In response to government’s regulation to impose 1% tax of total
turnover on small business having turnover of at least Rp4.8 billion per year
as per July 1, 2013, the Indonesian Chamber of Commerce [KADIN] rated that such
a policy was counter productive to the development of this segment which still
needed capital support.
As known, per July 1, 2013 the Government put in effect Government
Regulation [PP] no 46/2013 on income tax on revenues received or earned by tax
subject having certain gross income. The Government imposed tax of 1% on small
business [UMKM] whose turnover was maximum Rp4.8 billion a year.
In particular KADIN stressed that while the nation was supposed to
empower small business to ward joining the ASEAN Economic Community 2015, the
Government was not giving them incentive but burden them with this 1% tax
instead.
KADIN believed the development of UKM in Indonesia still craved for
attention from many parties, especially the Government, in regard to capital
and nurturement. In some other developing countries, UKM players clearly had
full support from their Government, such as in extra capital injection, low
bank interest facilities, and tax exemption.
The result was that product competitiveness of the said countries were
strong at the regional and global market. To illustrate, players of small
business in China were enjoying good privileges so their products were
marketable to other countries including Indonesia. It was common sense that the
development of UKM in Indonesia be supported, but the central or local
Government.
Jakarta as reference city could serve as example. UKM players in Jakarta
should be the portrait of successful UKM for all of Indonesia toward AEC 2015.
Many things had to be done for the development of UKM sector in Indonesia. UKM
development called for attention from all parties, not just the Government.
Academicians must also actively participate by giving inputs, while the
banking industry participate I terms of financing and counseling. Seminars and
discussion related to UKM must be encouraged to create implementable formulae
for solutions in supporting national UKM whereby they could compete in AEC
2015.
The rising voices that urged the Government to support UKM to grow was
based on the fact that KADIN still saw the national small business sector as in
unprepared condition to compete in AEC in 2015. The UKM sector sill needed
support in order to develop before joining the AEC in 2015. The UKM sector was
today in still in too helpless condition to face the regional open market.
The government was expected of their support in terms of capitalizing
and training. The State Owned Companies [BUMN] and Provincial Owned Companies
[BUMD] could play their roles in supporting UKM in terms of capital as long as
regulations permitted.
In terms of capital access. Bank Indonesia could also play their active
role. For example by giving incentives to credit providers banks. This was in
line with BI’s effort to increase UKM’s portion of credit at least by 20% in
2018.
The logic of it was, that banks might finance UKM, they needed
incentives. For example easy procedure to open branch offices. Open ATM
locations etc. in parallel with that, BI must try to set low credit interest
rate for UKM.
If national UKM had good access to banking services, and obtain credit
at low interest, UKM could strengthen their competitiveness whereby to compete
in MEA 2015. BI, together with the government, could motivate UKM to diversify
their business.
Indonesian’s vast population and sound middle class mean broad
opportunity for UKM to increase their production capacity. It was expected that
development of UKM would be concentrated on Small-and –Medium-Industry [IKM
whereby to bring added value and multiplier effect socially and economically.
As known, data of the Ministry of Trade had it that 70% of total UKM in
Indonesia specialized in the trading sector. This was in line with absorption
of banks’ credit allocation which was dominated by trading, hotel business and
restaurants [PHR]. Even the People’s Credit Business [KUR] was dominated by the
trading sector which contributed 60% of total KUR channeled worth Rp30
trillion.
BI together with the Government [central and local] could coordinate in
conducting trainings in entrepreneurship to motivate UKM to diversify business line
not just in trading. Some UKM players should be encouraged to become resolute
businesspeople and venture to be producers. Or else, national UKM would be stuck
only as traders and market products of other countries. To make it clear,
national UKM would only be seller of foreign products, especially that of
China.
If national UKM could be sound producers, the profit margin and added
value would be enjoyed by the producer countries. As traders, UKM would only
make measly margin, while they were benefiting nothing of the added-value
factor. BI claimed they had prepared some strategies to help development of UKM
at home.
Secondly, to prepare data and information though Website to enable banks
and customers to see the prospect and feasibility of a business line.
Thirdly, to conduct training sessions regularly and continually. In this
case BI would foster collaboration with Government institutions and banks,
especially to tackle a problem faced by UKM, i.e. financial management.
Fourthly, to facilities UKM development, product wise or marketing wise;
collectively for UKM of the same business line. The focus of UKM development by
BI was agriculture for food resiliency.
From the above picture it was apparent that some institutions had played
their role and given their contribution to develop national UKM especially
toward AEC 2015. Now it was up to the UKM players themselves to respond to the
help.
National UKM must change their mindset and viewpoint to look at MEA 2015
as an opportunity, not a threat; thereby UKM players would think positively and
constructively and abandon helplessness and dependency. (SS)
Business News - 05,2013
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