Covid-19 cost 60 million Indonesians their jobs in MSMEs. Can its economic ‘hero’ recover?
- From food stalls to motorbike taxis, small businesses are the lifeblood of Southeast Asia’s economy – and they have been decimated by the coronavirus and related lockdowns
- Despite the grim figure, experts say it’s too early to panic. The sector is famously resilient, having been the ‘hero’ of the Asian financial crisis, and can bounce back – provided the government lets it
From food stalls, cigarette stands and hair salons to massage parlours, motorbike taxis and pet-grooming services, MSMEs – micro, small and medium-sized enterprises – touch nearly every aspect of life in Indonesia.
As such it is hard to overstate their importance to Southeast Asia’s largest economy.
MSMEs employ the vast majority of the Indonesian workforce – until recently providing jobs for an estimated 97 per cent of the country’s 135 million workers – and are widely credited as the “hero” that kept the country afloat during the Asian financial crisis of 1996-1997.
But today, as the Indonesian economy reels from the coronavirus pandemic and related lockdown measures – at present all employees in “non-essential” industries must work from home – the ranks of MSMEs have been decimated.
Since the pandemic began, some 30 million of the country’s 64 million MSMEs have been forced to close, according to the Indonesian MSMEs Association. “Around 60 million people have lost their jobs,” said Edy Misero, the association’s secretary general. Many of the newly jobless have been forced to return from urban areas to their rural hometowns.
More pain could be on the way. While Indonesia’s infection rate has dropped – from a peak last month that saw it become the Covid-19 epicentre of Asia with more than 4 million cases and 131,000 deaths so far – it remains high, with more than 7,000 new cases reported on August 29, and just a little more than a quarter of the population fully vaccinated.
Given the ubiquity of MSMEs, the sector’s problems are likely to have an outsize impact in Indonesia, which this year lost its upper-middle-income status conferred by the World Bank amid worsening poverty and unemployment.
