Up until a few short weeks ago SME’s were considered the backbone of Indonesia’s economy, but the back is now showing signs of major breakage. Some SMEs are fairing better than others, but for the vast majority, the last two weeks have been a downward spiral.
Indira, a coffee shop owner in the district of Tangerang on the outskirts of Jakarta, has gone from making 2,000 dollars a day to a mere hundred in literally two weeks. Hardly enough to cover her overhead and Indira may have to swallow the bitter pill of shutting down her coffee shop. The closure itself will cost her about 3,000 dollars out of pocket just to pay severance for her 30 staff members and empty out her space.
Elsewhere in Tangerang, Adi, who runs an event catering business with his wife, says he’s suffered an 80 percent drop in income since the event has been canceled due to coronavirus fears.
Mira, a dentist with her own small clinic in East Jakarta, says she’s had to shut down for two weeks and like everybody else in her profession is awaiting further government instructions on when she can start serving patients again. Mira says she has enough stashed away to pay staff wages for the next 6 months, but that would be her absolute threshold. Luckily, she also has a side hustle selling satay and rice boxes, which has actually experienced a 5 percent increase in online sales since the pandemic.
The above are just a few small examples of how COVID19 has affected SMEs in Indonesia’s big cities, and one can only imagine how the pandemic has affected micro-businesses elsewhere in the country, especially those in remote parts of Indonesia. Farmers that rely on sales of their crops are definitely affected, given that demand at traditional markets; food stalls and restaurants have dwindled. Those creating arts and crafts for the tourist market are another group hugely affected since transnational border controls have brought global tourism to a standstill.
The economic repercussions of COVID19 have been massive and the Indonesian government is already predicting zero economic growth for this year – the worst it’s been in over a decade. If SMEs have long been viewed as the backbone of Indonesia’s economic growth, will the pandemic crush this backbone into a million pieces?
Over the next few days, we will dive deeper into SMEs and their difficulties in the SEA region and how Silot is prepared to help SMEs operate, grow, and thrive.