Journal of Business and Economics, ISSN 2155-7950, USA

December 2017, Volume 8, No. 12, pp.

 Academic Star Publishing Company, 2017
http://www.academicstar.us

MSME Business Recovery Strategy New Restoration Adaptation Period

Venesia 
(Master of Management, Tanjungpura University, Indonesia)

Abstract: MSMEs are business activities capable of expanding employment opportunities, providing broad
employment opportunities in economic services to the community, playing a role in the process of equitable
distribution and increasing community income, encouraging economic growth, and playing a role in realizing
national stability. The purpose of this research is to find out how the business recovery strategy carried out by
MSMEs during the adaptation period for new recovery. The method used in this research is qualitative method.
The technique of determining informants was carried out by purposive sampling. The data analysis process is
carried out by reducing the data and presenting the data that has been obtained and then drawing conclusions. The
results of this study indicate that MSMEs continue to improve their competitiveness amid the pandemic that is
still happening in Indonesia.
Key words: strategy, MSMEs, new normal, Covid-19
JEL codes: ?

1. Introduction

Right at the end of 2019 the world community was shocked by the Corona virus which then quickly spread
throughout the world. The disease caused by the Corona Virus which became known as Corona Virus Disease
2019 (Covid-19) has infected more than 49.4 million people, and caused more than 1.24 million fatalities as of
November 7, 2020. The first case Covid-19 in Indonesia, was announced on Monday, March 2, 2020 by President
Joko Widodo. According to Wikipedia, today as of November 16, 2020, or more than eight months since the
President's announcement, the number of positive sufferers of Covid-19 in Indonesia has reached 471,000 cases
with 15,296 fatalities and 392,000 of them declared cured.
Efforts to minimize the spread of the Covid-19 pandemic have been carried out through policies to maintain
social distancing, but later renewed it to maintain physical distance or physical distancing. The spread of the
Covid-19 pandemic that is so deadly at this time is a crisis that is hitting humanity. We cannot avoid this crisis, but
must be faced together by the whole society. Basically, a crisis is an event that does not go well and causes
instability to an individual or a group of people. According to Machfud (2011), a crisis is a condition that will
threaten the integrity or sustainability of an individual or group. Crises can occur because of information that is
not in accordance with facts and can also occur because of communication that is not going well. To deal with the
current crisis, all stakeholders must work together in efforts to prevent and handle this Corona Virus. At present all
policy implementers, namely the central government and local governments, must cooperate with all media in
providing actual and clear information, so that information confusion does not occur. Various efforts to minimize


Venesia. E-mail: venesiahuang29@gmail.com
 MSME Business Recovery Strategy New Restoration Adaptation Period

risks must be made so that they can suppress and reduce the spread of the Covid-19 pandemic. At present all
policy implementers, namely the central government and local governments, must cooperate with all media in
providing actual and clear information, so that information confusion does not occur. Various efforts to minimize
risks must be made so that they can suppress and reduce the spread of the Covid-19 pandemic. At present all
policy implementers, namely the central government and local governments, must cooperate with all media in
providing actual and clear information, so that information confusion does not occur. Various efforts to minimize
risks must be made so that they can suppress and reduce the spread of the Covid-19 pandemic.
This pandemic also had a wide impact on the business world at all levels, but the most severe impact was
experienced by MSMEs (Micro, Small and Medium Enterprises). Currently, many MSME players in the service
and production business sectors are experiencing various challenges due to this pandemic, such as a significant
decline in turnover, lack of customers, difficulties in obtaining raw materials, and product marketing constraints.
The significant decline in turnover was due to reduced buying and selling activities due to restrictions on the
movement of the community through the PSBB policy that was enforced throughout Indonesia. Before the PSBB
was implemented, all Civil and Private Servants had implemented the Work From Home (WFH) policy. In the
absence of community mobility in urban areas, there is no purchase of MSME products so that sales turnover
drops dramatically.
The next challenge for MSME players is the difficulty in obtaining raw materials for the manufacture of their
products. Most of the suppliers of MSMEs come from outside the city and cannot send raw materials for
production because of the PSBB (Large-Scale Social Restrictions). Even if there is, the price of supply goods will
be very high and no longer affordable. However, after MSME players can provide products and services, they
experience obstacles in marketing their products because several business sectors such as tourism are paralyzed
due to this pandemic.
After the end of the PSBB, we are now faced with an era of a new order, a new era of normality or better
known as the New Normal. New Normal is marked by the reopening of people's daily activities while maintaining
themselves from the spread of Covid-19. New Normal itself consists of new orders, habits and behaviors, through
clean and healthy living habits. Some of the new habits in the current New Normal era include washing hands
with soap, always wearing a mask when going out or in a crowd, and maintaining physical distance from other
people. It is hoped that these new habits can be carried out collectively and become new habits that are obeyed by
all citizens.
New Normal or a new life order with new habits after the Covid-19 pandemic has become the government's
plan to address economic problems resulting from the Covid-19 pandemic. When talking about the economy, we
all understand that the driving force of the economy in both developing and developed countries outside of oil and
gas, one of which is MSMEs. Therefore it is an obligation for the government to pay attention to this sector.
UMKM itself has a role of up to 60 percent in the movement of the economy in Indonesia, employment can reach
90 percent (Ramadhan, 2020). It can be concluded that the role of the MSME sector is very real in the nation's
economy. This can be seen in Table 1 below.
 MSME Business Recovery Strategy New Restoration Adaptation Period

Table 1
Data on the Role of MSMEs on the Economy in Indonesia
Number Role of MSMEs Total Percentage
1 Total Workforce 89.20%
2 Providing Employment 99.00%
3 GDP (Gross Domestic Product) National 60.34%
4 Total Exports 14.17%
5 Total Investment 58.18%
Source: Indonesian Central Bureau of Statistics, 2020.
However, during the Covid-19 pandemic where all sectors were badly affected, the MSME sector also
experienced the same thing. The unemployment rate will increase, not only because the company collapses or
closes, but because with the habits during the Covid-19 pandemic and the current New Normal situation, many
companies get practical patterns that will be used as a sustainable step for the company's activities. For example, a
company that usually employs 500 workers, because of the PSBB and WFH policies, only 50% of the workers
carry out activities alternately. But in terms of results, the resulting production is still so that the company will
carry out work efficiency by reducing the number of existing employees. In other words, unemployment has
increased significantly. When viewed from the history of the economic crisis, this incident is actually not the first
time. In Indonesia in 1998 and 2008 an economic crisis has also occurred. However, at that time, the MSME
sector still survived, and could even become a driving force for the recovery of the economic crisis. In contrast to
current events, the MSME sector finds it difficult to survive, it can even be said to be the worst. Even according to
Ramadan (2020), many MSMEs have collapsed or gone bankrupt and many people have lost their jobs.
This New Normal era provides opportunities and challenges for MSME players to rebuild their businesses
which had collapsed due to the existence of PSBB during the last few months. MSME players must find the right
marketing strategy in facing the opportunities and challenges that exist in the current New Normal era. It was
proven that during the implementation of the PSBB there were still MSME actors who could survive and even
increase their business volume.
During this New Normal period, the MSME sector slowly tried to get up and began to aggressively seek new
strategies in an effort to survive and rise from adversity. Most of the MSME players have started to switch to
using digital systems. Actually, this digital system has long been known and entered Indonesia. However, it was
only after the Covid-19 pandemic that business people began to become aware. In fact, they seemed to have
snapped up from their long sleep so far. They just realized that the use of digital systems is a necessity that must
be owned. The digital system is a very important requirement in every company. It is believed that digital systems,
big data, and the internet are the main solutions to the problems that occur in companies, both micro and macro.
This kind of mindset is finally starting to take shape.
The formulation of the problem in this study is how the business recovery strategy carried out by MSMEs
during the adaptation period for new recovery. Meanwhile, the purpose of this research is to find out how the
business recovery strategy carried out by MSMEs during the adaptation period for new recovery. The benefits that
can be obtained from this paper are that it is expected to contribute to the development of science, especially those
 MSME Business Recovery Strategy New Restoration Adaptation Period

related to efforts to increase the business volume of MSME players during the adaptation period for new recovery.

2. Research Methods

This research is a qualitative research through a descriptive approach that is descriptive of the results of
observations and documentation studies. At the analysis stage, the data obtained were processed by simplifying
the words so that they were easy to understand and read. Qualitative research referred to in research here is
research that intends to explain what the object of research is experiencing holistically and by means of
descriptions in the form of language and words in a special natural context by utilizing various scientific methods
(Moleong, 2017).
The research subject becomes the main source of information, the necessary information is taken from the
main source of information and additional information required. The research subject was taken by using the
snowball sampling technique (side snowball). This study uses data validity which is done by triangulation. Data
analysis was carried out by data reduction, data presentation, and conclusion or verification. This stage can be
seen in the following figure:
Figure 1
Stages of Research Work Activities
 MSME Business Recovery Strategy New Restoration Adaptation Period

Source: Processed Data, 2020.

3. Result and Discussion

The spread of Covid-19 is still actively happening. But the government must take action to keep the economy
running, people can still live. New Normal does not mean that life and activities can run normally as it was before
the Covid-19 pandemic. There are many steps that must be prepared so that the spread of the virus can be
suppressed. The opening of the New Normal will take different forms, depending on the country and region, as
well as the business sector being carried out. The discovery of a vaccine has not made the New Normal policy
very risky. This makes the government think hard about how to make the incremental opening of economic
activity difficult to navigate so there are many issues that need to be considered, such as financial stability,
consumer and supplier mindsets, how to motivate and ensure worker safety and how quickly market demand will
return.
In this New Normal era, changes in the order and habits of society change drastically. The government
continues to make various policies that must cover all interests and problems that occur in society. On the one
hand, the government must be able to deal with the widespread spread of the Covid-19 virus, but on the other
hand, the government must also pay attention to the slow movement of the economy. Therefore, in this New
Normal period, it can be used as a breath of fresh air to restart the development of MSMEs in improving the
economy going forward. This is indeed not easy to do, but with new strategies, and working creatively and
innovatively, Indonesia can rise from the downturn in the economy due to the Covid-19 pandemic.
MSMEs in Indonesia are the largest group of economic actors in the Indonesian economy and have proven to
be a safety valve for the national economy during times of crisis, as well as being a dynamist for economic growth
after the 1998 and 2008 economic crises. Through the community empowerment approach, MSMEs create large
enough job opportunities that are very helpful efforts to reduce unemployment and poverty. However, most
MSMEs have not implemented the right business recovery strategy, making it difficult to compete with large
business groups. Awareness of the need to develop a business recovery strategy for MSME players emerged
during the current Covid-19 pandemic.
The MSME sector in Indonesia is a business sector that absorbs 97% of the workforce with a total
contribution of 60% of the Gross Domestic Product. Therefore, the government prioritizes the MSME sector in
efforts to recover the national economy through the APBN budget allocation for MSMEs amounting to IDR
123.46 trillion. The impact of the Covid-19 pandemic on the MSME sector today is very different from the impact
experienced by MSMEs during the 1998 crisis. At that time, MSMEs became the national economic safety net. On
the other hand, during the Covid-19 pandemic, MSMEs were the business sector that was most affected, both in
terms of supply and demand.
Based on data from the Ministry of KUKM, since March 2020 the MSME sectors that have been most
affected are the tourism, culinary, and processing MSMEs. On the other hand, the MSME sector that continues to
grow amid the Covid-19 pandemic is the health sector MSMEs, delivery services (couriers), the
telecommunications services sector, and the online trade sector (e-commerce). Since the implementation of the
 MSME Business Recovery Strategy New Restoration Adaptation Period

PSBB and WFH, there has been a change in consumer behavior where more activities are carried out at home, so
that all fulfillment of daily needs is carried out online, starting from basic needs, ready-to-eat food, medicines,
care, and other services.

During the PSBB period, sales transactions on various online platforms increased sharply. Monthly sales
have increased by 26% compared to before the Covid-19 pandemic. In addition, daily transactions increased to 4.8
million transactions in April 2020 from 3.1 million transactions in March 2020. The number of new customers
also increased by 51%. However, the increase in the number of consumers and business volume from online sales
is only enjoyed by MSMEs selling in large capital marketplaces such as Tokopedia, Shopee, and Bukalapak. This
number only covers 13% or around 8 million MSME players, while 87% are still selling conventionally.
In the current New Normal era, MSME players can take advantage of opportunities by carrying out business
activities as usual while adhering to health protocols in preventing Covid-19 transmission. In this New Normal,
the government also provides training and assistance to MSMEs to make business adaptations, from previously
based offline to online. Then, from selling certain products, they switched to selling products with a high level of
demand. Currently, out of the total 60 million MSME players, only around 8 million have been connected online.
The government targets that by the end of this year, UMKM players who go online can reach 10 million. The
Ministry of KUKM carries out various training and online business assistance through partnerships with
corporations and other online business actors.
The role of digital and online in every business activity can be said of one important thing. Especially during
the difficult times at the current New Normal. MSMEs are not only required to go online or go up a class. The
definition of graduating also means that further guidance and education is needed. As stated by Theosabrata
(2020), “Regarding this innovation, of course it has an impact on all parties. In this uncertain time, what is certain
is the uncertainty itself, so what is called must be agile actually comes from our ability to be able to move at the
right time. So, for agile, it is certain that we all have to be super creative. "
In the New Normal era, UMKM besides having to be creative, UMKM must also be able to adapt
appropriately, and carry out various kinds of validation. In addition, various strategies must be taken, but the main
thing is to change business models and take advantage of digital technology. However, not all regions can take
advantage of the digital platform. Not all regions have supported online tools. This is where the role of the
government in ensuring smooth internet connection in the New Normal era, aims to enable MSME players to
enter into a stronger digitalization system. However, considering the culture and capabilities of the Indonesian
people today, the combination between online and offline is better applied at the beginning of this New Normal.
Therefore, it is necessary to design a continuous training system for MSME actors from the rural to the central
level.
The conditions resulting from the Covid-19 pandemic which had an impact on the Indonesian economy
forced the government to issue a New Normal policy. This is what makes the government have to be careful and
prepare everything so that during the New Normal period it does not cause the spread of the corona virus to get
bigger. The New Normal Policy is a policy of reopening social economic activities and public activities on a
limited basis using health standards that were not previously used before the Covid-19 pandemic (Pratama, 2020).
This New Normal is carried out as an effort to return people's lives to normal by adapting to new habits. The new
 MSME Business Recovery Strategy New Restoration Adaptation Period

habit is an effort to save the lives of citizens and keep the country able to carry out its functions. New Normal is
the new stage after the policies of stay at home, work from home, and large-scale social restrictions were
implemented to prevent the previous spread of the virus.
New Normal enforced because the government is fully aware that it is impossible for citizens to stay at home
continuously without certainty, the economy of the community is hampered or can be said to have stopped which
results in bankruptcy, mass layoffs, and many social chaos. No one knows for sure when a viral vaccine will be
invented. The economy of the people and the state must continue to run. The state must continue to carry out its
functions according to the constitution. The government must be able to carry out its function in taking care of the
people, but the people's safety is above all. The New Normal policy is still integrated with the community
protection and security network program for citizens in need and without reducing the focus on providing health
services for handling Covid-19 victims.
The government through the KUKM Ministry has prepared a number of policies in the form of stimulus from
the supply and demand side. One of the policies provided by the government to MSMEs is in the form of tax
incentives, relaxation programs and credit restructuring, in addition to a new financing scheme for MSMEs with
low interest rates. Another policy is to purchase MSME products that are not absorbed by the market by SOEs, so
that these MSMEs can continue to grow. In addition, the Government also promotes the Shopping for Indonesian
Products campaign in all mass media to encourage people to consume authentic Indonesian products, most of
which are products of MSMEs. Several new government policies during the New Normal period include:
1. Establishment of health protocol SOP
To prevent the spread of the virus that got worse during the New Normal, the government prepared several
SOPs (Standard Operating Procedures) for strict health protocols. As stated by Sri Mulyani in Nordiansyah
(2020), "We must be able to balance the need to maintain health, while still creating space for social and
economic interaction."
2. Determination of fiscal policy from the Minister of Finance
There are several fiscal policies issued by the government in stimulating the people's economy in support of
extraordinary measures in extraordinary situations at a very high speed, including:
a. Income Tax Relaxation Article 21 (PPh 21)
PPh 21 will be borne by the Government (DTP) of 100% of the income of workers in the manufacturing
sector (including KITE and KITE IKM), the maximum amount of tax borne is IDR 200 million.
b. Income Tax Relaxation 22 Imports (PPh 22 Imports)
The exemption of PPh 22 Import is applied to 19 certain sectors and the Ease of Import for Export Purposes
- Small and Medium Industries (KITE IKM).
c. Income Tax Relaxation Article 25 (PPh 25)
There is a 30% reduction in PPh 25 fees for 19 certain sectors, Ease of Import for Export Purposes (KITE),
and Ease of Import for Export Destinations - Small and Medium Industries (KITE IKM).
d. Relaxation of Value Added Tax (VAT) Restitution
 MSME Business Recovery Strategy New Restoration Adaptation Period

Accelerated VAT refunds for 19 certain sectors, Ease of Import for Export Purposes (KITE), and Ease of
Import for Export Destinations - Small and Medium Industries (KITE IKM).
Again, this can work if there is cooperation between the central government and local governments. The local
government must be able to really supervise the implementation of the SOP in accordance with what has been
determined.

3. Providing capital injections is made easier for MSMEs

The next government policy is to make a policy that is leaning towards the community where the Financial
Services Authority (OJK) issues a countercyclical policy through the OJK regulation on national economic
stimulus as a solution to the impact of the spread of Covid-19. The government stated that banks would
implement policies to support economic growth stimuli for debtors affected by the spread of Covid-19. Several
stimulus policies were implemented, including:
a. Assessment of the quality of credit / financing / other provision of funds is only based on the accuracy of
principal and / or interest payments for loans up to 10 billion rupiah.
b. Banks can restructure all credit / financing regardless of the credit ceiling limit or type of debtor, including
MSME debtors. Credit / financing quality is expected to be smooth after restructuring.
One of the keys for MSMEs to survive is to adapt to market changes, both changes in demand by innovating
products according to the needs of society in the current New Normal era. MSME actors must be able to develop a
communication strategy for monitoring as part of adaptation to be able to survive and also continue to develop in
current conditions. The most appropriate marketing communication strategy in the current New Normal era is as
follows:
1. Non-digital strategy
Non-digital or conventional sales strategies are maintained by considering loyal customers of MSME products
who are accustomed to shopping offline, because of the proximity of the location to MSME players.
2. Digital strategy
The digital strategy consists of three main elements, namely content, databases and advertisements. In terms of
content, for example, MSMEs must be able to create content that is attractive and in accordance with new
target markets. This new target market is compiled in a complete database so that it is easy to analyze in
selecting the right prospect. After getting potential customers, MSMEs can use advertisements for promotion
to expand marketing coverage to new users according to the target market. In essence, all of these marketing
communication strategies aim to promote MSME products so that they can increase brand awareness and
ultimately increase the number of purchases.
3. Soft selling strategy
 MSME Business Recovery Strategy New Restoration Adaptation Period

Soft selling marketing strategy is the use of promotional media that describes the product, for example using
attractive product packaging, compelling taglines or infographics full of information about the product. Soft
selling can also be done by making a trailer that contains product knowledge, prices, and launch dates. This
trailer is then uploaded to all social media platforms such as Youtube, Twitter, Instagram and Twitter.
Meanwhile, the link from the trailer can be shared via messaging applications such as Whatsapp, LINE, or
Telegram. Even for the product purchase process, MSME players can apply marketing through payment when
the goods are received by the customer or Cash On Delivery (COD).

To implement the three strategies above effectively, MSME players can collaborate with various parties so
that they can move faster and more effectively. The right partner and in accordance with the common vision and
mission can increase the effectiveness of marketing of MSME products two times from the previous one so as to
encourage an increase in the volume of MSME businesses.

4. Conclusion

Although the role of MSMEs in the Indonesian economy is strategic and central, among other things,
because in addition to playing a role in economic growth and employment, it also plays a role in the distribution
of development results. MSMEs are often neglected only because their production is on a small scale and have not
been able to compete with other business units. In fact, MSMEs have proven to be more resilient in facing crises.
However, government policies and the regulations that support it are still considered not optimal. This can be seen
from the policies taken that tend to be excessive but ineffective, so that policies become less comprehensive and
less focused. Even though MSMEs still have many problems that cause their role in the Indonesian economy to be
less than optimal, so they need to get serious handling.
The development of MSMEs needs to get great attention from both the government and the community so
that they can develop more competitively with other economic actors. The government needs to increase its role in
empowering MSMEs by striving for MSMEs to grow and develop in a conducive manner, increasing their role in
empowering MSMEs, and increasing the quality of their Human Resources.
In this New Normal period to revive the economy of the people and state of Indonesia, policies that are pro-
business actors are needed, especially in the MSME sector. Given that MSMEs are an important sector in
improving the economy of the community and the country apart from oil and gas. MSMEs themselves have a
large contribution to the level of labor, income, and others. In order for the UMKM sector to run well, it is
necessary to do creative things that can support community activities during the New Normal period.
One of the keys for MSMEs to be able to survive during the current Covid-19 pandemic is to adapt to market
changes, both changes in demand (demand) by innovating products according to the needs of society in the
current New Normal era. MSMEs players must be able to formulate business recovery strategies as part of
adaptation to be able to survive and also continue to develop in current conditions.

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