As the machine of Indonesia's economic growth, small and medium enterprises (SMEs) contribute 58.92% of Indonesia's GDP and play a significant role in empowering Indonesia's communities. As SMEs continue to face challenges, we are seeing a slowdown in economic growth and development outcomes in Indonesia. As most young entrepreneurs work with dealing in MSMEs, the COVID-19 pandemic has severely impacted the growth of young entrepreneurs.
Co-led by UNDP Indonesia and Citi Foundation, Youth Co:Lab Indonesia conducted a rapid survey through U-Reports (facilitated by UNICEF) of young entrepreneurs across Indonesia and a wide range of sectors. The survey sought to understand how the coronavirus pandemic has impacted young entrepreneurs and their response to it. The results indicate that youth entrepreneurs face major challenges keeping their business going during the pandemic. The survey asked questions on business background, impact of COVID-19, solutions taken by the youth entrepreneurs, and on the support received from external sources like the government, the private sector and NGOs. Targeting youth from 16 - 30 years old, the survey received results from 756 respondents from across Indonesia.
The survey included an analysis based on the sectors with youth entrepreneurs The sectors where most young entrepreneurs operate are in fashion, retail, and consumer services. Here are the top four facts from the survey:
1. 79% of youth entrepreneurs report that COVID-19 has negatively impacted their business. Of these,21% report that their businesses have completely stopped operations due to the coronavirus.
2. 58% of youth entrepreneurs reported a decrease in their financial turnover -- up to 81%, while 36% have reported a decrease in financial turnover up to 40%. 6% of youth entrepreneurs claim that they see an increase or no impact at all on their financial turnover.
3. 68% of youth entrepreneurs reported that they did not receive government support to help them survive the pandemic. Regardless, 32% percent of youth entrepreneurs have acknowledged that the Government of Indonesia has allocated IDR 677 trillion for fiscal stimulus measures including tax deduction, refinancing, ease of accessing credit and repaying loans, and social protection support, online training for MSMEs owners as well as rapid tests for COVID-19, support for utility payments and daily necessities locally known as sembako.
4. In response to the pandemic, 84% of youth entrepreneurs reported that they have started developing a support system from various youth entrepreneurship networks. The initiative involves a partnership between supplier and distributor to solve issues on supply & demand chains, online exposure, funding support, and co-leading charity efforts.
Policy Recommendations from Youth Entrepreneurs
Youth were asked to share proposals for policy recommendations for the government in order to help them maintain the number of young entrepreneurs in the ecosystem. Their proposals included:
● Funding: Targeted funding to support the recovery/ rebuilding process of their business.
● Promotion & Networks: Support for promoting local business through online business networks (e-commerce, online youth entrepreneurship network).
● Market Control: Respondents sought government assistance in ensuring stability of market price while accelerating the launch of a stimulus package for SMEs (including tax relief for SMEs).
● Handbook for the ‘New Normal’: Respondents sought support for toolkits or a handbook for business implementation during the new normal.
Youth Co:Lab Cohorts Response for COVID-19
We also interviewed a few Youth Co:Lab cohorts about how their enterprises have been supporting their communities combat COVID-19 and create more resilient enterprises. Some initiatives to mitigate the socio-economic impact of COVID-19 are:
● Berdaya Krui operates resorts and provides surfing lessons. With fewer clients, Berdaya Krui switched their business model to working as tourism consultants and added initiatives to reduce hunger in their area by opening a crowdfunding mechanism for their charity work.
● Suri The Goods took the initiative to add another product to their line up, to respond to market need during the pandemic. Known as a skincare brand, Suri The Goods added organic hand sanitizers to their product range. Proceeds from the sale of the products supported local beneficiaries.
● Tinung Rambu empowered women in the Sumba area to create fashionable reusable masks from the traditional fabric of Tinung Rambu. Profits were used to support women in Sumba with daily necessities.
● Huma Bahijau engages the local community, especially home makers and farmers, in the cultivation and distribution of moringa oleifera and moringa leaves, a local plant believed to have therapeutic qualities that could help in the fight against the current pandemic. Huma Bahijau developed a Moringa garden and used the plant to make tea, which they believe helps increase endurance. The income from the production supports Huma Bahijau sustain their business.
For more information, find it through the Result of Survey on Impact of COVID-19 on Young Entrepreneurs in Indonesia.
Writing by Lady Diandra and Yos Fahleza Rahmatullah, Youth Co:Lab Focal Point.