced by MSMEs were the large number of MSMEs that were not yet bankable, due to the absence of transparent financial management and lack of managerial and financial capabilities.

To overcome these various problems in the MSME sector, the Indonesian government under the leadership of President Joko Widodo has issued Law Number 11 of 2020 concerning Job Creation on 2 November 2020. The regulation aims to create jobs and increase foreign and domestic investment by reducing regulatory requirements. for business permits and land acquisition. The Coordinating Minister for Economic Affairs, Airlangga Hartarto, said that the Job Creation Law also regulates the strengthening of the e-commerce ecosystem, which can support efforts to digitize MSEs, including accelerating the expansion of broadband infrastructure development, where the Central Government and Regional Governments facilitate and facilitate the development of telecommunications infrastructure. In addition, in the Job Creation Law, tourism sector actors are required to be able to participate in developing partnerships with SMEs and local cooperatives.

The development of the MSME sector in Indonesia is experiencing major problems caused by the lack of financial access from the banking sector, difficulties in accessing markets and the poor quality of human resources to run MSME businesses. This condition is exacerbated by the Covid-19 pandemic which has reduced the income of MSMEs. Seeing these conditions, the existence of the Job Creation Law is a good momentum to strengthen the role of MSMEs in encouraging the national economy by creating job opportunities that can absorb productive workers.

)* The author is a Public Policy Observer

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