The term MSME is quite popular among Indonesians. It stands for micro, small, and medium enterprise. This type of business has also been legally regulated through Law Number 20 of 2008 on Micro, Small, and Medium.
The size of a business naturally calculated through the turnover it obtains. In addition, the total assets and the number of employees employed also determine the size of business.
Businesses with large net worth cannot be categorized as MSME. For example, state-owned enterprises, private-owned enterprises with high turnover, joint ventures, and foreign-owned businesses in Indonesia. Do you want to know more MSMEs? Check the explanation below!
What is MSME?
MSMEs are businesses owned by individuals, households, or business entities with assets and yearly turnover of not more than Rp500 million. In other words, the income generated from such business is relatively small. Not surprisingly, many MSMEs run their business from their own homes.
Businesses that are categorized into MSMEs can be of any variety. They could be in the form of food carts, grocery shops, or service businesses. Sometimes, there are many small industries and minimarkets that can still be categorized as SMEs.
MSMEs play a role as a driving force for the national economy in Indonesia. These businesses contribute to the high velocity of money in the market. In addition, MSMEs also participate in helping the government open more jobs.
With the development of technology, many MSMEs have upgraded. As a customer, you can transact easily. Most MSMEs already have a business website and social media account to make it easier for people to see their products.
Types of MSMEs
In general, MSMEs are divided into three types, namely micro, small, and medium enterprises. See the differences and examples below.
Microenterprise is the smallest category of MSMEs. Many also consider this type as a home business run by individuals or households. In microenterprises, asset in the form of building of business premises is not included in the calculation.
Based on the revenues, microenterprises have annual turnover of at most Rp300 million, with assets of up to Rp50 million, excluding land and building of business premises. They also have yet to implement a complex FMS.
Examples of microenterprises including grocery shops, barbers, and food merchants. Microenterprises often run their own business or assisted by their closest people. By employment, they won’t be more than five employees.
- Small Enterprise
Moving up to a larger business unit, namely small enterprise. This type of MSMEs has a turnover between Rp300—Rp500 million, with a total yearly sale of up to Rp2 billion.
Business that are classified as small businesses include motorcycle repair shops, copy shops, minimarkets, and catering business. It is likely that this business run by individuals with a considerable capital. However, there are also small businesses operated by business entities containing a number of people.
- Medium Enterprise
Medium enterprises are the largest type of business in MSMEs. Businesses that are classified as a medium enterprise naturally have higher turnover rates, but cannot be categorized as a big enterprise. They have a yearly turnover between Rp500 million and Rp10 billion.
Furthermore, the characteristics of medium-sized enterprise can be seen its financial management. They employ professionals in finance and hold a business license.
Examples of medium enterprises are packaged food industry, bakery factories, and hardware stores. These businesses hire more employees.
Those are the definitions and examples of MSMEs in Indonesia. To support the development of MSMEs in Indonesia, BCA initiated the Bangga Lokal x Bangga Buatan Indonesia as a form of support for local MSMEs, from coaching to promotion.
This program is designed to optimize the development of MSMEs in Indonesia. By participating in the Bangga Lokal, MSMEs can also get the opportunity to get a promotion through BCA’s media support. Support MSMEs with BCA now, support local pride, the pride of us all.