Helping small and medium-sized enterprises enter the global market

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Jakarta(ANTARA) –
Adopting a digital approach to innovation is a must for companies to further develop their business.

If companies can maximize the use of digital facilities in their operations, they can ensure the continuity of business operations and even find new business growth opportunities.

Digitalization can help micro, small, and medium enterprises (MSMEs) improve business efficiency and productivity, increase market access, and enhance competitiveness.

With the help of digitalization, MSMEs can also market their products more extensively online to reach international consumers. This will support MSMEs to enter the global market.

In view of the continuous development of the digital world, it is expected that MSMEs will become more familiar with the latest information technology and the digital world and optimize the use of digital technologies to expand their business to a global scale.

To this end, digital transformation of MSMEs is one of the main pillars to promote their adoption of digital technologies, end-to-end exports and the formation of an inclusive and sustainable business ecosystem.

This can bring new opportunities for MSMEs to enter global markets and innovate to improve product quality.

In 2023, the number of MSMEs in Indonesia will reach 66 million. MSMEs contribute 61% to the gross domestic product (GDP), equivalent to 95.8 trillion rupiah (about 610.11 billion US dollars). MSMEs provide employment opportunities for 117 million people, accounting for 97% of the total workforce.

However, according to government records, only 27 million MSMEs will be included in the digital ecosystem by December 2023. This year, the government aims to bring about 30 million MSMEs into the digital ecosystem.

The government also plans to allow small and medium-sized enterprises to engage in export business. Currently, small and medium-sized enterprises contribute only 15.7% to the country’s exports, lower than Singapore (41%) and Thailand (29%).

To encourage digitization of MSMEs, there is a need to raise awareness among MSMEs on building and managing influence on social media, optimizing the use of globally oriented e-commerce platforms, and using digital payment channels.

If these breakthroughs can simultaneously help MSMEs understand consumer preferences and global market conditions, and conduct production planning and supply chain management to meet market demand, they can help MSMEs enter the global market.

To enhance marketing, MSMEs must build strong brands by highlighting the quality, uniqueness and added value of their products to gain a foothold in the global market.

The Indonesian Government is continuing to support, promote and help MSMEs upgrade, enter the digital ecosystem and export their products, such as by strengthening production capacity, quality, marketing capabilities, market access, financial access, policy support and financing facilities.

The government also provides assistance to MSMEs by developing websites, applications and other digital capabilities to help them conduct business more effectively and efficiently.

In response, Bank Indonesia (BI) has been taking measures to encourage MSMEs to enter the digital ecosystem and export through four steps.

The four strategic initiatives include strengthening planning in line with global market needs and requirements based on market intelligence, and providing promotion channels into global markets through various domestic and international trade promotion activities.

Trade promotion activities include organizing events for Indonesian creative works, expanding trading companies such as Indonesia Bean House in Tokyo, Japan, Malaysia and Singapore, and establishing the Indonesian SME Center.

Bank Indonesia is also promoting digital literacy so that MSMEs can use technology effectively and raising awareness of fraud risks.

In addition, Bank Indonesia also provides education to encourage MSMEs to enter the export market, including through several “MSME Going Export” modules covering business potential, market trends, strategies, opportunities, procedures, requirements, and other tips and tricks.

Judah Agong, deputy governor of the Bank of the Philippines, said these measures are inseparable from the cooperation between the Bank of the Philippines and the government, relevant departments, industries, small and medium-sized enterprises and communities.

Under the coordination of the Ministry for Coordination of Economic Affairs, several ministries are also implementing projects to help small and medium-sized enterprises export their products.

The Ministry of Finance is providing Import-Export Destination Facility (KITE) to SMEs exempting them from value added tax (VAT) and import VAT. The facility is for SMEs or micro, small and medium enterprises that process, assemble or install raw materials for export.

The ministry has also set up export clinics to provide literacy and export education to micro, small and medium enterprises, or SMEs.

In addition, the Ministry of Trade also works to cultivate new exporters among MSMEs through the provision of export market information, enhancing product competitiveness, collaboration, promotion and human resource improvement.

The Ministry of Cooperatives and SMEs also encourages MSMEs through human resource training, assistance to integrated business service centres, strengthening of cooperative institutions and support for export market access.

Green small and medium-sized enterprises

Fashion is one of the sectors with the largest contribution to economic growth among MSMEs. Globally, demand for sustainable goods, including sustainable fashion products, increased significantly by 71% between 2016 and 2020.

To capture this global market potential, MSMEs must follow current global trends and enhance their capabilities to enter the sustainable fashion market.

According to BI’s assessment, 30% of MSMEs are classified as green MSMEs in 2023. Therefore, there is a need to optimize the transformation of MSMEs to support environmental sustainability and adopt digitalization in production, marketing and socio-economics.

Therefore, Bank Indonesia Deputy Governor Aida S. Budiman said that in addition to improving performance and competitiveness, MSMEs can also make positive contributions to inclusive and sustainable economic growth.

BI is continuing to promote collaboration and synergy among stakeholders to create pathways for digital SMEs to scale up their impact.

As competition on the international stage becomes increasingly fierce, small and medium-sized enterprises need to continuously develop their capabilities, qualities and competitiveness in order to be able to compete with enterprises in other countries.

To this end, multiple programs, policies and forms of support (including financing) provided by various stakeholders will help more Indonesian SMEs enter the digital ecosystem and export.

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