We can all agree that the economic heartbeat is often focused on the island of Java or in Jakarta, and East Indonesia is often overshadowed by its western counterparts. The thriving East Indonesia is quietly witnessing a surge in SMEs that are not only driving local economies but also making a significant impact on the national stage.
East Indonesia boasts a rich tapestry of cultures and landscapes. Amidst this diversity, a vibrant ecosystem of SMEs is flourishing. These enterprises span various sectors, from agriculture and fisheries to tourism and handicrafts, tapping into the region’s unique resources. In 2022, there were 103.660 SMEs recorded in West Nusa Tenggara, while in 2021, there were 98.270 SMEs recorded in East Nusa Tenggara. These show a great number of businesses have been thriving their way to boost East Indonesia’s economic growth.
One of the key contributors is its thriving agriculture and fisheries sector. The fertile soil and abundant marine resources offer a conducive environment for the cultivation of crops and the development of fisheries-based businesses. Local farmers and fishermen have leveraged traditional methods alongside modern techniques to enhance productivity. These efforts not only contribute to the region’s economic growth but also position East Indonesia as a hub for eco-friendly and high-quality agricultural products.
The breathtaking landscapes and cultural richness of East Indonesia have become magnets for tourism. SMEs in the region are capitalizing on this trend by offering unique experiences, ranging from eco-friendly resorts to guided cultural tours. Local entrepreneurs are collaborating to create a robust tourism infrastructure that not only attracts domestic travelers but also appeals to international visitors seeking authentic and off-the-beaten-path experiences.
The diverse ethnic communities in East Indonesia bring with them a treasure trove of traditional craftsmanship. SMEs in this region are preserving and revitalizing age-old techniques to produce distinctive handicrafts, textiles, and artisanal products. These goods are not only sought after locally but are also gaining recognition in international markets, adding to the region’s export potential.
How it impacts on local communities
The surge of SMEs in East Indonesia is not just about economic numbers; it’s about fostering sustainable development and empowering local communities. Many of these enterprises are deeply rooted in the communities they serve, creating employment opportunities and supporting social initiatives. As these businesses thrive, they contribute to poverty reduction and enhance the overall quality of life in the region.
However, according to East Nusa Tenggara Province Cooperative Service, 60 percent of the total SMEs are still in beginner level, making a great challenge to their growth and market access. Limited infrastructure, logistical constraints, and a lack of market information pose hurdles for businesses looking to expand beyond local boundaries.
The lack of awareness of digital marketing and online advertising are still a challenge, not only for East Indonesian SMEs but Indonesian SMEs as a whole. From our Scale Up Readiness Index (SCRIN) data, 57 percent of enterprises within KUMPUL.ID’s ecosystem have not yet conducted online advertising, even when 35 percent of them are actively using social media for their business. 75 percent of the enterprises have not yet established websites to market their product as well.
According to PricewaterhouseCoopers survey in 2019, 74 percent of SMEs in Indonesia have not had access to capital/funding, and according to the data from Asosiasi Pengusaha Indonesia (Apindo), 61,8 percent SMEs still have difficulty getting loans to support their business. Lack of access to information on funding and assets to apply for capital are also obstacles for most SMEs.
Other than that, Infrastructure that supports digitalization and internet for SMEs in the regions is still minimal, with lack of mentorship for SMEs to understand their competitive capacity.
Back in 2021, the Ministry of Trade and Google Indonesia had collaborated with KUMPUL.ID in “Dukung UMKM Indonesia Timur” program to support East Indonesian SMEs to improve their product quality and competitiveness and utilize digital technology to strengthen their position. Not only in the domestic market, but can also expand their market to penetrate the global export market. With over 1000 SMEs ranging from Makassar, Lombok, Manado, Ambon, Papua, dan Kupang joined for three-months online mentorship, giving significant impacts to their business.
The thriving SMEs in East Indonesia are not only shaping the economic landscape of the region but are also contributing significantly to the nation’s overall development. From sustainable agriculture and fisheries to the vibrant tourism and traditional industries, these enterprises showcase the entrepreneurial spirit that defines the resilience of East Indonesian communities.
As KUMPUL.ID continues to support and collaboration grows, the business potential of East Indonesia is poised to make an even more significant impact. With a focus on overcoming market access challenges, these SMEs are set to become key players in the national and international business, bringing the richness of East Indonesia to a global audience. The story of East Indonesian SMEs is one of innovation, community empowerment, and a promising future for inclusive economic growth.
Citation:
Blended Finance in Indonesia. Simatupang, Renata. USAID. December. 2020.
Pengusaha Ungkap 61 Persen UMKM Kesulitan Dapat Pinjaman Modal. CNN Indonesia. December. 2023
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