A country’s economic growth is supported by many factors. In Indonesia, one of the factors that drives the economy is the growth of small businesses, both included in the traditional sector and included in the modern sector. These businesses are often known as MSMEs (Micro, Small and Medium Enterprises). Although including a small scale, independent business carried out by the people of Indonesia actually has a significant role. Moreover, MSMEs are also spread throughout Indonesia. In addition, the MSME business also has several advantages, namely having a clear focus, flexibility, easy to innovate, and requires more affordable capital.
So, why can MSMEs become one of the supports of the economy? This turned out to be due to the contribution of MSMEs to gross domestic income. So, in the event of a global crisis, MSMEs can continue to help the Indonesian economy to keep developing. Because of its important role for the economic foundation, the Indonesian government also continues to encourage the growth of MSMEs so that MSMEs can develop through various innovative products and services. The greater the progress of MSMEs, the greater the number of jobs that can be provided so that unemployment in Indonesia can be reduced. The following are three contributions of MSME actors that have a positive influence on Indonesia.
1. Reducing poverty rates
The presence of MSMEs as a small-scale business is very helpful for the government to reduce poverty in Indonesia. This is because MSME has the potential to use human resources in accordance with their expertise and experience, starting from the person responsible for the production process, delivery, to sales. Based on data from the Ministry of Cooperatives and MSMEs obtained from umkm-id.com, productive MSMEs can employ more than 107.6 million Indonesians so that they contribute 60.6% of Indonesia’s gross domestic income.
2. Support the economic condition of the community
As a business that can be found in various regions of Indonesia, MSME also plays a major role in improving the economic conditions of the community, especially those who belong to the lower middle class. Because as mentioned, MSMEs can be found in various places, including places far from modern settlements as in big cities. Thanks to the presence of MSMEs, economic disparity between communities has become smaller. Therefore, the presence of UMKM also helps the government to prevent massive urbanization due to the people wanting to get a decent living in the city.
3. Become a source of foreign exchange income
The contribution made by MSMEs that also plays an important role for Indonesia is to become a state income in the form of foreign exchange. As we know, currently not a few MSMEs from Indonesia are able to compete internationally and export their products to various countries. Even based on data obtained from the Ministry of Cooperatives and SMEs in 2017, the country’s foreign exchange from MSMEs reached Rp88.45 billion, which means there has been an eightfold increase compared to 2016.
The contributions made by MSMEs to the country are very important. Therefore, the community and the government needs to provide support to the MSMEs so that it continues to grow. In addition, we also need to overcome the problem of technological limitations that often hamper MSME owners to keep up with the times.
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However, even though this MSME has an important role and contributes to the Indonesian economy, this MSME business still has weaknesses when operating. Therefore, the government needs to provide support and support so that this MSME business can run smoothly. In addition there are issues of limited innovation and technology, to the difficulty of access to funding sources that are quite limited.
By knowing some of these problems, the government can maximize regional spending through the regional budget to encourage the community’s economy, move the consumer goods sector and open up the possible job opportunities to reduce the economic and social impacts that can occur.