February 24, 2024

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Indonesia strengthens small and medium industries through programs

The Ministry of Industry continues to encourage the small and medium industries (IKMs) to diligently innovate with the use of digital technology, which is in accordance with the priorities of the Making Indonesia 4.0 roadmap.

According to a recent press release , the Indonesian government seeks to create an innovation ecosystem and to provide fiscal incentives in order to grow these companies.

The electronics industry is one of the sectors being driven by development according to the roadmap.

There are already small and medium industries in the field of technology that are capable of designing and developing products that are competitive in the global arena.

Moreover, the rise of the millennial generation poses a potential development in the industry.

Government Initiatives

To maximise this, the Government has various educational and training programs that aim to improve the competencies of the human resources in the field of digital technology.

Provisions of fiscal incentives from the Indonesian Government are in the form of the Mini Tax Holiday and the Super Deductible Tax.

OpenGov Asia earlier reported on Super Deductible Tax and how it is used to incentivise the industry to invest in vocational education and R&D for innovation.

Industries investing in vocational education may receive 200% tax relief while those investing in R&D for innovation may receive 300% from the Government.

Hopefully, the industry will be more active, more productive and more competitive because they will be encouraged by such incentives.

The e-Smart IKM program was first implemented in 2017 in order for the Government to expand the reach of the IKM market through e-commerce.

The next stage of the program is to introduce other forms of digital technologies such as fintech, digital brochures, digital training, and digital management systems.

The Government is hoping that the small and medium industries will utilise digital technologies by implementing cashless payment solutions.

With more people switching to digital payments, the IKMs should not be left behind.

Instead, they should transform themselves, particularly for those situated in tourist areas, and offer these services to cashless consumers.

Funding for the IKMs

Meanwhile, the Ministry is preparing a special allocation fund (DAK) of US$ 38.2 million (IDR 540 billion) for the development of the IKM in 109 districts or cities in 2019.

As reported, the budget will be used to grow new industrial entrepreneurs, revitalise IKM centres and develop IKM-supporting infrastructure along with Industry 4.0.

The government will disburse the allocation fund to increase the competitiveness of the national IKM so that they will be more competitive in both domestic and global markets.

The IKMs have been acting as the backbone of the country’s national economy since it holds the majority of the industrial population in Indonesia.

Currently, the number of IKMs has now exceeded 4.4 million units, which absorbed a workforce count of more than 10.1 million people.

Recognising the contribution of the IKMs is significant especially of there are targets set to be reached.

It is essential and important for the government, the industry and the academe to synergise and to work well together for the goals to be successful.

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