Appreciation of the Government’s Commitment to Embracing UMKM to Maintain Economic Equality
By: Dewi Utari )*
The government continues to demonstrate its commitment to embracing Micro, Small, and Medium Enterprises (MSMEs) as the backbone of the national economy. Several new policies and initiatives released throughout this year reaffirm that MSME empowerment is not merely a support program, but a crucial part of the national economic equity strategy. These efforts deserve appreciation because they provide a more inclusive space for small businesses to thrive amidst the increasingly competitive global economy.
The Minister of MSMEs, Maman Abdurrahman, explained that MSMEs have contributed significantly to Gross Domestic Product (GDP) and employment in Indonesia. Data from the Ministry of MSMEs shows that more than 97 percent of jobs are absorbed by the MSME sector, making it a pillar of national economic resilience. With such a significant contribution, the ability of MSMEs to survive, adapt, and thrive must be a priority in the economic development agenda. The government views this as key to maintaining economic stability, particularly in the face of changing global conditions and the threat of uncertainty that often impacts the informal sector.
The government’s commitment is reflected in various strategic programs such as facilitating low-interest financing, expanding market access through digitalization, capacity-building training, and expanding partnerships with the private sector. One policy that has received a positive response is the continued expansion of financing support for the People’s Business Credit (KUR). Lower interest rates, simplified requirements, and accelerated KUR disbursement have been a breath of fresh air for MSMEs who have previously struggled to access capital from formal financial institutions. This policy not only helps MSMEs strengthen their business foundations but also increases their ability to expand into broader markets.
In addition to financial support, the government is also encouraging the strengthening of the business ecosystem through digitalization. Digital transformation is a crucial aspect for MSMEs to remain relevant in modern market competition. Various training and mentoring programs related to digital marketing, the use of e-commerce platforms, and the use of digital payment methods have prepared MSMEs to enter a more dynamic market. This step demonstrates the government’s commitment to ensuring MSMEs can access new opportunities created by technological change while simultaneously bridging the digital divide between regions.
On the other hand, expanding partnerships between MSMEs and the private sector, including state-owned enterprises, is an equally important strategic step. The Director General of Small, Medium, and Miscellaneous Industries (IKMA), Reni Yanita, encourages large companies to involve MSMEs in their supply chains, through product curation mechanisms, quality assurance, and raw material provision. This step is considered effective in increasing MSME competitiveness, as it not only opens market opportunities but also facilitates a learning process that encourages improved production standards. Thus, MSMEs are not only able to survive but also able to enter industrial markets that were previously difficult to reach.
Efforts to maintain economic equality are also evident in the government’s encouragement of MSMEs as key actors in the regional economy. Strengthening local MSMEs is considered crucial to reducing economic disparities between regions. Programs such as integrated mentoring, the development of production centers, and the provision of business incubation facilities are concrete steps aimed directly at encouraging community-based economic growth. Through these programs, MSMEs in the regions not only gain access to capital and markets but also support in improving product quality and business management.
Furthermore, the continuation of affirmative policies, such as allocating a minimum of 40 percent of government spending on goods and services for MSME products, also demonstrates the government’s commitment. This policy provides significant opportunity for MSMEs to play a role in government procurement of goods and services, valued at hundreds of trillions of rupiah annually. With this market certainty, MSMEs can better plan production and pursue continuous innovation. This is undoubtedly a key driver for increasing the capacity and competitiveness of small businesses.
Coordinating Minister for Economic Affairs Airlangga Hartarto explained that the government is also demonstrating its commitment to protecting MSMEs through more adaptive regulations. Simplifying licensing, reducing bureaucracy, and facilitating access to food and product certification standards are important steps to eliminate structural barriers that previously limited MSME activity. Policies such as the risk-based OSS (Owned Enterprises) and free halal certification for small businesses are also being implemented.From the small scale to the simplification of distribution permits for processed food products, we demonstrate the government’s strong commitment to creating a more conducive business climate.
All of these steps are part of the government’s consistent commitment to creating an inclusive, equitable, and sustainable economy. MSMEs are no longer viewed merely as complementary to the industrial sector, but as driving forces capable of maintaining national economic stability. By continuing to embrace, support, and empower them, MSMEs have a significant opportunity to become a key force in driving more equitable economic growth.
Going forward, the challenges facing MSMEs will undoubtedly become increasingly complex, ranging from improving product quality, adapting to technology, to competing with global products. However, with continued government commitment and the support of a stronger business ecosystem, Indonesian MSMEs are believed to be able to grow more solidly. This is a crucial momentum to continue appreciating and strengthening policies that make MSMEs the foundation of national economic equality. The government, business actors, and the public have equally important roles to ensure the spirit of MSME empowerment continues to thrive and bring positive change to the Indonesian economy.
)* Government Policy Observer
