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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. Source : BPS – Statistics Indonesia 2007. Share to GDP (2007). Bina Swadaya. Development of Microfinance : 13 MFI Branches, 5 Rural Bank, 12 koops

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Impact the Financial Crisis for SMEs in Indonesia

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  1. Impact the Financial Crisis for SMEs in Indonesia Ign. Wahyu Indriyo Bina Swadaya

  2. Indonesia Micro Entreprises & SMEs Composition Source : BPS – Statistics Indonesia 2007

  3. Share to GDP (2007)

  4. Bina Swadaya 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.

  5. 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 -)

  6. Impact of Financial Crisis for Micro & Small Medium Entreprises • Increasing of production cost : - Imported raw materials (flour, corn, wheat, soybean, etc) - Imported machine & production equipment • 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.

  7. 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) 7 Sources : BPS – Statistics Indonesia

  8. Strategy to survive : • Substituting the raw materials. • Lessen quality & size of the product. • Lessen employee. • Innovation to create value added → creative industry

  9. Recommendation 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.

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