Surviving as Small and Medium Enterprises in Indonesia

   

For a while, the COVID-19 pandemic made it seem as though the world has stopped. The implementation of Community Activity Restrictions (PPKM) forces people to spend the majority of their time at home. The development of Small and Medium Enterprises (SMEs) has felt the impact of this. The decision to implement PPKM is a difficult decision that the government must make in order to reduce the COVID-19 cases in Indonesia. The implementation of this policy, together with the government’s efforts to ensure that Indonesian citizens carry out vaccination activities, has paid off. The number of positive COVID-19 has been decreasing rapidly. However, what about the SMEs that were affected by it?

What are Small and Medium Enterprises?

The licensing system in Indonesia divides licenses based on if it were an MSE or a Non MSE.

Non-Micro and Small Enterprises (Non MSEs) are much larger than MSEs. MSEs are businesses owned by Indonesian citizens, both individuals and business entities, with a business capital of at most Rp 5 billion excluding land and buildings for business premises.

Non-MSEs are divided into three categories. The first are Medium Enterprises. Medium enterprises are businesses owned by Indonesian citizens, both individuals and business entities, with a business capital of more than Rp. 5 billion up to a maximum of Rp 10 billion, excluding land and buildings for business premises.

The second are big businesses. Big businesses are business entities owned by Foreign Investment or Domestic Investment with a business capital of more than Rp. 10 billion, excluding land and buildings for business premises.

The third are representative offices. Representative offices are individuals who are Indonesian citizens or foreigners, or business entities that are representatives of business actors from abroad with the approval of the establishment of offices in the territory of Indonesia.

The fourth are overseas business entities. Overseas business entities are foreign business entities established outside the territory of Indonesia and conducting business and/or activities in certain fields.

What about SMEs? SMEs can be defined as enterprises whose personnel numbers fall below certain limits. Examples of SMEs include construction, manufacturing, retail trade, agriculture, forestry, fishing, hunting, mining, quarrying, oil and gas extraction, and many more.

Ease in Business Licensing

One of the government’s many efforts to help SMEs survive during the pandemic is to ease business licensing. The government has simplified the process of applying for licenses and made it possible to get a license with ease online. This is done by utilizing the risk-based Online Single Submission (OSS) system. This can be accessed by visiting www.oss.go.id.

Currently, the licensing system in Indonesia is done based on the business risk level. The levels are divided into low, medium low, medium high, and high. The system requires businesses to obtain an NIB that functions as a single license for the low-risk business activities. The NIB can function as an identification number, a Company Registration Certificate (TDP), Importer Identification Number (API), and customs access rights. Obtaining an NIB also guarantees a registration as a participant in health social security and employment social security.

The new OSS Risk Based Approach allows SMEs to create licenses with ease, simplicity, and transparency. These reformations have been made to make sure that SMEs don’t have to worry about licensing when starting a business. By doing this, the government has made sure that SMEs have full support from the government. Governmental support is one of the most important things that a business needs as legality helps a business to stand firm.

Coming back to the OSS, the data that the government receives from the OSS are utilized to further help business developments in Indonesia. The data gathered can be used by the Ministry of Cooperatives and SMEs to partner with MSMEs with large investment projects entering Indonesia. Ministry of Investment/BKPM also consistently requires large investments to cooperate with MSME actors.

The Indonesian government has made several other efforts to make sure SMEs can survive during the pandemic. These efforts include supporting SMEs by opening access to new capital, including from cooperation with investors. MSMEs need to be encouraged to be able to partner with foreign and local investors. However, new business models need to be created to protect MSMEs. Investment projects that are available in the OSS can be utilized by businesses.