“The gears of the nation’s economy need to start moving again, through how? By purchasing local products, ... purchasing products from SMEs,” ⏤ Joko Widodo, Indonesia’s President.1
Ever since the start of the pandemic, the Indonesian government, propelled by the President himself, has accelerated the shift of priority from improving the country’s infrastructure to empowering SMEs instead.2 New regulations and financial aids3 have greatly called attention to the SMEs’ critical role in reviving the nation’s economy.
SMEs and their amplified role towards the economy
With at least 62.9 million SMEs covering 99% of Indonesia’s overall business units today,4 it is undeniable that SMEs are among the backbone elements of the country’s economic growth. As an illustration, SMEs’ contribution towards the nation’s Gross Domestic Product (GDP) in the past 5 years has increased from 57,8% to 61%.5 The growth of SMEs, especially at a time like now, heavily affects the future unfolding before us.
Fortunately, the growth of SMEs have shown positive progress over the years, while boosting the people’s welfare by employing 97% of the country’s human capital.6 However, the pandemic’s limitations brought unfamiliar challenges that no business across any scale could have foreseen. During midyear of 2020, the Indonesian Politics Indicator Survey revealed the 4 main challenges burdening business owners amid the pandemic; the weakened economy, the scarcity of incoming orders, the increment of raw materials’ price points, and consequently, operational costs.7
With Indonesia’s multiple reinforcements of large-scale social restrictions since last year, businesses, particularly SMEs, have gone through a curving path in regenerating an effective performance in their offline operations. According to the Head of Indonesia’s Shopping Center Management Association (APPBI), the average number of shopping center visitors only makes up 20% of the overall capacity during social restriction periods. They predict that this figure would only go up once the vaccination has been widely rolled out, creating a safer public environment for all.8
Competing for the 20% visitors’ attention with the rest of the retail stores available is indeed a far-fetched goal to accomplish on a daily basis, resulting in a decrepit store performance that does not suffice in covering high operational costs.9 Accordingly, the restrictions of offline retail spaces have amplified the possibilities offered by online retail spaces, or in other words, e-commerce. At the end of 2020, one of Indonesia’s marketplaces, Tokopedia, recorded 100 million consumers of local products.10 This could illustrate that on top of fulfilling daily necessities, e-commerce has been considered a suitable medium to bring forth local products into a wider market.