Stretching the Small Micro Industry in the Pandemic Era

Small Micro Industry (IMK) has an important role as a pillar of the Indonesian economy. Based on data from the Central Statistics Agency, in 2019 in Surakarta there were 6416 IMK units, of which 92% were micro businesses with a workforce of 1 to 4 people and the other 8% were small businesses with a workforce of 5-19 people.

The pandemic that has hit the world since the beginning of 2020 has paralyzed various sectors, including the economic sector. Since the increase in the number of positive cases in Indonesia, the government has implemented several policies such as Large-Scale Social Restrictions (PSBB), Implementation of Community Activity Restrictions (PPKM), Micro PPKM, and Emergency PPKM. This restriction will certainly have an impact on economic activities, especially the business sector which results in fluctuations in demand and supply such as the micro and small industry sector.

In the midst of the pandemic, many micro and small industries are experiencing difficulties in business and have to close their businesses. In addition to shocks on the supply and demand sides, other problems faced by micro and small industries during the pandemic consist of financial problems and non-financial problems. Non-financial problems that occur such as price increases and difficulties in obtaining raw materials and difficulties in distributing business products. Meanwhile, financial problems that occur such as difficulties in paying trade debts and employee salaries due to decreased turnover.

In order to save and help MSMEs survive during the pandemic, the government has issued several policy instruments, both social assistance and economic stimulus to trigger business growth. The economic recovery program is expected to help the business world, including micro and small businesses, to recover and run their businesses normally. Some of the business stimuli provided to micro and small businesses include delays in principal and interest for MSMEs and Ultra Micro (UMi), interest subsidies for MSME and UMi loans, tax incentives for MSMEs, working capital credit guarantees, and the Banpres for Productive Micro Enterprises (BPUM). The BPUM given to micro-entrepreneurs affected by this pandemic is in the form of a grant (not a loan) with a large aid of IDR 1.2 million for each beneficiary. To be able to access the BPUM program, business owners must be proposed by the Office/Agency in charge of Cooperatives and Micro, Small and Medium Enterprises at the Regency/City level. affected by the pandemic. Unfortunately, there are still many small entrepreneurs who are not aware of this assistance.

In addition to financial problems, micro and small industry entrepreneurs are also still experiencing complicated licensing problems with many central and regional regulations or hyper-regulations governing licensing in various sectors that cause disharmony, overlap, non-operational and sectoral. So that in the future the government is expected to simplify the bureaucracy that applies in terms of licensing for micro and small industries.

The Covid-19 pandemic has changed consumer behavior and the map of business competition that business actors need to anticipate due to activity restrictions. Consumers do more activities at home by utilizing digital technology. Meanwhile, the changing industrial landscape and the new competition map are marked by four business characteristics, namely Hygiene, Low-Touch, Less-Crowd, and Low-Mobility. Companies that are successful in the pandemic era are companies that can adapt to these 4 characteristics. Thus, business actors, including micro and small industries, need to innovate in producing goods and services in accordance with market needs. They can also develop various new business ideas that can also contribute to solving the socio-economic problems of the community due to the impact of the pandemic (social entrepreneurship).