Small and Medium Enterprises (SMEs), their Role and Benefits

Lutfi

Small and Medium Enterprises SMEs Role and Benefits
Small and Medium Enterprises SMEs Role and Benefits

Rancakmedia.com - Small and medium enterprises (SME) is the most common type of business in Indonesia, but the boundaries of small companies in Indonesia are still different today. The definition of small business in small business is relative, therefore there must be boundaries that can give rise to the definition of small business from various aspects.

Understanding Small Business from Various Aspects

Based on Total Assets

Based on total assets, small entrepreneurs are entrepreneurs who have a net business of up to IDR. 200.000.000,00 does not include land and buildings where they set up their business.

Based on total annual net sales. On this basis, small businesses are entrepreneurs with total annual net sales of up to IDR 1000 million (one billion rupiah).

Based on ownership status in terms of form, it is stated that SMEs are small entrepreneurs, can be in the form of legal entities or non-legal entities, including cooperatives.

Understanding small business from various aspects

  • According to Law No. 1 of 1995, SMEs have the following criteria:
  • The maximum net value is IDR 200 million, excluding land and buildings for business premises.
  • Has sales of up to IDR 1 billion every year.
  • Indonesian Citizen (WNI)

Stand alone, not a subsidiary or branch of a business owned or managed by a large corporation. The form of business is an individual, a business with or without a legal entity, including cooperatives. Has maximum total assets of IDR 5 billion for the industrial sector.

For the non-industrial sector, with a maximum net income of Rp. 600 million (excluding land and buildings for commercial businesses) or with annual sales financed at a maximum of IDR 3 billion.

According to BPS at a seminar held in 2009 at the State Ministry of Cooperatives and Small and Medium Enterprises, Law Number 20 of 2008 which regulates MSMEs provides a legislative basis for the preparation of MSME variables from 2006 to 2008:

Micro business

Have a maximum wealth of Rp. 50.000.000 – or maximum Rp. 300.000.000 annual sales

Small Business

Net value above Rp. 50.000.000- to Rp. 500.000.000- or more than Rp. 300.000.000,- to Rp. 2.500.000.000,-

Corporate Media

Has a net value above Rp. 500.000.000 – up to Rp. 10.000.000 – or sales of more than Rp. 2500.000.000 up to Rp. 50.000.000,-

The Role of Small and Medium Enterprises (SMEs)

Economic history has been examined to examine the role of SMEs. Some conclusions have been made, at least theoretical. First, as happened in Japan, very rapid economic development is related to the size of the small business sector. Second, the contribution of SMEs cannot be ignored in creating jobs in the United States since World War II.

Seeing the experience of advanced industrial countries regarding the role and contribution of SMEs to economic development, developed countries are starting to change their direction. In developing countries (NSB) and in established industrial countries, there are different starting points between the attention given to SMEs.

SMEs are in a position of emergency and competition from large-scale businesses in previously developed countries. SMEs themselves have different weaknesses, but because SMEs prioritize the public/society interest, the government is urged to grow and defend SMEs.

Meanwhile, SMEs are gaining attention in developed countries, because they have favorable characteristics which are then brought and applied to NSB by academics. The role of SMEs is a priority for both ministries, the Ministry of Trade and Industry and the Ministry of Cooperatives and SMEs, at every level of development planning.

However, there were no acceptable results in development efforts. In reality, the development of SMEs compared to large companies is still quite small. SMEs operate under many economic activities, although mostly in the form of small businesses operating in this sector.

SMEs also play an important role in domestic economic growth. Thus it also has a role in the distribution of development results, apart from having a role in economic growth and employment. Appropriate policies to help SMEs, for example:

  • Permission
  • Technology
  • Structure
  • Management
  • training
  • Financing

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Lutfi

Hi, let me introduce myself, Lutfi Hulasoh, I am a writer and techno blogger. I started creating a personal blog writing informative articles about the latest trends and developments in technology. My writing covers a wide range of topics, from mobile applications to artificial intelligence, and I can also provide easy-to-understand explanations to help readers understand complex concepts.