Micro, Small and Medium Enterprises UMKM

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D. Micro, Small and Medium Enterprises UMKM

The definition of UMKM varies according to the ministry and institution concerned, and the common definition is not come out yet. But, BPS definition is generally used now days basing upon the number of employee as shown in Table 6. Statistical yearbook of Indonesia, 2004. p.252 Table 7 Classification of micro, small and medium enterprises UMKM Industry Category BPS Technical Note Employee BPS Parameter 1 Micro Industry HouseholdCottage Industry 1 to 4 employees 2 Small Industry Small Scale Manufacturing 5 to 19 employees 3 Medium Industry Medium Scale Manufacturing 20 to 99 employees 4 Large Big Industry Large Scale Manufacturing more than 100 employees Source: BPS 2004 Beside of BPS’s definition, MOI has own category expressing the scale of industry into three categories i.e., small industry, medium industry and big industry. According to MOI, the definition is depending on the amount of asset excluding building and land. • Small industry : up to 200 million Rupiah • Medium industry : more than 200 million Rupiah up to 10,000 million Rupiah • Big industry : more than 10,000 million Rupiah According to Ministry of Cooperation and SME, MSMEs 1 are very important, not only for economic growth and job creation, but also for poverty alleviation. MSMEs are also very strategic in term of their characteristics Soetrisno, 2005. • 99 or 42.4 million units of establishment in Indonesia are MSME. • 99.5 of total manpower contributed by MSME. • 57 of GDP contributed by MSME. • 19 of total export is from MSME. • Contribution to national growth is 2-4. 1 MSME: “Micro, Small, and Medium Enterprise” used by Ministry Cooperation and SME 18 Table 8 Productivity per unit in 2003 Unit: Million Rp. Sector Small Medium Big Total 1 Agriculture 10.24 15,394.11 232,691.10 248,095.45 2 Mining Quarrying 41.79 3,200.17 354,068.22 357,310.18 3 Manufacturing Industry 27.39 7,384.56 471,573.48 478,985.43 4 Electric, Gas, Water 19.77 2,505.32 416,812.14 419,337.23 5 Construction 276.39 2,454.92 167,567.91 170,299.22 6 Trade, Hotel Restaurant 26.02 2,865.52 26,230.07 29,121.61 7 Transportation Communication 13.33 8,174.38 245,169.51 253,357.22 8 Finance, Leasing Consultant 705.58 8,709.61 143,693.02 153,108.21 9 Other Service Sector 22.38 1,512.73 321,192.47 322,727.58 Total 1,142.89 52,201.32 2,378,997.92 2,432,342.13 Source: Suetrisno 2005 It also added that poverty eradication has strong linkages with MSME development. If every unit of MSME can be facilitated and empowered to create at least one person of job opportunities or additional new enterprise, it will create 40 millions new job opportunities. For example, problems of MSME in general; 1. Lack of access to productive resources, particularly financial 2. Business environment that creates high cost economy for MSME 3. Limited internal capabilities of MSME, including technological aspect, management and entrepreneurship 4. Lack of market access and more tight and unfair competition 5. Supporting institutions which are not well developed Table 9 Productivity per worker Unit: Million Rp. Sector Small Medium Big 1 Agriculture 6.82 34.16 343.37 2 Mining Quarrying 26.45 25.15 6,629.14 3 Manufacturing Industry 9.61 15.98 1,303.86 4 Electric, Gas, Water 28.45 27.25 3,862.99 5 Construction 66.13 37.46 2,557.38 6 Trade, Hotel Restaurant 13.63 42.01 384.38 7 Transportation Communication 10.60 78.70 2,368.66 8 Finance, Leasing Consultant 159.43 196.44 3,231.69 9 Other Service Sector 15.02 10.94 2,324.74 Source: Suetrisno 2005 19 Supporting Industry Related Industry Core Cluster Tapioca Industry Cassava Producer Carpenter Blacksmith Local Manufacturer Cassava Producer Cassava Producer

E. Cluster and Linkage