McKinsey: Micro, Small & Medium-Sized Enterprises Can Contribute $140B to Indonesia's GDP by 2030
Multinational management consultancy McKinsey & Company predicts that - by adopting digital technology - the micro, small and medium-sized enterprises (MSMEs) of Indonesia can contribute up to USD $140 billion to Indonesia's gross domestic product (GDP) by the year 2030.
However, to achieve this, coordination and cooperation between all stakeholders is needed, particularly in order to encourage micro enterprises becoming small enterprises, encourage small enterprises becoming medium-sized enterprises, and so forth.
Phillia Wibowo, Managing Partner of McKinsey & company Indonesia, informed that when these enterprises develop and adopt digital technology they have the potential of contributing up to USD $140 billion to the Indonesian economy by 2030. This also applies to those enterprises engaged in agriculture (where the majority of the country's employment is absorbed). In fact, according to a survey, around 80 percent of Indonesian farmers and workers who are engaged in agriculture is digitally connected in the sense that they have Internet access. However, only few use this Internet access for business purposes. Wibowo therefore urges the Indonesian government to engage in programs aimed at encouraging agricultural workers and farmers to use digital technology for business.
What is also needed is that the big companies of Indonesia start to develop digital platforms that can accommodate the needs of the country's MSMEs. While Wibowo admits that there are already quite some huge digital platforms, the problem is that these existing platforms mainly think from the perspective of the consumer; and not from the perspective of the MSME.
Secondly, Wibowo said the country's MSMEs need to have access to other markets, specifically foreign destinations instead of fully depending on the local market. By opening new markets for these MSMEs, they should experience higher sales growth. However, particularly in terms of exports it is important to raise the quality of local products.
Indonesian Finance Minister Sri Mulyani Indrawati earlier stated that the contribution of Indonesia's MSMEs to the whole Indonesian economy stands at 60.3 percent, while these enterprises absorb about 97 percent of employment. These are very impressive numbers, indeed. However, considering it are the MSMEs that are most badly affected by the ongoing COVID-19 crisis (as they have limited liquidity), it causes concern over the country's economic recovery.
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