How do Covid-19 Affect Micro Businesses in Indonesia?

Micro Businesses in Indonesia experience many negative impacts ever since the COVID-19 pandemic strikes hard on the country. The government sets partial lockdowns to get control over the virus spread. These partial lockdowns only allow the essential business to operate fully while others must operate with the minimum employee or stop their operations. With the pandemic dragging on, the Micro Businesses begins to die down.

Micro Businesses in Indonesia and their Struggles

Unfortunately for the country, Micro Businesses in Indonesia occupies the majority of business entities in the country. When the pandemic hits Indonesia, many businesses struggle to sustain the bleak economy. The bad economy has forced many entrepreneurs to close their companies, which increases the unemployment rate.

Furthermore, the population no longer engages in active buying and selling, which causes a stagnant economy. To give incentives for the people to spend, the government tries to disburse aid funds to Micro Businesses. The plan is not working as the covid-19 pandemic continues to ravage the country. Day by day, more businesses continue to close down as more people are left unemployed.

Furthermore, the government has also imposed a rule to stop export and import. While the government means well by this regulation, it affects microbusinesses badly. Companies that rely on trading their goods can no longer continue their activity. The businesses are forced to stop their operation since they cannot compete in the market. Furthermore, the buying market that was once a large pool is now a small pool with too many fishermen.

The Impact Towards the Economy

With the largest business proportion facing a direct hit, the country’s economy plunges further. As the Micro Businesses in Indonesia faces a rapid decline, larger businesses also face the threat of bankruptcy. Multinational companies begin to shut down their operations one by one. Small and medium companies, that managed to sustain their business for the first year of the pandemic begins to be shaken down.

Unlike microbusinesses, the government does not extend aid funds to those businesses. One by one they disappear and the number of unemployed increases even higher. The deaths of these companies result in an oversupply of human resources as jobs are declining, demands are much lower than supplies, and poverty level skyrockets. It is a nightmare for any economist.

To add salt to the injury, the Indonesian government does not have enough funds to support their local businesses. Unlike other neighbouring countries, to support the local economy, their government provides subsidies. The businesses that experience profit loss during the pandemic receives subsidies from the Government. These aids allow companies to run and the economy to sustain at a certain level.

Solution for Businesses in Indonesia

On the other hand, Indonesia is facing a larger socio-economic problem. The people have become restless from the ongoing pandemic and the lack of income. More people fall to starvation. The only way for everything to return to normal is if the country and its people can beat the virus. To do that, there is a huge need for cooperation between the government and its people. The government needs to handle medication, vaccines, and the health system correctly while the citizens must obey the rules and regulations.

If both parties manage to uphold their parts, Micro Businesses will be able to bloom again. That means a decrease in the unemployment rate and an increase in spending. This situation will be beneficial to the whole economy of the country.

Another effective solution for existing Micro Businesses is to use modern office solutions like MESO Serviced and Virtual Office. Entrepreneurs can either choose to rent a Virtual Office or a Serviced Office. Find out more about the products through our website. Alternatively, contact us on our Whatsapp number at +62812-1315-4189.

Sibylle Avelena

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