The Fluctuations of Micro Small Medium Enterprise Confronted Pandemic and Recession in Indonesia

On 2 March 2020 was confirmed as the first Coronavirus disease (COVID-19) to have spread to Indonesia. This pandemic was exploding by around 303,498 people per million are infecting so far1. It implicates in every sector like economic, social, and even political.

Mostly, every country in the world tackled an issue in the recession cause of the pandemic of COVID-19. All the sectors threatened to shut down, declare bankruptcy, and affected gross domestic product. Organization for Economic Co-operation and Development (OECD) said these pandemic give that implication threat the higher crisis of economy that marked the activities of production all over the world, decreasing the performing of consumption of society, the disappear of the consumer of trust, the decline of stock that toward uncertainty.2

If it always continues, OECD will predict output will fail until quarter in every single country, in which the expenditure of consumers has the potentiality sinking around one third.3

Besides, Micro Small Medium Enterprise (MSME) is one sector that can be supporting economic growth. In Indonesia, MSME as a backbone of the national economy has a significant problem.

It is not solely in the production aspects and trades of value, but there is so much unemployment cause this pandemic. Based on the data, there are 37.000 MSME that reported about these pandemic impact them seriously. Based on Indonesian Institute of Sciences (LIPI) survey, the pandemic of Covid-19 led 39,4 percent of entrepreneur to shut down the production, and 57,1% is still running but decreasing amount of production. Then, the other research also showed around 56 percent reported, about decreasing the sales, 22 percent for financing problems, 15 percent of distributions problems, and 4 percent for the difficulties to receive raw commodities.4

Because problems above always increase after the government tries to applied quarantine methods in every province in Indonesia. On the other hand, they are trying to maintain safety, and on the other hand, they have to keep the economy still grow up.

How to handle the problems?

According to OECD, some solutions must be considered by; safety protocol to run the economy activities by MSME, the postponement of credit to keep the financing liquidity of MSME, financial aid, and structural policy5.

First, the protocol of health that can be applied when the government can allow MSME to operate their activities. The collaborations are the key factors that can help them well underway.

Second, the government can release the policy for concessions of payment the credit of debt and instead of the extension payment process for six months later with considering the liquidity of financial MSME.

Third, Financial aid for MSME. The government of Indonesia has been expense the budgeting amount Rp. 70,1 million for the incentive of taxes and Rp. 405,1 Million credit stimulus for people of business overcome the pandemic of COVID-19 through the state budget.

Fourthly, The structural policy for long-term benefit. This policy not only used to face the pandemic of COVID-19 but also in industrial 4.0 in the future.

In addition, to keep MSME to confront the market in this situation, there are some approaches that can be realized, that will be:6

  1. Management cash flow

The strategy in business must be changed from attack mode become survive mode. Some conducts can be decrease such as branding products, postpone for expanding company and some campaign of promotions.

  • Keep the communications and emphasize

Business is not merely about lost and gain, keep in touch with consumer, understand about their need, makes up important factor.

  • Management of employee

Because the environment of work has transformed, likes work from home and the obligatory for worker to fill the update task applications.

  • Strategy of new marketing

During the pandemic situation, the needs of society have a movement and more inclined secondary things, as they need about dress, shoes etc. to get penetration market, one of the strategy to give the discounts to all products. Usually, the consumer buys something considered with 20% for logics and 80% for emotional aspects. In order that, the company needs to maximize emotional customer.

  • Utilizing financing service

The company used online financing to optimize its business and to get facilitate running the business.

Conclusion

Micro Small Medium Enterprise (MSME) is the importance and one of the sectors supporting the economy of Indonesia. For out of these problems, MSME needs some solutions and methods for running their business. The two things that it must prepare, how to maintain their enterprise in a pandemic situation, how to respond to the market behavior, and try to survive with all conditions. All the solutions above have to conduct by collaborations between the government and all the stakeholders.                

Reference

  1. https://covid19.who.int/region/searo/country/id
  2. https://www.oecd.org/coronavirus/policy-responses/coronavirus-covid-19-sme-policy-responses-04440101/
  3. Pakpahan,Aknolt Kristian, 2020, COVID-19 dan Implikasi Bagi Usaha Mikro, Kecil, dan Menengah, Universitas Khatolik Parahyangan
  4. http://lipi.go.id/siaranpress/Dampak-Virus-Corona-pada-Laju-Ekonomi-Indonesia-2020/21963
  5. Pakpahan, Aknolt Kritian loc. cit.
  6. http://lppm.unpam.ac.id/2020/06/05/bagaimana-umkm-bertahan-di-masa-korona/

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