SMEs are one of the sectors affected by Covid-19. Unlike the 1998-1999 crisis when SMEs were the savior of the country’s economy at that time. Now many SMEs are negatively impacted by their cash flow, this is because during the Covid-19 pandemic, there were social restrictions that made buying and selling transactions go down. SMEs play a role in driving the national economy that has contributed to the Gross Domestic Product (GDP) and employment.
Analysis of the Effect of Government Economic Policy during Covid-19 in SMEs (My owned Business)
Based on data from the Ministry of Cooperatives and Small and Medium Enterprises, in the last two years namely 2018 and 2019, SMEs contributed 60.3% and 60% to GDP. For the absorption of labor from SMEs based on Bank Indonesia data in 2016 that is 97%. To stimulate the economy, especially SME, the government issued several policies such as easing credit loans, assisting the transition to digital transactions, and programs to encourage buying local products.
My business is focused on women’s fashion brand, my initial plan was to launch a product in June with an omnichannel, digital, and off-store sales strategy through the pop-up market. My business is just going to enter the production stage, but due to social restrictions ultimately business was hampered. Both the process of finding material and interacting with vendors. In general, the government policy does not affect my business, which hasn’t started, but I will analyze the effect of government policy on SMEs in general.
Covid-19 Economic Policy
Here are some Covid-19 Economic Policy (Monetary and Fiscal) and their effects on SMEs:
1. Interest/Margin Subsidy PROGRAM “PEMULIHAN EKONOMI NASIONAL” (PEN)
Minister of finance regulation (PMK) NO 65 TAHUN 2020.
This policy will alleviate the burden of the SME players when cash flow is difficult because of declining sales. The government provides interest or margin subsidies (3% – 25%) for a maximum of 6 months for customers with accumulated loans of 10 million-1 billion. The condition of this policy is that the interest comes from the credit ceiling for productive loans and motor vehicles for working capital (business) purposes.
Before Covid-19 happened, there were already many SMEs who had working capital loans to keep their businesses going. But when sales suddenly fall due to physical distancing policies, then cash flow will be affected to be negative. When sales are stopped or reduced, there are costs that businesses must incur, such as interest costs. With this policy, it certainly will help cash flow from business actors so they can refocus to build their business during Covid-19.
Read : Global Marketing and B2B
2. Tax Insentive PMK No. 44 Th 2020
The tax incentives policy, SMEs are exempt from paying the final PPh PP 23 tax during the April 2020 tax period to September 2020. The tax rate for the SMEs itself is 0.5% of the monthly gross income. To take advantage of the tax incentives, the SMEs taxpayer should apply for a Certificate in advance. After that, the SMEs taxpayer submits a report on the realization of the Final PPh Income Tax covering income tax payable on income received/obtained, accompanied by an SSP / printed billing code.
Reports are submitted monthly no later than the 20th of the following month after the tax period ends using the Covid-19 Incentive eReporting service. Reports must be submitted on time so that incentives can be utilized. With this tax incentive, the SMEs can reduce one of their expenses, specifically the tax burden, and use this incentive as working capital so that the business can continue to run.
Encourage SME’s Productivity
3. Working Capital Credit Distribution for SMEs (Republic of Indonesia’s Coordinating
Minister Regulation No. 6 of 2020)
To encourage economic activity in the SME sector, the government issues working capital distribution regulations with a maximum credit ceiling of Rp 10 Billion. The channeling of credit is done through state-owned (BUMN) banks and guarantor parties also from SOEs (BUMN). This policy refers to Minister of Finance Regulation no 71/2020. The existence of working capital loans during this pandemic will stimulate the economy of the SME sector. The SMEs do not need to worry anymore about cash flow difficulties for working capital and can refocus their efforts.
4. Programs from the Ministry of Cooperatives and SMEs to encourage sales.
The Ministry of Cooperatives and SMEs collaborate with one of Lazada’s online market place platforms by creating a Kakak Asuh Program. The program aims to help business people transition to online sales in the limited circumstances of a pandemic. The target of this program is 2 million SMEs will go digital. This Kakak Asuh program will be made for the long term, specifically for the next 3 years. Based on data only 13% of the 8 million people who just offer their products online. So with this program, business people who are already Go Digital will help business people who don’t know how to go digital. The program is implemented through online group chat which is certainly easier when there are social restrictions. (Refers to : https://www.nextren.grid.id/read/012196641/lazada-dan-kementrian-koperasi-hadirkan program-kakak-asuh-targetkan-2-juta-umkm-go-digital?page=all )
In my conlusion with the four government policies above, the economy will stimulate prositively. Ease of working capital loans, tax write-offs, and loan interest subsidies will keep SMEs able to carry out their business processes so that employment can continue. Besides, with the existence of one of the cooperation programs for Go Digital SMEs, it helps SMEs to adapt to the current limitations of physical distancing.
In my opinion, 4 of the many government policies for economic stimulation are very helpful for the industry to keep running properly. But the government must continue to control the policy by monitoring the implementation of policies and measurement of stimulus budgets issued against the results obtained from SME’s revenue contributions during Covid-19. This requires to be done so that the policy can be evaluated for its effectiveness and efficiency in dealing with the economic crisis caused by this pandemic.