Indonesia’s Industry Ministry is currently seeking to increase the role of SMEs in supplying raw materials for larger businesses, as the government intends to rely less on imported goods.

A program that runs from July 1-15 aims to prepare selected SMEs by helping them with brand registration, packaging as well as with National Industrial Standards (SNI) and halal certification to meet big producers’ product standards, according to Gati Wibawaningsih, the ministry’s director general of small and medium enterprises.

“The message this program is trying to convey is that local industries can produce what Indonesians need with quality products,” Gati said in a virtual press conference on Wednesday.

The program is part of the government’s efforts to increase the role of small businesses, which contributed nearly 61 percent to the country’s economy, to help reduce big industries’ imports of raw materials and intermediate goods.

The government has set a goal of cutting the nation’s raw material imports by up to 35 percent to US$82 billion in 2022. The effort to slash imports has been going on for some time now. In the first quarter of 2020, imports of raw materials and intermediary goods saw a decline.

The program would also champion SMEs products through e-commerce platforms, including packaged food and beverages, fashion, healthcare products and sport equipment.

Large companies have already begun sourcing materials from SMEs to use in their products. For example, food manufacturing giant PT Indofood Sukses Makmur sourced tempeh, a fermented soybean product, as the main ingredient of its chips brand Qtela from a SME, said Stefanus Indrayana, the firm’s general manager of corporate communication.

Stefanus said that the partnership was immensely beneficial, with the SME seeing a gradual scale up in its production from 50kg pf tempeh a day to 1 ton.

“Our partner has good products,” said Stefanus. “But we require certain standards, such as SNI. So we do a lot of mentoring, including for halal certificates, waste management, administrative matters and technical tools.”

Unfortunately, several large companies have reported it is just not feasible at the moment to rely on local SMEs for certain raw materials or components. They cite either an ability to produce said materials, or insufficient supply as their main reasons for continuing to import these parts.

“Some of our components are made in Indonesia, but there are critical components that we have to import,” said William Gozali, director at PT Insera Sena; a large bicycle manufacturer.


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