Abstract
Small and medium enterprises (SMEs) have been the backbone of Indonesia's economy for over 100 years. There is nearly 64-million-unit business, with 98% of the market share belonging to the micro-business and 52% categorized as informal. Despite the uncertainty created by the prolonged crisis, a path of recovery is happening in the SME sector. Continuous effort to support SMEs has been planned include mapping out a cluster program. This chapter illustrates challenges and types of resilience and cluster issues facing SMEs that need to be resolved to prepare SMEs for recovery, and one of them is information technology. For many businesses, including SMEs, participation in the digital economy is the key to greater resiliency. The development of SMEs in Indonesia is an interesting topic with an actual illustration of the recent trends of Asian countries' economies and businesses in the current COVID-19 pandemic.
TopIntroduction
Small and medium enterprises (SMEs) in Indonesia play a primary role in the domestic market. They are the major source of income for numerous poor households. The SMEs account for over 90% of all firms, generate the highest employment rate and provide approximately 90% of the country's workforce, primarily women and younger people. The majority of the SMEs consist of Micro Enterprises, dominated by self-employed businesses with non-paid workers, widely scattered throughout the rural areas, thereby playing an essential role in developing the inhabitants' skills, particularly women and enthusiast youngsters, as entrepreneurs (Tambunan, 2009). The sector contributes 0.59% from 56.53% in 2009 to 57.12% in 2010, while it increased by 0.83% to 57.94% in 2011 in the GDP. Moreover, in 2012 there was an increase of 1.14%, thereby amounting to 59.08%. This shows the sustainable growth of SMEs in Indonesia. Therefore, it is necessary to maintain government policy stability to ensure the continuous maintenance of these conditions that leads to sustainable growth. The development of SMEs following economic growth is unidirectional. The growing national economy generated the largest gross domestic product (GDP) in ASEAN countries and was ranked 16th globally in 2015. Indonesia's debt to GDP is also quite low compared to other ASEAN countries, namely 24 percent in the same year. This has the potential to encourage the growth of new SMEs. Based on data from the Central Statistics Agency, in 2014, there were 55.2 million small and medium enterprises, therefore, supposing each SME unit employs an additional 1 (one) person this year, it implies that it can provide approximately 55.2 million new jobs in Indonesia (Wilantara & Indrawan, 2016).
It is essential to understand that SMEs have no standardized definition. In general, the key criterion used by most countries for statistical principles is the number of persons employed (Holmes & Gibson 2001). However, according to Indonesian Law no. 20 of 2008 concerning Micro, Small, and Medium Enterprises, the SMEs are determined by the assets and revenue generated by a company and distinguished by the size of the industry.
a. Micro Business
This scale describes as a productive economic enterprise owned by individuals or business entities under the criteria of micro-businesses. Consequently, this includes businesses with a net worth of IDR 50,000,000, excluding buildings and land premises. The sales generated yearly are approximately IDR 300,000,000.
b. Small Business
A small business is a productive economic enterprise owned by individuals or groups and not a business entity or branch of the leading company. It is controlled by the owner and, either directly or indirectly, part of medium businesses.
Besides, businesses that fall in these categories have a minimum and maximum net worth of IDR 50,000,000 and IDR 500,000,000, respectively. They make sales of relatively IDR 300,000,000 and IDR 2,500,000,000 yearly.
Key Terms in this Chapter
Kekeluargaan: A constructed relationship based on filial piety and harmony, wrapped in such a way that each Indonesian is connected to the others.
P2P (Peer-to-Peer): The provision of financial services to bring together Lenders and Borrowers in order to enter into lending and borrowing agreements through an electronic system using the internet network.
Hormat (Respect): A value of respect, normally to an older person originates from the family, where a father is respected due to his leadership and charisma within the inner family.
Machine Learning: Machine learning is the study of computer algorithms that improve automatically through experience and by the use of data. It is seen as a part of artificial intelligence.
Internet of Things: A network of physical objects, so known as “things,” that are embedded with sensors, software, and other technologies that is used for the purpose of connecting and exchanging data with other devices and systems over the internet.
Customer Relationship Management: A process in which a business or other organization administers its interactions with customers, typically using data analysis to study large amounts of information.
Cloud Technology: Cloud computing is the on-demand availability of computer system resources, especially data storage and computing power, without direct active management by the user.
Artificial Intelligence: The simulation of human intelligence processes by machines, especially computer systems.
PELITA (Pembangunan Lima Tahun): A five-year development plan created during Soeharto’s New Order Regime, to improve the people’s living standard and economy in Indonesia.
Rukun (Harmony): A value that can be represented as the maintenance of social harmony.