UPNVJ Public Relations – The Rector of the Veteran National Development University (UPNVJ) Jakarta, Prof. Dr. Anter Venus, MA., Comm., highlighted the structural issues that continue to hamper the productivity of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia. The large number of MSMEs and their contribution to the national economy are considered not to be fully matched by optimal productivity levels per worker.
This was conveyed by Prof. Anter Venus when she was a keynote speaker in the National Webinar entitled "Transformation of Productivity Measurement Methods for MSMEs and Small Industries (MICRO, MESO, MACRO)" organized by Quantum HRM International.
In her presentation entitled "The Paradox of MSME Productivity in Indonesia: Unraveling Structural Barriers & Building an Integrative Solution Ecosystem," Venus described MSMEs as a giant engine of the Indonesian economy whose driving force is still hampered.
Indonesia has approximately 65 million MSMEs, employing 97 percent of the national workforce and contributing around 60 percent to Gross Domestic Product (GDP). However, despite this significant contribution, productivity per worker remains low.
According to Venus, these issues should not be viewed as a result of a lack of hard work by MSMEs. Rather, MSMEs still face inefficient business structures and various interrelated obstacles.
Six Structural Barriers to MSMEs
Venus identified six root structural issues affecting MSME productivity. First, inefficient work patterns. Many businesses remain in the informal sector and pursue increased output by increasing working hours, rather than adopting technology or creating added value.
Second, disorganized business management. Mixing business and personal finances, messy data recording, and suboptimal payment systems make it difficult for financial institutions to assess a business's viability.
Third, limited access to capital. The material presented revealed that of the approximately 65 million MSMEs in Indonesia, only about 36 million have access to formal financing.
Fourth, digitalization remains superficial. According to the material, only around 39.4 percent of MSMEs have digital operations. A digital presence isn't always accompanied by a business strategy that increases profits and productivity.
The fifth issue relates to human resource capacity and innovation. Limited financial literacy and digital skills mean that some MSME products lack strong differentiation in terms of packaging, branding, or business model.
Meanwhile, the sixth obstacle is supply chain disconnection. Many MSMEs are not directly connected to the supply chains of large companies, so demand and market access remain challenges.
Digitalization Alone Is Not Enough
Venus emphasized that simply encouraging MSMEs to go digital isn't enough to solve productivity issues. Digital transformation needs to go deeper, encompassing business operational processes such as bookkeeping, inventory management, and analytics.
Therefore, he offers four pillars of integrative solutions to encourage MSMEs to move up a class.
The first pillar is smart financing, namely credit assessment based on business track record and cash flow data, not only relying on physical collateral.
The second pillar is operational digitalization, namely the use of technology that does not stop at the presence of MSMEs in the marketplace , but enters into the "kitchen".