COVID-19: Supporting enterprises, jobs and incomes

Ensuring business continuity of SMEs as the backbone of Indonesian economy

Indonesian key labour actors discussed steps and programmes to assist small- and medium-sized enterprises (SMEs) ensuring their business continuity based on the key findings of the ILO’s latest enterprise survey. SMEs are the backbone for Indonesian economy.

News | Jakarta, Indonesia | 08 June 2020
A modern fruit market in Jakarta during the COVID-19 pandemic (c) ILO/W. Adhi
Indonesian enterprises and jobs are impacted severely by the COVID-19 outbreak. A recent ILO’s enterprise survey has revealed that the majority of small and medium enterprises (SMEs) in Indonesia had been forced to close their businesses, either temporarily or permanently, due to COVID-19.

Two out of three surveyed enterprises in Indonesia suspended business operations temporally or permanently. Revenues of enterprises are slashed. Over a quarter of the enterprises reported having lost more than a half of their revenue."

Januar Rustandie, Project Manager of ILO’s SCORE Indonesia
“Two out of three surveyed enterprises in Indonesia suspended business operations temporally or permanently. Revenues of enterprises are slashed. Over a quarter of the enterprises reported having lost more than a half of their revenue,” said Januar Rustandie, Project Manager of ILO’s SCORE Indonesia, revealing the key findings of the ILO’s Sustaining Competitive and Responsible Enterprises (SCORE) Programme Indonesia, covering 571 enterprises in April 2020.

Januar, together with Ahmad Dading Gunadi, Director of SMEs and Cooperative Development of the National Development Planning Agency (Bappenas) and Jeff Kristianto, Programme Manager of Business and Export Development Organization (BEDO), discussed about business continuity and the efforts to rebuild and strengthen national economy while attending necessary health protocols during and after the pandemic. Jointly held by the ILO and the Alliance of Independent Journalists (AJI) Jakarta on 3 June, the discussion reached a viewership of 1,270 participants with the majority of them were national journalists.

Januar revealed that 90 per cent of surveyed enterprises already endured financial problems and 63 per cent opted to reduce their workforces. More enterprises were considering doing the same in order to survive. Enterprises make every attempt to survive but they require supports from the government.

“Some enterprises diversify products and services and others shift their businesses to the cyber space. Enterprises need government support with not only cash flow for survival, but also with adapting business models and operations to ‘after-corona’,” Januar added.

Supporting SMEs to maintain their businesses

Responding to the urgent needs of SMEs to survive the pandemic, Ahmad Dading Gunadi explained government’s five main programmes that have developed to assist SMEs. "Our main focus now is to continue providing the SMEs with financial assistance and bridge the process of adaptation or transformation," he said.

Our main focus now is to continue providing the SMEs with financial assistance and bridge the process of adaptation or transformation."

Ahmad Dading Gunadi, Director of SMEs and Cooperative Development of the National Development Planning Agency (Bappenas)
These five main programmes included credit restructuration, tax relaxation, social assistance, subsidies and loan relief and stimulus for emergency fund relief. In addition, the government would facilitate small businesses in building partnerships with e-commerce companies, allowing them to tap into online business models to eventually make it through the crisis.

Meanwhile, Jeff Kristianto provided some business tips for SMEs to survive the pandemic. As a training provider for SMEs, BEDO has provides some assistance to SMEs. “This is not our first crisis, SMEs have endured many crisis. Even though SMEs are vulnerable to crisis, most of the entrepreneurs told us that they are ready to rebuild their businesses and to adopt new business strategy,” stated Jeff.

During this difficult situation like this, it is important for the management to be transparent and open a dialogue with their workers in order to develop business strategies that benefit both parties."

Jeff Kristianto, Programme Manager of Business and Export Development Organization (BEDO)
Key strategies offered by BEDO included the need for SMEs to negotiate their financial conditions with banks, buyers and suppliers, minimize expenses by carefully checking costs, focus on selling products with short expiry dates and expand their market segments by shifting from export- to local-oriented market and from offline to online sales.

“It is also important to maintain a good workplace communication between the management and workers. During this difficult situation like this, it is important for the management to be transparent and open a dialogue with their workers in order to develop business strategies that benefit both parties,” Jeff exclaimed.

Understanding the importance of workplace cooperation, Maria Satiaputri, owner and CEO of SCORE trained Spa Factory Bali, shared how the company has adapted to meet the new challenges by building a workplace cooperation between workers and managers. “The pandemic severely impacted our business and had reduced our income to 80 percent. Based on what we learnt from SCORE programme, we gathered all of the workers and we transparently discussed the challenges that we faced in maintaining our business,” told Maria.

Together they tried to find solutions by only focusing on the high-demand product and agreed to shift their marketing strategy from corporate to retail marketing and from export- to local-oriented market. “We focus on our hand-sanitizer products and we receive a good support from all the workers to act as resellers of the products. As a result, we never stop our operation and are able to maintain a full operation until now,” added Maria.

Ensuring business continuity

We need to continue strengthening dialogues among business players, improving local markets and, most importantly, calling for the assistance from the government so that we can strengthen the economy while ensuring the health protocols."

Ronald Walla, Chair of the Indonesian Employers’ Association (Apindo) for SMEs
Ensuring business continuity was the main highlight for both employers and workers. From the perspective of employers, Ronald Walla, Chair of the Indonesian Employers’ Association (Apindo) for SMEs, emphasized the importance of information sharing among SMEs at all levels—national, provincial and district/city. “We need to continue strengthening dialogues among business players, improving local markets and, most importantly, calling for the assistance from the government so that we can strengthen the economy while ensuring the health protocols.”

From the perspective of workers, Helmy Salim, trade unionist from the Confederation of All Indonesian Workers’ Union (KSPSI), highlighted the crucial of social dialogue between workers and employers in order to find win-win solutions in terms of wages, business and employment continuity, safety management and so forth. “Trade unions are the partners of employers. Through dialogue we can find win-win solutions that benefit both parties while ensuring business continuity.”

Trade unions are the partners of employers. Through dialogue we can find win-win solutions that benefit both parties while ensuring business continuity."

Helmy Salim, trade unionist from the Confederation of All Indonesian Workers’ Union (KSPSI)
The ILO’s SCORE Indonesia has developed a new training module named SCORE Business Continuity Plan (SCORE BCP) programme to assist SMEs maintaining their business continuity. The programme will be jointly conducted with BEDO, the University of Parahyangan Bandung and Semut Management Indonesia (SMI), focusing on changes needed, risk assessment, finance and cash flow, digitalization and adaptation to the new normal.

“SMEs are the economic backbone for the country. Through this training module programme we hope to sustain the business and the same time maintain SMEs’ productivity and competitiveness. And working by collaborating with relevant ministries, employers’ and workers
Organizations as well as private partners and educational organizations, we hope that this programme can be disseminated and widely expanded nationwide,” Januar added.