Transcript Impact the Financial Crisis for SMEs in Indonesia

Impact the Financial Crisis
for SMEs in Indonesia
Ign. Wahyu Indriyo
Bina Swadaya
Indonesia Micro Entreprises & SMEs Composition
Large
Scale
4,527 units
2,520,707 employees
Medium
120,253 units
4,720,006 employees
Small
2,017,926 units
9,970,664 employees
Micro
47,702,310 units
77,061,669 employees
Source : BPS – Statistics Indonesia 2007
Share to GDP (2007)
Bina Swadaya
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Development of Microfinance : 13 MFI
Branches, 5 Rural Bank, 12 koops
Society Empowerment : Empowerment
Community based organization (Self Help
Groups), Community Health, and Sanitation,
Environment/Agriculture, Employment.
Agribusiness Development Services: center for
agriculture information and offering various
services such as agricultural library, training, CD
and VCD, Agriculture products and marketing
accessories.
Communication Media for Development :
publishing agriculture books, skill books, health,
language, management, and applied technology.
Understanding Financial Crisis
'Financial global crisis is difficult to be understood. If the
situation is crisis, why many consumers still want to buy our
product ? Domestic market still give good prospect' (a
handicraft businessman in Klaten, Central Java).
The phenomena of financial crisis for micro enterprise
& SMEs :
Increasing of production cost & living cost (fuel price,
imported raw material price – flour mills, pesticide, food,
transportation, etc -)
Impact of Financial Crisis for Micro &
Small Medium Entreprises
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Increasing of production cost :
- Imported raw materials (flour, corn, wheat,
soybean, etc)
- Imported machine & production equipment
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Decreasing of demand : handicraft ( 50%), palm, dairy milk.
Unregulated market create more vulnerable condition : salt trader
(imported salt).
Politics of Food security Vs term of trade for more than 38
million farmer households.
Indonesia - 10 potential product dominated by micro enterprises & SMEs, (high
number of employees, creativity, cultural and traditional wisdom, domestic &
international market)
Export 2007 & Target 2008 (US $ Billion)
Food
2,0
Jewelry &
Accessories
2,3
1,4
1,0
Fisheries
0,9
0,7
Handycraft
0,6
Balm
0,3
0,2
Leather
Product
0,2
0,2
Medical
Equipment
Office
Equipment
Rizoma Oil
0,7
0,2
0,2
0,1
0,1
2007
2008
0,1
0,1
Herbal 0,0
0,0
Sources : BPS – Statistics Indonesia
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Strategy to survive :
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Substituting the raw materials.
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Lessen quality & size of the product.
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Lessen employee.
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Innovation to create value added → creative industry
Recommendation
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Regulating and facilitating to protect micro & small,
medium enterprise.
Indonesia case :
a) The strength of local (domestic) market → 70% GDP
= households consumption.
b) Creative economy = 8% GDP and absorb 7.4 million
employees.
Main creative industry in Indonesia : Fashion, art &
handicraft, television, radio & cinematography, print &
publishing, computer & software, interactive game,
music & showbiz.