Jakarta, May 11 (ANTARA) - Small and medium scale enterprises (SMEs) which reached about 49 million units and contributed about 54 percent to the country's gross domestic product (GDP) have served as a back-bone of the country's economy.
With the help of SMEs and other business in the informal sector, Indonesia was able to face the waves of recent economic and financial crises and maintain its economic growth at a positive level, while other countries suffered a lot. However, a challenge will soon come up. ASEAN member countries have determined to establish an economic community in 2015, where goods, service, investment and trade would move freely. Would SMEs in the country be able to face an integrated community with free trade? "I think it would be hard for the SMEs at home to face the implementation of the ASEAN Economic Community (AEC)," Teguh Boediyana, chairman of the Expert Council of the Indonesian Cooperatives (Dekopin), said. Therefore, the ASEAN leaders who held an 18th summit in Jakarta over the weekend agreed to reinforced SMEs within the region in an effort to prepare them to face the free trade. They agreed to strengthen the position and increase the competitive edges of small and medium enterprises. "It is important to maximize the potentials of SMEs in ASEAN and provided them with special treatments towards the creation of an ASEAN economic integration," Indonesian Trade Minister Mari Elka Pangestu said. The minister's remarks came up as she led a Preparatory Meeting of ASEAN Economic Ministers (AEM) in the Jakarta Convention Center (JCC). During the preparatory meeting all ASEAN economic ministers agreed that building the capacity of SMES would help them play a role in the economic development within the ASEAN region. "We need cooperation in encouraging the SMEs so that they would be able to take advantage of the ASEAN economic integration because it was proven that this group of businesses could provide significant contribution to the regional economy," she said. Dr Utama H Padmadinata, a researcher of the Assessment and Application of Technology (BPPT), in an APEC Innovation briefing a couple of years ago indicated the SMEs role in the country?s economy. He released data for 2006 that SMEs in Indonesia played a significant role in social and economic growth. The importance of the SMEs is well illustrated in their contributions on the number of employment, SME establishment and SME contribution to GDP. The number of employment of SMEs was 85.42 million peoples or equal to 96.18 percent of the whole workforce in Indonesia. The number of SME establishments in 2006 was 48.93 million or equal to 99.985 percent of total enterprises in Indonesia. The SMEs contribution to GDP was 53.28 percent. Seeing the importance of the SMEs contribution to the country?s economy while they also face a challenge, Trade Minister Mari E Pangestu promised to assist them, calling on SMEs to even take advantage of the ASEAN market. To benefit from the single ASEAN market, the government would assist small and medium entrepreneurs, particularly those who were ready to export their commodities. They would be provided with financing. "The aid will certainly be adjusted to the financing standard and small and medium entrepreneurs must understand the standard to penetrate ASEAN market," she said. Actually, the ASEAN single market had already been formed in 2002 and was now embarking towards the next stage of ASEAN economic community formation. "In terms of market, the single market has actually been implemented as of 2002," she said. The minister said free trade was a challenge which businesses should take advantage of. "She said 99 percent import tariffs in ASEAN member states had been nil percent so that there is no longer any trade barrier," she said. However, Teguh Boeiyana said that the country's SMEs would be trapped in a condition similar to that of the ASEAN-China Free Trade Agreement (ACFTA). He said that Indonesia's SMEs still face constraints in the form of low competitiveness in both aspects of production and human resources quality. "Efforts to empower micro and small business did not use a clear concept and direction," he said. In the past six years of the government of President Yudhoyono, all stakeholders of the SME sector were still unable to build a goody synergy in developing small and medium enterprises. "The president did not know that many of his apparatuses and ministers still entertained individualistic mind and failed to build synergy in developing SMEs," Teguh said. After all, most of SMEs are businesses which do business in the informal sector. Therefore, it would be difficult for micro and small scale businesses to increase their competitive edge individually. Therefore, small businesses must be able to adopt optimistic attitude in the face of the market challenge in the integrated ASEAN community. "SME players may not give in and be pessimistic. They have to be always optimistic in the face of the free market," Lagut Sutandra, a lecturer at the North Sumatra University said. He said that the business climate in a free market should force business players to become more creative, innovative and smart in looking at opportunities to produce quality and efficient goods and services based on the market demand.***5***
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