Empower grassroots businesses to create high value-added SME sectors: Mulyani

JAKARTA – Better collaboration is needed between grassroots businesses and the mainstream industries to foster innovation and create high value-added SMEs, said Indonesia Finance Minister Sri Mulyani Indrawati on the sidelines of the 12^th World Islamic Economic Forum (WIEF) today.

Access to financing is just one challenge, said the minister. “SMEs face many other obstacles such as high transaction costs, accessing raw materials and markets,” Indrawati told Salaam Gateway.

“President Joko Widodo is concerned with trying to build more infrastructure that is not only enjoyed by big business but also by more SMEs, so that they will be able to access raw materials and markets easier,” said the newly-appointed finance minister.

“Moreover we are trying to reduce costs that come from bureaucracy as well as uncertainty of law enforcement. We will look at the obstacles and push SMEs to use more technology,” she added.

The minister said that she hopes events such as the WIEF will link SMEs to markets and investors.

“11 agreements related to real estate, medical facility, halal industry, franchise industry, Islamic finance and capital market amounting to $899.6 million were exchanged during the forum. It would be very meaningful if we can channel these to SMEs,” she added.

Sandiaga Uno, vice chairman of the Indonesia Chamber of Commerce and Industry (Kadin), said that getting access to financing is not an issue anymore for SMEs.

Instead, they need more empowerment and skills upgrading from experienced mainstream industry players, he told Salaam Gateway.

“Entrepreneurs see challenges and problems as opportunities. They will create everything from nothing if they can work hard, work smart, and work comprehensively,” said Uno.

There are currently an estimated 57.6 million SMEs operating in Indonesia, according to data from the Central Statistics Agency (BPS).  Around 99 percent of them are micro enterprises that could benefit from skills upgrades.

“We’ve seen many partnership schemes between big corporates and SMEs like automotive producers Astra International that works with more than 20,000 SMEs and also oil producer Pertamina to back up their supply chain and create lower costs,” he said.

Kadin also encourages more fintech schemes to broaden market access for SMEs. “We are in the front line in backing SMEs. I believe funding isn’t an issue anymore and financial institutions should look more to SMEs’ business model rather than to issues of collateral because in the end, the cashflow generated from businesses will be able to pay the installment. Financial institutions should not require collateral,” he added.

© SalaamGateway.com 2016