BKPM partners with HIPMI to facilitate partnerships between big investors and UMKMs

JAKARTA – Small-to-mid scale businesses (UMKM) make up 99% of Indonesia’s businesses, contributing 97% of jobs to the workforce and 57% towards the country’s gross domestic product (GDP). 

These numbers show that Indonesian UMKMs are perfectly capable of competing with ASEAN Plus Three nations and even Europe. However, their credit proportions are still at 20%: a low number that shows UMKMs are still having trouble accessing funding and investment. To help improve funding access for UMKMs, the Investment Coordinating Board (BKPM) has partnered with the Association of Young Indonesian Businesspeople (HIPMI) to draft a memorandum of understanding (MoU) regarding the provision of investment for UMKMs on Wednesday (10/2). 

BKPM chairman Bahlil Lahadalia pointed out that the MoU, which is part of Presidential Decree No. 42/2020 on Incentives and Sanctions for Ministries, Government Institutions and Regional Governments, promotes the importance of partnerships between small- and large-scale businesses.  The BKPM will coordinate assessment efforts regarding the effectiveness of the government’s one-stop investment permit service (PTSP) as well as monitor the progress of the institutions and companies providing investments. Going forward, the board will also involve the HIPMI in monitoring efforts. 

Currently, all investing companies subjected to incentives must allocate a certain amount jobs to local, regional businesses. The BKPM will also form an independent commission to prevent nepotism and ensure proper curation of participating businesses. 

“We are asking HIPMI to identify the best, most suitable businesses to participate in this program. We don’t want businesses with unclear or questionable performances. The BKPM will form a proper, independent commission to ensure this,” Bahlil said in a written statement on Thursday (11/2). 

Investments currently contribute 30% towards the country’s economic growth. In comparison, consumption makes up 57 to 60%. According to Bahlil, the state and quality of the workforce are crucial factors that could further push consumption rates higher and potentially boost investment as well. 

“To increase the rate of investments coming into Indonesia, the BKPM is will focus on accelerating permit issuances for prospective investors. Businesses must adhere to the government’s rules, not the other way around, but the government must approach them sensibly because these investors can help create jobs and increase the country’s earnings,” Bahlil explained.  
HIPMI chairman Mardani H. Maming said that the partnership between HIPMI and BKPM is rooted in a clause inside the Omnibus job creation law (UU CK), referring to partnership efforts between foreign investors and UMKMs. 

Maming added that such partnerships can introduce new dynamics to the economy, and could also help increase the number of both regional and national businesses in the country. 

“We are not against foreign investment. We welcome them whole-heartedly. We are only asking the government, specifically the BKPM, to play a part in collaborating with local and regional businesses so that a cohesive partnership towards developing and growing Indonesia’s economy can be formed,” he said.