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UMKM Empowerment Accelerates Inclusive Economic Recovery

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By: Rivaldi Andrian )*

The government continues to empower Micro, Small and Medium Enterprises (UMKM) during the Covid-19 pandemic. This step is carried out in order to accelerate the recovery of an inclusive economy, so that many people are safe from the threat of poverty.

During the pandemic, many are experiencing financial difficulties, including UMKM entrepreneurs. They have to survive in the midst of the storm because people’s purchasing power has fallen drastically. Various strategies were carried out, ranging from giving special discounts to expanding promotions in cyberspace.

The government does not remain silent and saves UMKM, so that they do not collapse and close their businesses. The reason is, small and medium entrepreneurs are heroes because they act as the backbone of the country’s economy. Do not let many UMKM lose money, then affect Indonesia’s finances.

President Jokowi at the APEC meeting which was held virtually gave a speech about UMKM. According to him, UMKM need to be empowered to accelerate the recovery of the inclusive economy. In a sense, an inclusive economy can save people and reduce poverty levels, and reduce inequality in income distribution.

UMKM are not only a savior net for low-income people, but also absorb workers. The reason is because 1 small and medium-sized business has a minimum of 2 employees (and a maximum of 30 people). Just imagine if the small business is closed, how many people are confused because they can no longer have a monthly salary?

UMKM can absorb 50% of the workforce and 64% of UMKM actors are women. Therefore, the empowerment of UMKM is also the empowerment of women. This shows that the government has carried out gender equality while at the same time saving UMKM from the brink of collapse.

President Jokowi continued, there are 2 ways to empower UMKM, the first by providing soft loans. The government has disbursed more than 4 billion USD, which was distributed to 17.8 million UMKM. They deserve help because they are affected by the pandemic.

Of course, this loan is a productive loan, and President Jokowi once advised that it should not be misused to become consumptive. Assistance money from the government can be used as additional capital for wholesalers and reopen their businesses, after having closed at the beginning of the pandemic. So that UMKM actors can continue their business without being confused about where to find credit.

The second way to save UMKM is digitization. A total of 8.4 million UMKM actors have entered the digital realm, including 54% of women entrepreneurs. Digitization is important because it is now the era of the internet, so you can’t just rely on buyers who come directly to the store.

Today many people prefer online shopping because it is practical and does not need to be tired on the road to come directly to the store or market. They are more willing to spend shipping costs, rather than losing time and energy for offline shopping. Online shopping is also more practical because all you have to do is order via cellphone and wait for the package to arrive at your house.

SMEs are already technology literate, and they also feel the benefits. During the pandemic, the majority of buyers penetrate the online market, and indeed with promotions on the web and social media, their reach will be wider. Buyers do not only come from their hometowns but also from other cities throughout Indonesia, even from abroad.

The government saves UMKM because they are the backbone of the country’s economy. UMKM must be assisted with loan injections for additional capital, so they can continue their business again. In addition, they also get an education to do business online and get more buyers, even from abroad.

)* The author is a contributor to the Press Circle and Cikini Students

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