MSME development in Indonesia has long suffered from fragmented data. Data on MSMEs are often limited, opaque and not exhaustive, partly due to the large proportion of informal enterprises and the use of multiple repositories specific to each institution or agency. The fragmented and opaque nature of MSME data creates a challenge in providing financial institutions with accurate credit information.
MSMEs' Single Database is included as a provision in Government Regulation No. 7 of 2021. GR 7/2021 states that the single database involves collecting and checking the suitability of data, managing the data submitted by ministries/agencies and local governments, and spreading the use of data by taking advantage of the data network system and information. According to the regulation, such a database will at least include the business identity and business owner’s identity1. While a memorandum of understanding (MoU) has been recently signed to mark the cooperation between the Ministry of Cooperatives and MSMEs and Statistics Indonesia (BPS) in strengthening MSME data, an operational regulation has not been issued, which can pose a challenge for smooth implementation in the field given the number of stakeholders involved and the types of data that need to be collected in order to understand the digitalization financing needs of MSMEs2.
Inventorizing data on MSMEs can help the government and other stakeholders to customize policy, product, and service solutions that meet their specific needs. As the ministry responsible for MSME development at the national level, the Ministry of Cooperatives and MSMEs is responsible for leading the process of building the database. To ensure that MSMEs will receive targeted support to digitize their business, the database needs to include not only the identity of the business and its owner, but also the business activity, financing history and needs, as well as their digitalization needs. These may include the perceived costs needed to employ specialized IT staff or to overhaul their existing processes and systems. Regional governments, such as the Provincial Government of DKI Jakarta, should be involved in regularly gathering the most up-to-date data from MSMEs in their region alongside Statistics Indonesia. Finally, it is crucial to digitize the database to ensure that relevant organizations are able to access the data simultaneously.
For many entrepreneurs, the decision to turn into innovations depends on the ease to adopt technology, trained workforces, and multiple sources of finance. Yet, navigating the complex regulation is a major challenge for most lay business people. To expedite the economic recovery post-pandemic recession, the stakeholders in the ecosystem are urged to formulate the right policy to simplify such challenges.