Microbusiness in Indonesia is commonly known as UMKM. Like any other business across the nation, the UMKM sector is also experiencing various setbacks. These setbacks are due to the lack of demand. With more companies toppling over, people tend to divert to saving instead of spending. The more people spend, the less money circulates in the market. In return, the economy slows down steadily.
Moreover, due to the restrictions, a lot of companies are also unable to operate. Any companies that fall under the non-essential category are not allowed to be in office. This restriction proves detrimental to businesses that rely on personal contact between the client and the companies. For instance, service and tourism industries rely on meeting guests and providing services. In fact, due to the pandemic and the absence of tourists, a lot of famous hotels had to file bankruptcy.
The fall of the giant companies also impacts the microbusiness in Indonesia. A lot of the microbusiness customers are office employees. These businesses rely on the employees’ daily spendings for their income. With the restrictions in place, office employees cannot come to the office. In turn, microbusiness in Indonesia is experiencing economic turmoil.
National Struggles During the Pandemic
As one of the emerging markets in the world, Indonesia is one of the favoured destinations for foreign investments. Nonetheless, as the Covid-19 pandemic rampages across the globe, the country is forced to take extreme measures to limit national spread. Within a couple of weeks, the capital city of Jakarta, previously famous for its nasty congestion has almost zero cars on the intercity highway. People stay at home, continuing their work online and causing the streets, business areas, and shopping malls to empty.
The Government’s plan to inhibit the spread works well. The number of infections slowly dwindles as the restrictions and the vigorous vaccine inoculation program rolls out. Nonetheless, the economy takes its toll. According to the World Bank, in 2020 the poverty rate in the country increased by 0.41%. The number of poor people in the country is now about 10.2% of the population. Microbusiness in Indonesia, which was previously the hope for the country to regain its economic footing also suffers the consequences.
Regardless of the many stimuli like when the government distributes funds to microbusiness in Indonesia, the results are not satisfying. The small financial aid the government provide is not enough to cover the costs that companies must bear. Moreover, the execution of the financial aid is unorganized, causing the money to flow to unwanted destinations.
Microbusiness in Indonesia Current Situation
At the time this article is written, the number of infections have significantly dropped. Slowly but surely, the economy is starting to move. More business in Indonesia is beginning to operate. The movement of money and goods are starting to show.
However, the condition is still far from normal. A lot of businesses close down due to the pandemic and does not have enough capital to restart. Unfortunately, many of those businesses are microbusiness in Indonesia. Due to their relatively small income turnover, it is difficult for microbusinesses to maintain their operation during the restrictions.
Nonetheless, the presence of micro business in Indonesia is crucial for the local economy. This is because microbusiness caters to the lower and medium income population. According to The Jakarta Post, about 115 million of Indonesia’s population belongs in the medium class. The medium class are people who are free from poverty but is not yet financially sufficient. In other words, the middle-class population makes almost half of the national population.
Understanding this situation, the government makes it clear that micro-businesses are the focus. Therefore, once the covid-19 situation improves, the government lowers the restrictions that allow the microbusiness in Indonesia to start operating. The effect of this regulation shows a positive result. At MESO Serviced and Virtual Office, there has been a significant increase in the number of entrepreneurs reopening or starting their businesses.
It means that more businesses are starting to grow back. Therefore, it is perfect timing for potential entrepreneurs to start their businesses. Entrepreneurs looking to start their business can visit the MESO website to consult with the legal team or rent a virtual office or a ready-to-use office suite.