The Impediments of Small Medium Industries in Government’s View in Indonesia
Muslim El Hakim Kurniawan1, Gatot Yudoko2, Mursyid Hasan Basri3
1Muslim El Hakim Kurniawan, Doctor of Science Management Program, School of Business and Management, Institute Technology Bandung, Indonesia.
2Gatot Yudoko, School of Business and Management, Institute Technology Bandung, Indonesia.
3Mursyid Hasan Basri, School of Business and Management, Institute Technology Bandung, Indonesia.
Manuscript received on 07 May 2019 | Revised Manuscript received on 19 May 2019 | Manuscript Published on 23 May 2019 | PP: 980-986 | Volume-7 Issue-6S5 April 2019 | Retrieval Number: F11680476S319/2019©BEIESP
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: Objective – The paper aims to scrutinize impediments faced by small medium industries from the government’s view point as one of the stakeholders responsible for developing small and medium industries in Indonesia. Methodology – This study used a survey with questionnaires containing impediments that became challenges for small and medium industries (SMIs) in Indonesia. The survey was conducted 3 times, involving respondents from industry and trade office from 34 provinces in Indonesia and from 2 central agencies (Directorate General of SMIs, Ministry of Industry of the Republic of Indonesia, and Indonesia Shoe Central Office in Sidoarjo) whose main task is to develop SMIs in Indonesia. The respondents have average experiences of fostering and accompanying SMIs for 9.76 years. The survey results are matched into the table classification of impediments consisting of 4 quadrant classifying the problems. This quadrant are divided by four perceptions, namely internal and external perceptions and coverable and uncover-able perceptions. Internal and external perceptions indicate the source of the problems whether coming from within or outside the organization. Coverable means that the problems can possibly be solved by the firm and/or (local) government, while uncover-able means that the problems are difficult to overcome by both parties. Quadrant A, shows the source of impediments are derived from internal organization, coverable and characterized by exploitative SMIs. Quadrant B, shows the source of impediment are derived from external organization, coverable and characterized by explorative SMIs. Quadrant C, indicates source of impediments are derived from external organization, uncoverable, and characterized by explorative SMIs, and, quadrant D, indicates the source of the impediments are from within the organization, uncoverable, and characterized by exploitative SMIs. Findings – The results of the survey showed that from the government’s point of view, the most crucial problem faced by SMIs is capital problems (small capital, difficulty in getting capital support, high-interest rate, etc.) with a percentage of 94. 4 percent, followed by lack of knowledge about proper marketing methods (91. 6%), lack of financial management (bookkeeping/accounting, segregation of business and family finances, debt, etc. (88. 8%), small production and difficulties in achieving economies of scale (77. 8%), not having a clear vision, organizational structure, and planning in developing a business (75%), poor quality of product and not having certifications such as PIRT (Food Home Industry Handler License from Public Health Office), Halal certification (from Indonesian Ulema Council), MD (Domestic Food Registration from National Agency of Drug and Food Control), etc. (72. 2%), small local market and small population (66. 7%), lacking managerial ability of owner/manager (63. 9%), one man management (business operations are highly dependent on one person) (58,3 %), low education level of owner / manager / worker (58. 3%). From the classification of impediments table, the government officials argued that the majority of problems faced by SMIs are internal and coverable impediments (quadrant A) as much as 70 percent and approximately 20 percent of the problems are external and uncoverable impediments (difficult to solve, both by local government’s and SMIs themselves – quadrant C).
Keywords: Indonesian Small Medium Industries, Impediment, Government.
Scope of the Article: Small Batch Manufacturing