What Is SME and How Does PT Sriboga Raturaya Contribute to The Industry?

You may have often heard the term Small and Medium Enterprises or SMEs. Simply put, Small and Medium Enterprises (SMEs) are a category of businesses that maintain their income, assets, or number of employees below certain thresholds.

Small and Medium Enterprises (SMEs) are one of – if not the most important industries in the Indonesian economy. Its outstanding contribution to our Gross Domestic Product (GDP) is a proof. Now, if you are wondering, “What is SME? How big is their role in the Indonesian economy?” Well, keep reading and you will find all about it in this article.

Understanding Small and Medium Enterprises (SMEs): Definition and Criterias

What is SMEs: The Definition

Small and Medium Enterprises (SMEs) are a category of businesses that maintain their income, assets, or number of employees below certain thresholds. This limit is determined by each country. So, don't be surprised if each country has its own way to define an SME.

In Indonesia, Small and Medium Enterprises (SMEs) are defined separately in Law Number 20 of 2008 concerning Micro, Small, and Medium Enterprises. In Article 1 paragraph 2, it is stated that a small business is a productive economic business that stands alone, which is carried out by individuals or business entities that are not subsidiaries or branches of companies that are owned, controlled, or become part of either directly or indirectly by medium-sized or large businesses.

Next, in Article 1 paragraph 3, the law stated that medium-sized businesses are productive economic businesses that stand alone, carried out by individuals or business entities that are not subsidiaries or branches of companies that are owned, controlled, or become part of either directly or indirectly of small businesses and large businesses with a total net worth or annual sales proceeds as stipulated in this law. 

Then, what is SME? In short, we can interpret Small and Medium Enterprises as productive economic enterprises that stand alone, carried out by individuals or business entities that are neither subsidiaries nor branches owned or a part of large businesses.

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What Is SMEs: The Criteria

After knowing what SME is, we will discuss the criteria for small and medium enterprises. Each category has its own criteria. The following are the criteria for small and medium enterprises:

Criteria for small enterprise: 

1. Has a net worth of more than Rp 50 million up to a maximum of Rp 500 million, excluding land and buildings for business premises, or 
2. Having annual sales results of more than Rp 300 million rupiahs up to a maximum of Rp 2.5 billion.

Criteria for medium enterprise:

1. Has a net worth of more than Rp 500 million up to a maximum of Rp 10 billion, excluding land and buildings for business premises, or 
2. Having annual sales results of more than Rp 2.5 billion up to a maximum of Rp 50 billion.

Small and Medium Enterprises (SMEs) as The Backbone of the Indonesian Economy

After answering your question about what SME is, we will now discuss its role in the Indonesian economy. Small and Medium Enterprises are part of the Micro, Small, and Medium Enterprises industry. Based on the data from the Ministry of Cooperatives and SMEs (Indonesian: Kementerian Koperasi dan UMKM), the number of MSMEs in Indonesia in 2022 has reached more than 64 million – including small, medium, and micro businesses.

As a whole, the Micro, Small, and Medium Enterprises (MSMEs) industry has a very important role in our country. President Joko Widodo even called this industry as the backbone of the Indonesian economy. This is evidenced by the many economic activities generated by the industry, including harvesting, manufacturing, and shipping of basic necessities to almost the entire population of the country. 

In numbers, the MSME industry also makes an outstanding contribution to the country's economy. The contribution of MSMEs to the country's Gross Domestic Product (GDP) reaches 60.5%. In addition, as Indonesia's economic backbone, the industry also has a very large employment absorption, as much as 96.9% of the total national employment absorption. This makes it the largest provider of employment opportunities in the country.

The data above gives us an idea of how potential this industry is. Therefore, the government and all parties involved in the economy should move together to build a stronger MSME industry.

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PT Sriboga Raturaya Take Parts in Indonesia’s SME Industry

PT Sriboga Raturaya also takes part in building the industry. The company understands what SME is and how important the industry is to the nation’s economy. The company's contribution is done through one of the divisions under PT Sriboga Flour Mill which was specially formed to support the Indonesian SME industry, the Sriboga UKM Center. 

Sriboga UKM Center was established in 2004. Its main mission is to help and guide SME entrepreneurs in Indonesia to develop their businesses. The division delivers support through a variety of forms, including:

a. SME Business Sharing

Sriboga UKM Center collaborates with universities in Indonesia, such as Diponegoro University, Jenderal Soedirman University, Nahdlatul Ulama Islamic University Jepara, and many others. Together with these professional academics, Sriboga UKM Center empowers small and medium-sized business owners by providing MSME business management materials as well as product demos, including baking.

b. Sriboga UMKM Class

Sriboga UKM Center holds classes at Sriboga Customer Centers in 5 cities; Jakarta, Bandung, Yogyakarta, Semarang, and Surabaya to give various insights related to SME business. These insights include branding & packaging, digital marketing, business management & financing, as well as human resource management and business negotiations.

c. Regular Community Meetings

Once a month, Sriboga UKM Center holds MSME community meetings as a medium for gathering and discussing MSME problems. In these meetings, Sriboga SMEs share information, education, and other community activities.

d. Internship Team Assistance

Sriboga UKM Center also assigns internship teams to help assist Sriboga SMEs. These teams are the scholarship recipients from Sriboga who have graduated from IKOPIN University. They can help Sriboga SMEs with digital marketing, packaging design, legality arrangements, and even financial management.

e. Collaboration with Souvenir Center

Sriboga UKM Center collaborates with Pusat Oleh-Oleh UKM Kota Lama in Semarang to sell their members’ products. Other than that, this collaboration also includes business management training and bakery applications.

f. Collaboration with Government or Private Agencies

In empowering SMEs, Sriboga UKM Center also collaborates with government and private agencies. This is intended to provide Sriboga SMEs with more complete insight, including from other institutions that work in synergy with Sriboga.

g. Empowerment of SMEs through Digital and Social Media

Not only done through offline activities, but Sriboga UKM Center also empowers its SMEs on digital channels and social media. Some of its digital efforts are online training, educational social media content, and social media accounts to promote small and medium businesses.

It has been nearly 2 decades since Sriboga UKM Center was founded, highlighting the importance of what SME is in Indonesia. Until today, it has shown its support to 3,502 SMEs in 20 cities in Indonesia. Moving forward, PT Sriboga Raturaya and its subsidiaries will work hard and give a bigger contribution to the Indonesian SME industry. Click here to stay updated on the latest activities of PT Sriboga Raturaya and its subsidiaries.