COVID-19 Pandemic and MSMEs in Indonesia: Impact and Policy Responses

Abstract

Since the first confirmed case of COVID-19 infection in Indonesia in March 2020, the pandemic has hit the economy hard, especially the Micro, Small and Medium-sized Enterprises (MSMEs). This study aims to analyze the extent of the impact of the pandemic on MSMEs and the effectiveness of the government policy measures. Primary data was collected through a questionnaire administered to 2,535 MSMEs in 17 provinces during July–September 2020. The results show that MSMEs already suffered revenue slump within the second month of the pandemic and encountered both financial and non-financial hardships. The government supports and assistance was perceived as very helpful to mitigate the impact of the pandemic by the recipients. However, the programs’ distribution was hampered by either mis-targeting or lack of socialization regarding applicationrequirements, procedures and registration location. The policy, academic and managerial implications of the findings are provided.

The Well-Being of Micro Small and Medium Enterprises’ Practitioner in Covid-19 Pandemic

“…Despite the challenges and hardships faced by MSMEs sector in COVID-19 pandemic, this study has shown that level of well-being is relatively moderate to high, although the case of lower level of well-being is also observed. The MSMEs sector in Indonesia is known to possess the capability to transform challenge into opportunity in regards to sustaining their business through support from various sources, for example during the 1997-1998 and 2008-2009 economic crisis where MSMEs shown their resilience (Gunadi et al, 2021;Sudarmo, 2021)the pandemic has hit the economy hard, especially the Micro, Small and Medium-sized Enterprises (MSMEs. We argue that in the case of MSMEs' well-being in COVID-19 pandemic, those in higher well-being possess the traits of resilience and willingness to adapt, while those in lower level of well-being were facing lack of capability and support to face the challenges of COVID-19 crisis.…”

“…The challenges of MSMEs sector in Indonesia can be categorized into financial and non-financial challenges (Gunadi et al, 2021)the pandemic has hit the economy hard, especially the Micro, Small and Medium-sized Enterprises (MSMEs. The diversity of challenges faced by MSMEs sector can be seen in this study with vast number of statements from the respondents.…”

“…At the same time, the MSMEs sectors also have limited time and resources, which is true due to relatively small capital assets. For marketing, it is a fundamental issue in COVID-19 crisis where the sector expect a support in particular of training for digital marketing while waiting the restriction policy lifted and traditional market can operate again (Behera et al, 2020;Gunadi et al, 2021;Nufus et al, 2021;Saturwa, Suharno, & Ahmad, 2021)the micro, small and medium Enterprises (MSMEs. Although traditional market plays important role, with the change of lifestyle and social restriction, MSMEs sector is expected to adapt their business and actively participate in digital marketing to sustain their business and improve their revenues.…”

“…The Well-Being of Micro Small and Medium Enterprises' Practitioner in Covid-19 Pandemic (Diana Harding, Deris Friyanto, and Kevin Muhamad Lukman) impacted the MSME through reduced sales revenue and non-financial hardships (Behera et al, 2020;Gunadi, Lesmana, Fachrizah, Revindo, & Daniswara, 2021;Komara, Setiawan, & Kurniawan, 2020)the micro, small and medium Enterprises (MSMEs. At the same time, COVID-19 pandemic also affecting the lower purchasing power and consumption rate, hence generating another pressure in the form of layoffs and employment reduction (Djatmiko & Pudyastiwi, 2020).…”

government's alignment to MSMEs in the new normal era

“…In addition, according to ABDSI (2020), 48.3 percent of MSMEs in Indonesia struggle to sustain their supply chains, 92.6 percent require debt restructuring, and 26.6 percent experience cash flow issues that result in debt the majority of business owners lose the majority of their revenue, while 28% just lose half. Numerous studies have been done to look at how the pandemic has affected MSMEs globally and in Indonesia (see, for example, ILO 2020; ABDSI 2020; Gunadi et al 2021;UNDP & LPEM FEBUI 2020;World Bank & Bappenas 2021;Tambunan 2020). The purpose of this study, however, is to conduct a more thorough investigation of the following issues: (1) the degree to which SMEs' internal strategies are dealing with the pandemic; (2) attitudes toward MSMEs' economic recovery; (3) MSME business recovery strategy; (4) MSME business transformation strategy in anticipating the postpandemic business landscape; and (5) identifying the government assistance required to aid MSME enterprises in their recovery and transformation.…”