The Development of Small Industries and Economy of Indonesia

           Small indusrties or in this case Small and Medium Enterprises (SMEs) are small firm that operating in producing goods or services. Usually this kind of business has a little capital, limited equipment or tools, a few employment, and little output or product. There’s so many kind of product that be produced by SMEs company. Usually there are so many SMEs in one country (especially in little countries or developing countries) and because of that reason, SMEs give significant development in litlle countries or developing countries.

          Indonesia is one of developing countries in economy and because of that, SMEs give so many development in this country. From the data in 2001, there are 99,97% SMEs company in this country and there are 97,85% employee work in SMEs company. The comparison between Big Industries and SMEs company in this country is too large and of course this fact gives significant impacts for this country.

From the data above, we can see that SMEs have a big role as a job provider for the vast majority of the people and reducing unemployment in this country. Recently, unemployment is one of the biggest problem for this country. Because of so many unemployments in this country, the government must take responsibility for their life, for example give some subsidy to ensure their life. Moreover, with so many unemployments in this country, human resources in this country can’t be distributed and be used properly, the circulating of money don’t balance, and that make a gap in economic cycle in this country. So, the function of SMEs as a job provider is very important for this country.

            From this function, we can see that SMEs have a vital function in combating poverty, distributing income, and economic growth of this country. As we can see, there’s so much people live in proverty. That is happen because a big gap from many people who have money and who don’t have money. The distributing of income (or in this case is money) can’t reach people with low economic condition, and back again the real reason for this case is because it’s not easy to get job. With SMEs in this country, this problem can be reduced because there are so many SMEs in this country and because of them, many people can get income easily. When this problem reduced, the economic growth of this country will be better and better. That happen because the economic gap in this country will be reduced and the circular of money is this country will be more efficient.

             Another function of SMEs in this country that important is increasing non-oil export. Indonesia is one of oil exporter country (especially crude oil), but we cannot always become an crued oil exporter because crued oil is one of limited and raw product. And based from that fact, we need some product that can be exported to other country to increasing income for this country. There are so many SMEs in this country and every firm makes some output or product that can be sold to another country. And when that happen, cash income for this country will increasing.

               Besides from that, it’s not easy for SMEs to compete in the global market and it is hard to become a big and stable company. Intense competition in the market is still the biggest problem for SMEs company to compete in the market. Many people already know another product from other brands and trusted that brand as the best product in the market. It’s not easy for SMEs to make their product and their brand become a famous product, be known by people (instill the brand image), and be trusted by others.

Another problem for SMEs is their low capital. As a small and medium company, SMEs of course still have limitation in capital section. Many SMEs company who still don’t have their land and equipment. They just used their simple tools or they need to rent it from others. They don’t have much money to hire many employment or buy some technology to support their businesses.  That problem will affect the procces of production and the output of the company. The output will fewer with the higher cost, and that will impact to the product price that will be higher than other product.

              Another weakness from SMEs company is knowledge and experience. Knowledge and experience is an important factor for the company to running their business. With knowledge and experience, a company can make a great decision for their company policy and strategy to gain market. As a small and medium company, logically SMEs still have a fewer knowledge and experience than another big company and this fact makes SMEs harder to become a big company .

From companies side, SMEs company need to be opened to market needs and market changes. To gain the market, SMEs company need to make some innovative idea when they produce their product. The innovation product will make people interest to buy their product and make their brand be known by others. After people have a brand image, the company will be more easier to compete and gain the market.

             From the society side, people must be opened their mind to try and trust SMEs product in the market. This step will help the company growing and of course as the result, the company will give a positive feedback to society by hire more employment and reduce the economic gap in the society.

From the government side, based on the functions of SMEs, the government must see SMEs company as a benefit for this country (even until now, the fact is the government still can’t give much help to SMEs company growing). Economic issues can be reduced and economic growth problem in this country can be resolved by SMEs company. The government need to find a solution for SMEs company weaknesses to make this company survive in the market. There are some action that the government can do.

·         the government can give some capital subsidy or loan to make SMEs company grow and become a stable and big company.

·                                The government can make some policy that helped SMEs and give some protection to SMEs company to grow bigger, for example make SMEs easier to make business license or make a limitation for foreign companies operate in this country.

·         the government can give a training and information about how to producing, advertising, and marketing SMEs product in the market. It can help SMEs company to compete in the market.

·         the government can help SMEs company with built some facilitate for the company create partnerships with exporters or buyers from other countries.

               So, from the data above the condition about SMEs company in Indonesia, the function of SMEs company in this country, and the weaknesses of SMEs company, we can conclude that Small and Medium Enterprises really important for this country. Because of that, the government must keep supporting SMEs company so this company can compete in the market. Moreover, from SMEs company side, the company need the innovative idea and from society side, people must open their mind to support SMEs companies grow bigger. 

Daftar Pustaka

http://en.wikipedia.org/wiki/Small_and_medium_enterprises
http://www.smecda.com/deputi7/file_infokop/riana.htm

Writer :
Name : Vicky Ferdian
Npm : 120110120133
Facebook : http://www.facebook.com/vicky.ferdian

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