The SUAR team through the Business Universe Survey explored the thoughts of business leaders, regulators, and economic observers on their role in developing UMKM. The results of the survey:

• UMKM have supported many families and contributed to national economic growth. The Ministry of UMKM of the Republic of Indonesia said that based on data from the Central Statistics Agency, the current number of UMKM is 65.5 million units capable of absorbing 119 million workers. This is more than half of the total labor force in Indonesia, which amounts to 153 million people. The UMKM sector contributes 61.9% to the Gross Domestic Product (GDP).
• However, UMKM still face major challenges, one of which concerns access to financing for business development.
• The results of a survey conducted by the SUAR Team revealed that in general, it is actually quite easy for UMKM actors to get access to financing (60%). However, as many as 40% believe that UMKM actors still find it difficult, even very difficult, to access financing.

• Most of the interviewees stated that the factors that make it difficult for UMKM actors to obtain credit from banks are the absence or limited collateral owned by UMKM actors (26.7%). Furthermore, there is also the factor of information about credit that is not known by UMKM actors (16.7%) and the low financial literacy and digitalization of UMKM actors (16.7%).
• Difficult rules or administration were also cited (13.3%), ranging from difficult requirements to long loan disbursement times. Other reasons include inadequate business conditions with minimal resources and legality issues, resulting in a lack of trust from banks (13.3%). In addition, there are also banks that are too selective or picky in disbursing credit, and high interest rates (10%).
• To overcome the limited access to financing, as a solution, the resource persons agreed that regulatory reforms need to be carried out. In addition, UMKM players need to partner with large companies (as mentors) to facilitate obtaining credit from banks. Another solution is to diversify collateral to make it easier for UMKM players to obtain credit.

• Property assets, motor vehicle assets, and assets in the form of machinery or production equipment are the top three types of collateral that can be used as collateral to banks. However, for flexibility, other things that can be used as collateral include products or projects from the UMKM itself as well as invoices or sales orders. Diplomas are also recommended as collateral for banks.
• The Business World Universe Survey concluded that there are three main factors that make SMEs grow. First, promotion, marketing, and market expansion strategies (26.7%). Second, easy access to financing or ease of obtaining credit for business expansion (23.3%). Third, good business management by UMKM (16.7%).

The effort to develop UMKM is a continuous effort that has been carried out for a long time. In accordance with the great potential of UMKM, building and developing UMKM means building the Indonesian economy.

Read more here. Happy reading, Chief.