The Role of Government in MSMEs:The Empowerment of MSMEs During the Free Trade Era in Indonesia

Abstract

As the era of globalisation has progressed, the free-trade paradigm -in which the role of government in every aspect of economic development is minimised, replaced by the power of the free market -has inevitably spread across countries throughout the world. Despite the positive outcomes that can be obtained from the idea of free liberalisation in achieving economic growth and opportunities, this paper will propose that governments must continue to have a strong role in their countries' economies, particularly in developing countries such as Indonesia. This argument is justified on the basis of the threat that free trade poses to some informal sectors called micro and small and medium enterprises (MSMEs), which have commonly shown low levels of competitiveness in the global market. Thus their very survival heavily depends on government involvement. The Indonesian government has launched many policies to help SMEs become and remain more competitive; for example, the Technology for Regions Program (Iptekda), which combines state support and a market-based approach for MSMEs' empowerment.This paper conducts a case study of the Iptekda program for the empowerment of MSMEs in Malang Raya. The research will address two issues: why government intervention is still required for MSE capacity-building; and how the program may help MSMEs improve their capacity and competitiveness. To answer these questions, this paper will apply a qualitative approach that uses in-depth interview with the owners of five MSMEs. The results reveal that MSMEs benefit from the program in terms of improved productivity, marketing and insights into MSMEs as an economic sector. The research limitation is that it consists solely of qualitative findings; the findings need to be combined with quantitative data for more-reliable results. Replication of this study using larger samples and a broader geographic base is suggested for promoting programs to empower MSMEs in Indonesia. KeywordsRole of Government, MSE, Indonesia, Free Trade Era Cover Page FootnoteThe publication is part of dissertation research which title the Technology Diffusion Policy Implementation for Empowering Micro and Small Enterprises in West Java Sub District and Malang Raya East Java. Acknowledgement: The authors wish to thank Endang Sukara and Rochadi Abdulhadi from the Indonesian Institute of Sciences (LIPI) for their valuable input into this research. AbstractAs the era of globalisation has progressed, the free-trade paradigm -in which the role of government in every aspect of economic development is minimised, replaced by the power of the free markethas inevitably spread across countries throughout the world. Despite the positive outcomes that can be obtained from the idea of free liberalisation in achieving economic growth and opportunities, this paper will propose that governments must continue to have a strong role in their countries' economies, particularly in developing countries such as Indonesia. This argument is justified on the basis of the threat that free t...

Small micro and medium entreprise empowerment strategy through stakeholder involvement to increase the performance

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Technology Diffusion Challenges for Micro, Small and Medium Enterprises (MSMEs) in Developing Countries: Case Study of the Appropriate Technology for MSMEs Program (Iptekda) in West Java-Indonesia (The paper is part of a Dissertation with the title of Technology Diffusion Implementation Policy Analysis : Case Study Technology for Region Program (Iptekda LIPI) 2000-2011 in West and East Java written by Dhian Kusumawardhani, 2016)

“…We give her higher priority than the common people do. When harvest, The success may be in the form of increased productivity, efficiency, and marketing ( [6], p.22). Results of this research supported the findings of previous research conducted by Syamsulbahri and Brojonegoro (2006) that the highest percentage of success was found in East Java.…”

The Effectivity of Credit for Businesses Program (Kur) Distribution in Maluku and Maluku Utara Provinces in Period of 2010-2014

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