UMKM Development: our Nation’s backbone to suppress inequality

UMKM Development: our Nation’s backbone to suppress inequality

UMKM (Usaha Mikro, Kecil, dan Menengah) is the way to reduce inequality. Micro business, small business, and medium enterprises seems to be the core of the country’s income. This so-called Usaha Mikro, Kecil, dan Menengah is said to be the nation’s backbone as it has significant role in raising national income. In Indonesia, 99% of businesses here are classified as UMKM. BPS (Badan Pusat Statistik) stated that there are a total of 26.2 million micro and small businesses, and medium enterprises in Indonesia with micro business as the highest percentage. This proved that it is a thing in our country and will probably become more great in number.

Food stall as one of the example of UMKM

The Contribution of UMKM to the Country

As stated by Ministry of Cooperatives and SME (Kementerian Koperasi dan UKM), from 64.2 million UMKM, they have contributed 61.07% GDP or equal to 8.537 trillion rupiahs. From the data, we could conclude that Indonesia has a basic potential in a strong economic matters because of the high numbers of the business doer. These type of business are also proven to be potent in facing economical crisis, for instance, this pandemic.

The government know of its potential, so they take on policy to increase the capacity of micro and small businesses to be medium enterprises. Moreover, they create more job opportunities than big business does as they took more manpower to keep their business running, empowering people, and also make innovation which is compatible with the fast-changing trend.

UMKM uses manpower to produce their goods

Development of UMKM as a Way to Reduce Inequality

Equality in welfare is a form of social equity to all people in the country. Equality is also an effort to suppress inequality in income or Gini ratio. Gini ratio is a measure of inequality in which the number range for 0 to 1. Number 1 represents a perfect inequality while 0 represents a perfect equality.

Inequality related to money or opportunities is often linked with poverty. So often that this poverty is not eradicated even though the government already gave their best through various programs. The government now came into conclusion that to erase poverty, the poor should be held as the subject or doer. This is realized by intensifying the promotion of micro-small business and medium enterprises.

Intensifying promotion of micro-small business and medium enterprises on digital marketing seems to be the way. By reducing digital gap, business could run smoothly with market objectives for broader consumer. The use of online application is considered as one of the breakthrough to helping the development of micro-small business and medium enterprises, especially in this digital era.

Online application for UMKM is used to engage more customer

Job opportunities of these type of business are higher than big business or company. Development is very needed as they absorb domestic workers for about 75% on all workforce. According to Indonesia’s vice president, the priority given by the government to micro-small business including family-based one is a way to handle economic drop as the impact of Covid-19 pandemic.

Not to mention in this pandemic, people become more creative and innovative in producing goods. They synergize to bring helpful ideas which could impact their income.

It is not a secret that in this pandemic era, the poor became poorer while the wealthy became more prosperous. There has been inequality in income between lower social strata and the upper one. The pandemic give the implication of crisis in economic, social, and politic sectors. For UMKM, there has been a significant decrease of the sale, profit, capital problem, and the number of employees. But fear not, the government has given their all to bring back the glory of our economy through empowerment. UMKM is the strongest when monetary happened, so it will be maintained and developed as it is the most crucial source in eradicating inequality.

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