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The creation of a conducive business climate is a significant factor to the accelerated upgrading and development of MSMEs, said Minister of Cooperatives and SMEs Teten Masduki.
“A conducive business climate is created if productive partnerships and healthy business competition are established between small and large businesses,” Masduki stated during a webinar on Tuesday.
However, MSMEs that are in partnerships, when networked into the global value chain, may still meet obstacles to their development, he added.
The Statistics Indonesia (BPS) recorded that 93 percent of SMEs had not formed partnerships, meaning the ratio of MSME products in the global value chain is still very low, he explained. Therefore, Masduki considered the existence of Law No. 11 for 2020 on job creation as key to the future of the Indonesian economy.
This law aims to encourage job creation, facilitate new business needs, establish partnerships between small and large businesses, ensure sustainable development, and enable MSMEs to grow and develop in line with the needs of national industries, he stressed.
He then revealed the ministry and the Business Competition Supervisory Commission (KPPU) are cooperating to create productive partnerships between small and large businesses in both the country’s center and the region, as well as to avoid unhealthy business competition.
Regarding incentives, Masduki said they will be given out to partners as stipulated in the Government Regulation (PP) No. 7 for 2021 while explaining the incentives for Micro and Small Enterprises (UMK), such as local tax reduction, relief and retribution, as well as capital and research assistance, and credit loan interest subsidies.
Incentives for medium and large businesses within such partnerships include local tax reduction, relief and retribution, he added.
Incentives are given out for innovating and developing export-oriented products, attracting regional labor, using appropriate and environmentally-friendly technologies, organizing education and training for MSMEs, mentoring for MSMEs, and expanding access for UMKs.
“I think the scope is already very broad in terms of MSME partnerships. The ecosystem is getting better,” Masduki confirmed.