Micro, small, and medium enterprises (MSMEs) are business groups that contribute a significant percentage to Indonesia’s economy.
Playing a crucial role in the economy, MSMEs contribute around 99% of the total business units in Indonesia.
Furthermore, the contribution of MSMEs to the Gross Domestic Product (GDP) reaches 60.5%, with a labor absorption rate of 97% of the national workforce, making this sector the primary provider of jobs in Indonesia.
However, despite this success, MSMEs in Indonesia still face several challenges; one is the lack of readiness to adapt to technological advancements, which poses a significant hurdle to the sustainability of MSME businesses.
With a mission to develop and strengthen MSMEs through the digital sector, Universitas Gadjah Mada (UGM) collaborated with the Ministry of Trade and Google Indonesia to organize a Sharing Session and a Public Lecture on Indonesian Trade Policy by the Minister of Trade on Monday (Nov. 23).
This event was held at the Sukadji Ranuwihardjo Auditorium, UGM’s Master of Management program. In her remarks, Professor Ova Emilia, the Rector of UGM, revealed that the university has always supported entrepreneurship development efforts through the KKN programs spread across almost all parts of Indonesia.
The students participating in KKN act as agents of change, introducing and assisting MSMEs, even at the village level.
“Perhaps it will be further strengthened later if there is a collaboration with Google, and hopefully, this collaborative initiative will become more tangible and can be enjoyed by all communities in Indonesia,” she stated.
Rector Emilia added that UGM also has the Gelanggang Inovasi Kreativitas (GIK UGM), which functions as a hub or melting pot to realize various pentahelix collaborations involving government, society, academia, businesses, and media elements.
GIK UGM, which spans nine hectares, can be used by UGM students and anyone with innovation and creativity who wants to commercialize their products by connecting with industries or other parties.
She hopes that the Ministry of Trade can create a dedicated center at GIK UGM to provide consultation or MSME training open to the public.
“Hopefully, this collaboration will continue to grow and benefit us all,” she concluded.
The event started with a sharing session with representatives from Google Indonesia. Raihan Ridwan, Government Affairs & Public Policy, stated that Google has collaborated with the Ministry of Trade to conduct digital training for two million MSMEs in Indonesia through the Gapura Digital and Women Will programs and offer several certifications that MSME actors can obtain for free.
He emphasized the importance of digitalization as the internet is now a crucial source for finding product information when consumers research purchases.
The digital economy continues to grow by 22%, reaching USD 77 billion, and is projected to hit USD 130 billion by 2025.
“Why do MSMEs need to be digitally literate? Because research shows that 59% of global buyers use Google to research purchases they plan to make offline in stores or online on marketplaces,” he said.
Ridwan also explained several Google products, including exporting, that can help MSMEs level up. He suggested that a small step MSMEs can take is creating a YouTube account and Google Business Profile.
With two billion users, 70% of YouTube viewers say they made a purchase decision for a brand after seeing it on the platform.
“So, YouTube can actually inspire purchases,” Ridwan noted.
Waranugraha, Founder and CEO of Gapurahoster, shared a similar opinion regarding soft selling digitally on Google platforms.
He remarked that one of the challenges MSMEs face is marketing their products. MSME actors must consider how their products can be sold or, at the very least, known to the public.
“What I’ve seen in many MSMEs is that they struggle to promote online. Is having a website enough to make sales boom? Not necessarily,” he explained.
“We can utilize Google’s features as a solution. For example, YouTube has great potential for marketing; creating short videos on Shorts can go viral and be found by people who don’t even know or subscribe to us,” he stated.
This potential can be further maximized when MSMEs can create longer content, such as full product reviews. He also mentioned the potential of Google Business Profile, which can impact product sales since Google’s search engine algorithm will find the nearest information for people browsing the internet.
Google provides information in the form of text, images, and even maps that, when clicked, can direct users to MSME businesses. According to him, Google Business Profile can be a tool to build public trust in trying MSME products.
Minister of Trade Dr. Budi Santoso, in his public lecture, shared that government programs aim to increase MSME competitiveness.
This is because government protection for MSMEs is only temporary, and MSMEs still need to rise and develop their competitiveness to survive in domestic competition and continue to grow so their businesses are sustainable.
Dr. Santoso also discussed the excellent performance of exports and imports, as evidenced by the trade balance surplus, which has been consistently positive for the past 54 months since May 2020. Due to changes in its structure, this surplus is supported by non-oil and gas exports.
Fifteen years ago, 70% of Indonesia’s exports were dominated by raw materials, while today, 78% are industrial products, indicating that downstream processing across all sectors is progressing well.
“However, the structure of imports is still largely dominated by raw materials, which needs to be carefully monitored because it can stifle domestic industries, especially if there’s a sudden supply cut. So, we must always strive to source raw materials domestically,” Dr. Santoso remarked.
He then outlined the Ministry of Trade’s work programs, which are focused on creating a conducive trade ecosystem to advance Indonesian MSMEs, such as protecting the domestic market, expanding export markets, and implementing the ‘UMKM Bisa Ekspor’ program.
The Ministry of Trade encourages Indonesian MSMEs to be bold in innovation and ready to adapt to the challenges they face in global competition.
That morning, a Memorandum of Understanding (MoU) was signed between UGM and the Ministry of Trade, further strengthening the collaboration.
Previously, the Ministry of Trade had collaborated with several units at UGM, including the Faculty of Economics and Business, the Faculty of Law, the Faculty of Agricultural Technology, the Faculty of Mathematics and Natural Sciences, the Directorate of Research, and the World Trade Center.
In the near future, this MoU will be followed up by the Faculty of Law in the area of cooperation for the implementation of the Tridharma of Higher Education and MBKM in the field of Consumer Protection, as well as the Directorate of Community Service through the involvement of KKN-PPM students in assisting MSMEs as agents of change.
Author: Triya Andriyani
Photographer: Donnie
Post-editor: Afif