The decline in people's purchasing power is greatly felt by a number of traders and Micro, Small and Medium Enterprises (MSMEs) in Indonesia. Ngatmining, a food trader in Jetis, Mojokerto, admitted that his income had fallen drastically due to the uncontrolled prices of basic necessities.
“Indeed, the current conditions are far from what they were before. The economy is difficult now, in my opinion. Wholesale(the goods for sale-ed) are still going up, but the number of buyers is decreasing. Far very. The buyers are almost that many, more than half. How people's incomes are now probably decreasing. So,manage production.”
Ngatmining must work around this uncertain economic condition by reducing the size of the food products it makes, but still maintaining the quality. The goal is to keep buyers coming, so that the family economy can keep turning.
The same thing was expressed by Anita Poetri, who had to find a way to keep the products she sold selling. She slightly reduced the size of the product and took a small profit as long as sales continued smoothly. Not only in the food sector, clothing products marketed online also felt the impact of the global economic crisis.
A woman from Sidoarjo said that the government needs to intervene by controlling the prices of basic necessities, so that the lower middle class is not affected.
“The current economic recession is global, everyone is feeling it. When I first started selling online shop “That, I've felt at the peak, you could say not successful but not bad. Along with various obstacles, then also the current uncertain economy, I really felt a very drastic decline.”
According to data from the Investment Coordinating Board (BKPM), in 2020, MSMEs contributed 61.97 percent or around Rp. 8,500 trillion to the Gross Domestic Product (GDP). In the same year, MSMEs also absorbed 97 percent of the workforce. However, the condition of MSMEs declined in 2020-2021, or during the first two years of the COVID-19 pandemic.
Results of a study by the United Nations Development Agency (United Nations Development Programme/UNDP) and the University of Indonesia's Institute for Economic and Social Research (LPEM UI), at that time showed that more than 48 percent of MSMEs faced raw material problems, 77 percent lost income, 88 percent of MSMEs lost product demand, and even 97 percent of MSMEs lost asset value.
An economic expert from the Faculty of Business, Widya Mandala Catholic University Surabaya, Wahyudi Wibowo, said that the continuing decline in economic conditions has not only occurred this year, but has been going on for several years previously.
According to Wahyudi, this is due to the entry of imported products that disrupt the existence of domestic products, especially those produced by local MSMEs.
“It was several years ago, when many imported products entered Indonesia. And we know that these imported products are not only raw material products, or semi-finished materials, but also many fashion products, food products, finished craft products, finished products, and indeed cheaper, more competitive. As if we see for example that in e-commercewell, I think that's what also really disrupts the development of MSMEs in our country.”
Not only during the pandemic, the decline in purchasing power is still felt until 2024. The lower middle class is taking action to postpone consumption until the economic conditions are more stable.
Wibowo explained that there are some people in the middle class who are delaying purchases due to inflation. In fact, he said, the purchasing power of this group is expected to support national consumption.
“So, the growth of individual income is not sufficient compared to inflation. So, indeed, today's economic conditions still do not provide many good prospects, so that the community, especially the middle class, wait-and-see “before,” said Wibowo
Wahyudi added that there needs to be government intervention in the domestic MSME sector, so that it can survive the economic crisis due to the global recession. One way is by providing cheap credit assistance for businesses, opening new markets, and opening partnerships between large companies and local MSMEs.
Head of the Surabaya City Cooperatives, SMEs and Trade Service, Dewi Suryowati, emphasized the local government's commitment to assisting all economic sectors in Surabaya, including UMKM. Various programs have been prepared, starting from labor-intensive programs, funding for grocery stores, to the provision of the city government's E-PEKEN online sales platform.
“For us in Surabaya, for the lower economy, we help everyone, especially in Surabaya there is also a labor-intensive program, like this, we actually prioritize the lower middle class so that everyone can continue their activities,” said Dewi.
Dewi added that the Surabaya City Government also helps fund grocery stores to shop on the E-PEKEN application.
Currently, there are around 150,000 MSMEs in Surabaya, with 50,000 of them being food and beverage MSMEs. Dewi said the decline in revenue in the MSME sector was not due to a lack of buyers. However, there was a shift in buyers directly to the platform online.
The Surabaya City Government, said Dewi, continues to provide assistance and online marketing training, so that local MSMEs can continue to thrive amidst unstable economic conditions.
“It's not that they are holding back from buying, because now when everything is quiet, it doesn't mean that no one is buying, because now everything is quiet.” online. So, how do we provide training to our SMEs? online “What is it like, because when we also try to provide assistance to them, many of them still don't understand,” said Dewi. (pr/ab)
