Indonesia’s MSMEs are being pushed to the next level in an effort to take advantage of the demographic bonus estimated to occur in 2025-2037.
Heaptalk, Jakarta — Indonesia is expected to experience a demographic bonus in 2025-2037 which is marked by a larger productive age population. During the period, the working-age population is estimated to have reached 76%, while the elderly population is around 10.7%.
This demographic bonus needs to be harnessed well in order to become a source of national economic strength. If not, it will likely trigger crucial issues. According to the Minister of Tourism and Creative Economy Sandiaga S. Uno, one of the keys to optimizing abundant human resources is to constantly develop human resources to be more innovative, adaptive, and collaborative. Apart from that, young people also have to hone their soft skills to have the courage to take various risks.
“Japan, Korea, and Taiwan have been able to take advantage of their demographic bonuses, making them developed countries. Now we will face this demographic bonus with full uncertainty,” said Sandiaga in a discussion held by Beritakota entitled Demographic Bonus and National Entrepreneurship Development in Jakarta (02/23).
Meanwhile, the Head of the Monitoring and Evaluation Planning Section, Deputy for Entrepreneurship of the Ministry of Cooperatives and SMEs, Fiter Baresman Silaen stated that his party aims for 4% of the total population to be established entrepreneurs in 2024.
Currently, the number of Indonesia’s MSMEs reaches 99%, which is dominated by micro-entrepreneurs. This condition makes the structure of the national economy very fragile. Therefore, the government is taking multiple efforts, and policies to result in more MSMEs being pushed to the next level and becoming a pillar for national economic growth. The Ministry targets the addition of new entrepreneurs to reach 1 million in 2024.
“We need to push for this demographic bonus to produce more entrepreneurs. Later, we are no longer focused on creating a workforce but creating entrepreneurs since in the future the number of workforce and employment will be unequal,” said Fiter.
Collaboration of 27 Ministries and Govt Institutions to push MSMEs growth
To achieve the target entrepreneurship ratio and increase the number of new entrepreneurs, the Ministry of Cooperatives and SMEs has carried out major reforms in fostering MSMEs, one of which is collaborating with 27 Ministries and Government Institutions. Fiter said, “We have now formed an ecosystem where all parties can be involved in efforts to push MSMEs to the next level. We have a coaching clinic, and business incubation collaborates with academics. Hence, it is not solely training and then leaving them offhanded.”
A representative from Bappenas, Hariyadi Sabar, as the Coordinator for Population Affairs, Directorate of Population and Social Security also attended the discussion. According to Hariyadi, Indonesia’s demographic dividend faces a number of challenges, including the low quality of human resources and an increasingly high unemployment rate that is not proportionate with the number of jobs.
“This demographic bonus is dynamic and can be optimized if there are appropriate policies. Without increased productivity and relevant policies, the benefits of the demographic bonus will soon end,” said Hariyadi.
To take advantage of the demographic bonus momentum, Hariyadi emphasized the importance of implementing the 3E framework program, spanning empower, educate, and employ. All related parties need to focus on providing rights and opportunities for the working age to join a more productive ecosystem. “On the other hand, joint efforts are needed to create more quality job opportunities, one of which is through the MSME upgrade program,” he added.
Chief Commercial Officer of PT SiCepat Ekspress, Imam Sedayu confirmed that MSMEs are the backbone of companies in the logistics sector. Indonesia’s large population is a promising market for MSMEs, as shown by the significant hike in delivery services provided by SiCepat reaching 1 million packages per day.
The surge in SiCepat service traffic was also triggered by the increasing number of Indonesia’s MSMEs going digital. In 2022, the number of MSMEs entering the digital ecosystem reached 20.76 million units, which rose 26.6% compared to 2021 of 16.4 million units. “Imagine this demographic bonus, if later we can take advantage of it by encouraging millennials to become entrepreneurs with their high level of technological knowledge, it will be extraordinary. We hope this will happen in Indonesia,” concluded Imam.
