Natural disasters recently striking Aceh and West Sumatra have not only claimed lives but also severely crippled thousands of small and medium industries (SMEs). In response, the government is now rapidly accelerating the recovery of these vital SMEs to avert widespread food supply disruptions and mitigate national economic strain.
Eko S.A. Cahyanto, the Secretary-General of the Ministry of Industry, is scheduled to conduct direct verification visits to the affected SMEs in Aceh and North Sumatra this month. This crucial step is designed to empower affected business owners to independently resume their production activities. “Currently, communities in the disaster-stricken areas of Aceh and North Sumatra urgently require a significant volume of food and beverage products. The recovery of our SMEs is essential to ensure these needs are met locally, without relying on external regions,” Eko stated at his office on Wednesday, December 31.
Eko detailed the extensive impact, revealing that nearly 84% of all SMEs in Aceh have been affected. This includes disruptions to their supply chains due to damaged infrastructure, a workforce still recovering from the tragedy, and temporary production halts. In comparison, approximately 10% of SMEs in North Sumatra have been impacted, while West Sumatra saw less than 2% of its SMEs affected.
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The Ministry of Industry’s recovery strategy for SMEs in Aceh and North Sumatra encompasses three immediate programs. First, it will provide assistance for the restructuring of production equipment for the affected SMEs. Second, working capital credit will be extended to SME owners. Lastly, Eko plans to support SME production processes in Aceh and North Sumatra through a collaborative “joint production house” scheme.
These three programs primarily aim to foster the development of essential basic necessity products and forge partnerships to broaden market access. Consequently, government aid will be distributed in phases, gradually restoring the full production capacity of each impacted SME. Beyond small businesses, the manufacturing sector’s recovery efforts will expand to include large industries. This comprehensive approach is designed to mend supply chains across various manufacturing segments, including textiles, agro-industry, and basic metals.
“We will promptly propose the funding for these aid programs to the President, enabling the use of the State Budget in this disaster situation,” Eko affirmed.
According to data from the Central Statistics Agency (BPS), the combined economy of Aceh, North Sumatra, and West Sumatra reached Rp 469.43 trillion in the third quarter of this year. This figure accounts for 7.75% of the national economy, which stood at Rp 6,060 trillion from July to September 2025.
Several economists have indicated that these events could significantly alter Indonesia’s economic growth trajectory for the fourth quarter of 2025. The tragedy, which resulted in 753 fatalities, has the potential to suppress economic prospects. Mohammad Faisal, Executive Director of the Center of Reform on Economics (CORE) Indonesia, highlighted that most economic activities in the affected regions have stalled. Simultaneously, these three provinces collectively contribute approximately 9% to the national economy.
Faisal’s projections suggest that the Sumatra disaster could dampen economic growth in the final quarter of 2025. CORE Indonesia’s growth target for Q4 2025 has been revised downward following the catastrophe. “Originally, economic growth in Q4 2025 was projected to be in the range of 5.2% to 5.4%. However, given the current conditions, it might only reach 5.2% or even fall below that figure,” he explained.
Summary
Natural disasters in Aceh and West Sumatra have severely impacted thousands of small and medium industries (SMEs), leading to casualties and potential disruptions in food supply. The government, through the Ministry of Industry, is accelerating recovery efforts for these vital SMEs, particularly in Aceh and North Sumatra. Secretary-General Eko S.A. Cahyanto will conduct direct visits to empower business owners and ensure local needs are met. Nearly 84% of SMEs in Aceh were affected, with North Sumatra seeing a 10% impact, due to damaged infrastructure and production halts.
The Ministry’s recovery strategy involves three immediate programs: restructuring production equipment, providing working capital credit, and implementing a “joint production house” scheme. These initiatives aim to develop essential products, broaden market access, and gradually restore full production capacity, with funding proposed from the State Budget. Economists project that the disaster, which caused 753 fatalities, could significantly dampen Indonesia’s economic growth in Q4 2025, with revised forecasts potentially falling below 5.2%. The affected provinces contribute approximately 9% to the national economy, highlighting the widespread economic concern.
