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Job Creation Law Supports MSMEs in Indonesia


By: Deka Prawira)*

The Job Creation Law supports micro, small and medium enterprises (MSMEs) in Indonesia. Among other things, through the ease of licensing and simplified regulations. In addition, MSMEs are also assisted in marketing through assistance by the Cooperatives and SMEs Office. 

The pandemic has shaken the economy a little, including MSME entrepreneurs. They were out of breath in running their business, due to the declining purchasing power of the people. Then, there was a change in shopping trends where more people shop online, while some MSMEs don’t have online stalls.

The government helps MSMEs in various ways, one of which is by enacting the Job Creation Law at the end of 2020. In the law, there are MSME clusters and ease of doing business clusters that will make it easier for small and medium-level businesses. They must be helped because 90% of traders in Indonesia are MSMEs, so saving them also helps the country’s economy.

Macroeconomics expert, Iskandar Simorangkir, stated that the government provides ease of doing business for MSMEs. The breakthrough was made through the Job Creation Act. Efforts continue to be made to make the economy more efficient and competitive in the global market. Indonesian MSMEs can also be part of the  global value chain  such as MSMEs in Japan and Germany.

Ease of doing business is done by granting a business license which is easier and can be managed through  online single submission. For the MSME business level, the only license required is an NIB (Enterprise Identification Number). After having NIB, MSME entrepreneurs take care of business and commercial or operational permits, according to their respective fields.

With the NIB, it will be easier for MSMEs to gain trust from the Bank  because their business is considered valid. If there is a capital loan, the MSME business will be more developed. Especially during a pandemic where small and medium-level businesses thaw because people’s purchasing power declines, so they need capital to reopen their stores and survive bankruptcy.

Moreover, the KUR (People’s Business Credit) ceiling was increased to 373.17 trillion rupiah (in 2022). The government has also extended the KUR interest subsidy by 3%, until the end of 2022. This subsidy assistance greatly facilitates MSMEs so that they continue to exist and struggle to overcome the impact of the pandemic.

In the Job Creation Law and its derivative rules (Government Regulation number 7 of 2021) there are several rules that facilitate the performance of MSMEs in Indonesia. First, there is the acceleration of the digitization of MSMEs. The acceleration of digitization is carried out by the Ministry of Trade and in collaboration with the private sector. MSMEs will learn how to do business online and take advantage of networks in the digital era.

Acceleration of digitization is very important because now is the era of information technology and online shops are very popular. But unfortunately there are still MSME actors who are technologically ignorant and do not use the internet as a promotional medium. Even if someone has social media, it is only used for  status updates  . Though it can also be used to market their products.

Digitization is also carried out in financial arrangements. Where MSMEs are trained to be disciplined and take advantage of financial regulation applications, which are facilitated by the central and local governments. The facilities are also 100% free, making it easier for MSMEs, where they experience various difficulties due to the effects of the pandemic. 

By getting into the habit of managing finances via applications, it will discipline MSMEs to separate between personal money and commercial money. They will also feel the practicality of not having to manually record in a book or create their own Excel file, because it is facilitated by a financial recording and management application.

Then, MSMEs will be given facilities in the form of providing a promotion place of 30%. This must be done by all Ministries, Institutions, Local Governments, State-Owned Enterprises (BUMN), and Regional-Owned Enterprises (BUMD). 

The provision of this place is very good because it is also a means of promotion for small and medium-level businesses, and the number of Ministries and SOEs is very large, making it easier for MSMEs to  go public  and expand their market among bureaucrats and civilians.

MSMEs are also facilitated by the convenience of government goods and services. Where Ministries, Institutions, and Regional Apparatus are required to use goods and services from MSMEs. As much as 40% of the allocation for the procurement is taken from the goods/services budget.

 Various facilities provided by the government to MSMEs are the implementation of the Employment Creation Act for the MSME cluster and the ease of doing business cluster, as well as its derivative rules. The government is trying hard so that MSMEs can get back up and shine despite the effects of the pandemic. If MSMEs are healthy, the country’s economic condition is also healthy, because they are the backbone of the Indonesian economy.

Many MSMEs are provided with facilities ranging from easy licensing, KUR loans with low interest rates, and interest subsidies. They also receive assistance for business digitization and  online marketing,  as well as the use of financial management applications. With the implementation of the Job Creation Act, which provides these facilities, the MSME business will be victorious again. 

)* The author is a contributor to Pertiwi Institute 

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