The Impact of the Pandemic on MSMEs Indonesia

3 min readJan 26, 2021

This article aims to and analyze the impact that occurred during the Covid-19 pandemic on MSMEs. Since the outbreak of the corona virus, in almost all business activities, there has been a very significant decrease in the turnover of MSME players. Digital developments in globalization greatly affect the wheels of the economy, including the market. The research results show that MSMEs are the type of economic business that is most affected by the Covid-19 pandemic including the automotive industry, steel industry, electrical equipment, textile industry, handicrafts and heavy equipment, tourism. Meanwhile, industries that can survive the Covid-19 pandemic are

1. MSMEs that are able to adapt their business with innovative products

2. The retail industry that is able to survive, this is due in part to utilizing sales through digital marketing

3. Industries related to the fulfillment of basic needs, including electricity, clean water, agriculture, animal husbandry, plantations, fisheries, automotive and banking.

Indonesia’s SME Rescue Policy Efforts

The Indonesian government has issued a policy package of USD725 million for

financial incentives for various sectors of tourism, aviation and property services, as well as additions

subsidies and tax cuts. There are five cooperative protection and recovery schemes

and MSMEs in the midst of the Covid-19 pandemic (Kemenkop-UKM, 2020), namely:

A. providing social assistance to poor and vulnerable MSME sector business actors,

B. tax incentives for MSMEs;

C. relaxation and credit restructuring for MSMEs;

D. expansion of MSME working capital financing;

E. placing ministries, BUMN and local governments as a buffer for UMKM products; and (e) e-learning training

Providing social assistance

Provision of Social Assistance Social assistance is provided to MSME actors who are categorized as poor and vulnerable. Included in this social assistance scheme is a 50 percent reduction in electricity rates for electricity customers with a capacity of 450 watts for more than three months (Arifin, 2020), which can generally be MSME workers or business actors. The problem with providing social assistance is that there are still many recipients who have not been recorded in detail

As for the government’s efforts to minimize the decline in turnover for MSMEs, here are some of the activities that have been successfully carried out

Application of Health Protocols in the Business World

The Ministry of Health (2020) on May 20, 2020 issued provisions regarding the protocol for preventing COVID-19 in public areas, especially for service and trade scores. This provision applies to managers or managers of workplaces / business actors, workers, and consumers / customers. According to MediaIndonesia.Com (2020), this step is recommended by the Ministry of Cooperatives and MSMEs, among others, in the form of using masks both by MSME sector players and the public as users of MSME products or services.

Other Strategies that Need to be Taken as Policy Completions In accordance with the development of government policy implementation to empower MSMEs affected by the COVID-19 pandemic, there are several additional steps that can be taken to complement existing policies.