Strengthen MSMEs in Domestic Market

KOMPAS/TOTOK WIJAYANTO

Visitors try the passenger seats of buses made by Mercedes Benz being presented at the Gaikindo Indonesia International Commercial Vehicle Expo 2020 in the Jakarta Convention Center, Thursday (5/3/2020). The automotive exhibition for commercial vehicles will take place until 8 March.

JAKARTA, KOMPAS — Micro, small and medium enterprises (MSMEs) are still a mainstay despite the uncertain economic conditions. MSMEs do not only play a role in the domestic economy, but they are also encouraged to reach foreign markets.

One way to encourage the MSMEs to dominate the domestic market is to ask the hotel industry to switch to using MSME products. The products include soap, trash cans and furniture.

Also read : Regulation Causes Problems for MSMEs

"Our MSME products are not bad, many are of good quality. We want to reduce the trade balance deficit. So, I think everyone must have a commitment to limiting imports," said Cooperatives and Small and Medium Enterprises Minister Teten Masduki in Jakarta on Thursday (5/3/2020).

Our MSME products are not bad, many are of good quality. We want to reduce the trade balance deficit.

According to Teten, many MSME products made domestically use local raw materials that can substitute imported raw materials. Thus, the market can take advantage of the MSME industry compared to industries that rely on imported raw materials.

Separately, Bogor Agriculture University (IPB) Alumni Association entrepreneurship chairperson Beta Sagita said that MSMEs must be able to innovate and to create superior products that are different from those in the market. That way, consumers will be interested in buying MSME products.

KOMPAS/FERGANATA INDRA RIATMOK

A worker puts the finishing touches on the production of a bag at Warung Djadjan cafe, Serengan, Surakarta, Central Java, Thursday (5/3/2020). The place provides a free showroom for micro, small and medium enterprises (MSMEs). The service is to support the growth of MSMEs in the city.

Trade surplus

MSME products are also expected to help maintain Indonesia\'s export performance. This expectation arises because the export target has not changed even though a number of institutions have projected the world economic growth will slow down due to COVID-19, which will have an impact on trade performance.

Trade Minister Agus Suparmanto said the ministry decided to stick to the export targets based on the 2020-2024 National Medium-Term Development Plan, namely a surplus of US$300 million in 2020, which will increase gradually to $15 billion in 2024. The surplus in 2020 is achieved by exports of $175.9 billion, with imports of $175.6 billion.

"We remain optimistic even though now there is an impact of the coronavirus. In China and Vietnam, the number of cases has decreased and many are recovering. This is still at the beginning, so we remain optimistic, the target remains the same," Agus said after a working meeting on Thursday evening.

Based on data from Statistics Indonesia (BPS), the country\'s trade deficit was $3.2 billion in 2019.

To meet export targets, the government is targeting alternative export destination countries outside the current market. The new export market is needed because the economic conditions of China, one of Indonesia\'s main export destinations, are sluggish.

KOMPAS/JUMARTO YULIANUS

Various sasirangan fabrics are displayed at the Indonesian Employers Association (Apindo) MSME Expo II in Banjarmasin, South Kalimantan, Wednesday (29/1/2020). The activity aims to bring micro,small and medium enterprises (MSMEs) closer to the market or buyers and provide encouragement and motivation to MSMEs to continuously innovate.

Institute for Development of Economics and Finance (Indef) senior economist Enny Sri Hartati said one way to maintain economic growth was to encourage direct investment into the country. "This method is more relevant than encouraging household spending, which has fiscal risks," she said.

The government put together a number of stimulus packages to maintain growth. Coordinating Economic Minister Airlangga Hartarto ensured that the government\'s economic package policy was in line with BI\'s monetary stimulus and the easing of credit collectability rules from the Financial Services Authority (OJK).

"We heard from the banking sector about the recent credit situation. The goal is that the stimulus from the government, BI and the OJK is effective in transmitting interest rate cuts that can be beneficial for the people," he said after meeting the finance minister, Bank Indonesia, the OJK and leaders of a number of banks.