Workshop Policy Lab for Sustainable Procurement 3 RIDF 2021: Identifying Potential Policy Solutions for UMKMs

JAKARTA – The Covid-19 pandemic has forced regional areas and districts to adapt to changing social and economic conditions, especially in strengthening local procurement of goods and services while also considering environmental and social aspects.

One of the efforts made to do so is to support sustainable public procurement efforts and take advantage of the potential of micro, small and medium businesses (UMKM).

"Public procurement can help stabilize the growth of UMKMs by helping them increase their transaction values and products that they handle," the Head of the Regency Administrations Association's (APKASI) Public Relations Secretariat Division Mirza Fachri said during the Policy Lab for Sustainable Procurement (PLSP) Road to Indonesia Development Forum (RIDF) 2021 workshop on Thursday (7/10).  

Taking lessons from the New Zealand government, New Zealand expert Business Development Professional Wini Rizkiningayu said that the NZ government considers public procurement to be one of their most lucrative and profitable sectors. The NZ government spends up to NZ$14 billion to NZ$20 billion on public procurement every year, while regional governments tend to spend NZ$5.6 billion per year. Therefore, public procurement has become one of the NZ government's largest business activities with an overall spending of NZ$25 billion every year.

The reason why the NZ government is so focused on sustainable procurement, Wini elaborated, was that first, they consider it to have economic viability for the long term where with a proper procurement system, local businesses are able to flourish. Second, sustainable procurement, with its myriad of environmentally-friendly criteria, will help reduce the amount of waste produced in the country, thus further preserving its environment.

"The main goal of public procurement in NZ is to create access for its small and medium businesses (UKM) to be able to do business with the government easily. If the policy framework is clear, businesses will be encouraged to follow the framework so that they can participate in the auction process easier. If we're talking about the construction sector, for example, this also increases the size and worker skill levels needed to improve working conditions in NZ. All of this supports the country's transition to a net zero emission economy that they plan to achieve by 2050," Wini explained.

Meanwhile, according to Multi Stakeholders Forestry Program 4's Forest Policy & Governance Manager Iwan Wibisono, Indonesia is currently focusing on increasing exports but the domestic market is reeling from challenges related to the abundance of imported goods flooding the market, from markets such as China, especially in the furniture industry.

"Domestically-made furniture should be dominant in the country. From the demand side, we need to encourage the Ministry of Environment and Forestry to hold trials regarding the certificate criteria for goods procurement, although from a regulatory perspective there should be no discrimination," Iwan explained.

Furthermore, Iwan said that his institution is currently facing challenges regarding data collection.

"We are currently perfecting the database of certified UKM goods suppliers. We have gathered a lot of data from surveyors, but many UKMs are still wary of providing data and many still doubt whether or not they will be really assisted in the process of acquiring new customers, so we need to trigger the buying and selling processes so that we can accommodate their concerns," he added.

Taking place over three days, from October 5 to October 7, the PLSP Workshop, which is also attended by ministries/agencies and local government representatives, offers an opportunity for key ecosystem stakeholders to contribute towards setting the policy agenda, improving policy implementation and making recommendations to improve policy targeting. Collaborations across stakeholder groups, including policy practitioners that support UMKM organizations, are very important in jointly shaping Indonesia’s policy landscape and creating a conducive and supportive policy climate for UMKMs.

The PLSP Workshop also aims to identify challenges in policies related to eco-inclusive UMKMs to develop prototype solutions to the challenges faced. This program is expected to be able to produce strategic recommendations and implementation patterns that can be used in the future by both regional and national policymakers, as guidelines for sustainable development and further UMKM growth efforts.