THE DIGITALIZATION OF MICRO, SMALL and MEDIUM ENTERPRISES (MSME/UMKM) IN FACING THE MODERN ERA
The COVID-19 pandemic has had a very significant impact on the growth of MSME in Indonesia. MSME are the most important pillars in the Indonesian economy. The number of MSME in Indonesia is 64.19 million, of which the composition of Micro and Small Enterprises is very dominant, namely 64.13 million or around 99.92% of the total business sector.
Based on data from the Coordinating Ministry for Economic Affairs of the Republic of Indonesia 2020, the majority of MSME (82.9%) experienced a negative impact of this pandemic and only a small portion (5.9%) experienced positive growth.
In addition to the disruption of buying and selling activities due to the decline in people’s purchasing power, another factor that causes the deterioration of the MSME economy is the existence of social restrictions. The social restrictions imposed by the government as one of the procedures to deal with the spread of COVID-19 have caused a drastic decline in the economy of businesses and all their partners.
Based on this, the growth of MSME digitization is going faster because many MSME players are taking advantage of the development of digitalization as a media for their promotions and transactions. So that the constraints of social restrictions and other obstacles related to the ease of buying and selling activities can be overcome
The Ministry of Cooperatives and SMEs (Kemenkop UKM) noted that until February 2022 there were as many as 17.25 million MSME players who were connected to the digital ecosystem. The Micro Business Sector, the Ministry of Cooperatives, Small and Medium Enterprises, explained that the growth of digitization was faster than in previous years. Based on data, businesses that utilize digital systems have grown more than 100% compared to the previous few years.
In addition, based on its growth until February 2022, the digitization of MSME has grown by around 1.95 million units from the number in 2021.
Kemenkop UKM will continue to encourage MSME players to be connected to the digital ecosystem. Kemenkop UKM targets 30 million MSMEs to be connected to the digital ecosystem by 2024.
Based on the results of the BRI survey from March to September 2021, there were as many as 20% of MSME stated that their businesses had closed. This can be said to be quite good because in the previous year period (in 2020) MSME which stated that they had closed reached 50% of the total MSME.
In overcoming this problem, the government distributes assistance through all sectors, including MSME and Corporations. The government also directly distributes incentives to the community as working capital while increasing purchasing power.