Reimagining SME Recovery in Indonesia
Looking at how SMEs have adapted to the challenges of COVID-19 in Indonesia through a survey of 2,200 entrepreneurs
Social distancing measures, such as Indonesia’s PSBB (Large Scale Social Restriction), have been implemented in response to the COVID-19 pandemic. This presents a unique challenge for SMEs, who now face disruptions in their supply chains, cash flow, and demand. As such SMEs have had to adapt their business practices, with many digitalising their businesses.
These findings come from Sea Insights latest report based on a survey of over 20,000 Indonesian youth, including 2,200 young entrepreneurs and business owners.
Click here for the full report in English and Bahasa Indonesia
We found 3 key insights
1) COVID-19 and Social Distancing measures have presented 3 main challenges to SMEs
- Supply-side — 63% of entrepreneurs have reported that remote working is either difficult or impossible.
- Cashflow — 1 in 4 business owners says that funding has been a constraint to working remotely.
- Demand-side — Close to 60% of Indonesian youths planning to increase emergency savings and spend more frugally.
2) SMEs are quickly going digital to adapt to the challenges of COVID-19
COVID-19 has further accelerated the process of digitalisation among SMEs, with close to 50% increasing their use of key digital tools such as social media, buying through e-commerce and educational technology.
In addition to increasing their digital footprint, SMEs have been shifting distribution channels to increase sales. Close to 1 out of 2 young entrepreneurs have started selling more intensely online through e-commerce. Of those selling more actively online, 1 in 5 of them are using e-commerce for the first time during COVID-19.
3) Digital transformation will be long-lasting and have a significant economic impact
Close to 70% of entrepreneurs said they will permanently increase their usage of key digital tools such as e-commerce (both buying and selling) and social media.
Based on our previous research on 18,000 business owners in Indonesia, we know that e-commerce is a powerful tool that can significantly boost SMEs, doubling their revenue on average. Most importantly, it lowers the barriers to entry into entrepreneurship and allows a new class of entrepreneurs, such as homemakers and students, to generate precious alternative income streams.
