Technical Assistance I
The Government considers Micro, Small, and Medium-sized Enterprises (MSMEs) as an essential source of economic growth to achieve the vision of Indonesia Maju (Advanced Indonesia). Consequently, strengthening MSMEs is considered an important priority agenda.
On Tuesday (22/03), the Ministry of National Development Planning (Bappenas) hosted a workshop to present and discuss a draft pilot plan for a new Supplier Development Programme (SDP) to support the Leather and Leather product cluster. The development of the new SDP was initiated by Bappenas in collaboration with the Ministry of Investment (BKPM), the Ministry of Industry, the Ministry of Cooperatives and MSMEs, with technical assistance from ARISE+ Indonesia. These ministries formed a Task Team for the SDP.
The SDP will enable selected companies in the leather value chain, particularly the tanning and leather products manufacturing segments, to enhance their understanding of buyer requirements and procurement, strengthen connections with domestic and overseas buyers, and improve their business operations and technical capacities to meet buyers' standards and requirements.
The Director of Trade, Investment and International Cooperation, Bappenas, P.N. Laksmi Kusumawati, said that improving exports and SMEs' participation in the Global Value Chains (GVCs) would jumpstart the economic recovery and achieve high and steady economic growth.
Like the rest of the world, Indonesia also suffered an economic downturn as the unprecedented Covid-19 pandemic ravaged the businesses in early 2020, and MSMEs were one of the severely hit segments.
"The Government has prioritised recovery efforts to strengthen and level up SMEs to become suppliers and partners of export-oriented companies to increase exports, participation in the GVCs, and encourage the Foreign Direct Investment (FDI) flows to Indonesia," Ms Kusumawati said.
She went on to say that the development of the new SDP facilitated by ARISE+ Indonesia would allow the Government officials to learn the process of developing plans for other sub-sectors in the future.
The development of the SDP Plan, facilitated by the ARISE+ Indonesia Senior Expert, Dan Nicholls, is the culmination of a series of activities that commenced with a preliminary study launched in June 2021. The assessment was conducted to review lessons learned from the implementation of SDPs in Indonesia, review good practices and lessons learned from SDPs implemented in other countries, and define some critical success factors for a new SDP.
A series of quantitative analyses and consultations with the private sector and ministries/agencies has resulted in the Task Team selecting the Leather and Leather Products cluster as the SDP's design and planning target industry. Indonesia's leather industry witnessed a sharp rebound in export levels, reaching close to US$4 billion in 2021. Despite this encouraging development, much more remains to be done in empowering mid-sized firms in the cluster, enabling them to develop their buyer base and helping the industry fulfil its potential in exports and domestic trade.
The SDP plan is being finalised following the discussion and will contain a detailed proposed schedule of activities, ranging from training courses and buyer-meets-supplier events, business reviews, corporate improvement plans, and one-on-one mentoring. ARISE+ Indonesia has recommended that the SDP first undergo a 'Confirmation and Inception Phase', set out in detail in the plan. During this phase, it is recommended that the Government appoint a lead ministry for the SDP Plan's implementation, consulting further with key industry stakeholders and securing their participation in the SDP to take the programme forward.
