PAPER

“SMALL AND MEDIUM MICRO ENTERPRISES (SMME)

ECONOMIC ENGLISH”

GROUP 7
1. Hwan Daniel (7203240035)
2. Inda S. Tarigan (7202540011)
3. Fitri Rahayu (7201240003)

Class : A (Economics)
Lecturer : Dr. Mica Siar Meiriza, M.Si.
Courses : Economics English

ECONOMIC SCIENCE STUDY PROGRAM

FACULTY OF ECONOMICS
MEDAN STATE UNIVERSITY
2021

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 FOREWORD

Praise and Gratitude, we pray for the presence of God Almighty because
for the blessings of all the help, guidance, and wisdom and strength given, so that
we can complete the task of the course "ENGLISH ECONOMIC" entitled "Micro,
Small and Medium Enterprises (MSMEs)". Writing this paper is one of the tasks
and requirements for completing an English course assignment for Economics at
Medan State University, Faculty of Economics, Economics study program.
In writing this paper, we would like to express our gratitude to those who
helped in completing this paper, especially to the mother, as the supervisor of the
Economic English course, who spent her time, energy and thoughts in
implementing guidance, direction, encouragement in the framework of preparing
this task. We also realize that this assignment still has many shortcomings,
therefore we apologize if there are errors in writing the assignment and we also
expect constructive criticism and suggestions to complete this task. Finally, we
thank you, hope it can be useful and can increase knowledge for readers.

Medan, 2 May 2021

Group 7

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 TABLE OF CONTENTS

FOREWORD ...............................................................................................................i

TABLE OF CONTENTS ............................................................................................ii

CHAPTER I. INTRODUCTION

A. BACKGROUND..................................................................................................1

B. PROBLEM FORMULATION ......................................................................……1

C. PURPOSE .............................................................................................................1

CHAPTER II. DISCUSSION

A. Definition of UMKM……………………………………………………2
B. Strengths and Weaknesses, Role of MSMEs…………………………….4
C. The Impact of the Covid-19 Pandemic on MSMEs in Indonesia………..6
D. Challenges, Opportunities, and MSME Development Strategies in the
Middle of the Covid-19 Pandemic…………………………………………10

CHAPTER III. FINAL

4.1 Conclusion....................................................................................................13
4.2 Suggestion ...................................................................................................13

REFERENCES..............................................................................................................14

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 CHAPTER 1

INTRODUCTION

A. Background
Micro, small and medium enterprises are the main players in economic
activity in Indonesia. The future of development lies in the ability of micro, small
and medium enterprises to develop independently. In general, the goal or target to
be achieved is the realization of strong and independent Micro, Small and
Medium Enterprises (MSMEs) that have high competitiveness and play a major
role in the production and distribution of basic needs, raw materials, and in capital
to face free competition. MSMEs are productive business units that stand alone,
which are carried out by individuals or business entities in all sectors of the
economy. Since the Covid-19 pandemic, the Indonesian economy has experienced
shocks, one of which is the people's economy. With the existence of various
policies related to efforts to prevent the Corona virus, it is difficult for people to
carry out economic activities. The Covid-19 pandemic has an impact on several
business sectors in Indonesia, especially MSME players.

B. Problem Formulation
1. What is meant by UMKM?
2. What are the Strengths and Weaknesses, as well as the Role of MSMEs?
3. What is the impact of the Covid-19 pandemic on MSMEs in Indonesia?
4. What are the opportunities, challenges, and strategies for developing MSMEs in the
midst of the Covid-19 pandemic?

C. Purpose
1. Knowing what is meant by MSMEs
2. Knowing what are the strengths, weaknesses and roles of MSMEs
3. Knowing the impact of the Covid-19 pandemic on MSMEs in Indonesia
4. Knowing the opportunities, challenges, and strategies for developing MSMEs in
Indonesia

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 CHAPTER II

INTRODUCTION

A. Definition of MSMEs

1. Definition of MSMEs
In Indonesia, the definition of MSMEs is regulated in the Law of the Republic of
Indonesia No. 20 of 2008 concerning MSMEs. Article 1 of the law states that a
micro business is a productive business owned by an individual and / or an
individual business entity that has the criteria for a micro business as stipulated in
the law. Small business is a productive economic business that stands alone,
which is carried out by an individual or a business entity that is open as a
subsidiary or not a subsidiary owned, controlled or part of, either directly or
indirectly, of a medium or large business that meets the criteria. small business as
referred to in the Law.
Meanwhile, a micro business is an independent productive economic business
carried out by an individual or a business entity that is not a subsidiary or branch
of a company that is owned, controlled, or is part of, either directly or indirectly,
of a micro business, small business or large business which fulfills criteria for
micro business as referred to in the Law. In this law, the criteria used to define
MSMEs as stated in Article 6 are net assets or asset values excluding land and
buildings where they are business, or annual sales proceeds. With the following
criteria:
a) A micro business is a business unit that has a maximum asset of Rp. 50
million, excluding land and buildings for business premises with a
maximum annual sales of Rp. 300 million.
b) Small businesses with asset values of more than Rp. 50 million up to a
maximum of Rp. 500 million excluding land and buildings where the
business has annual sales of more than Rp. 300 million up to a maximum
of Rp. 2,500,000, and.
c) Medium-sized enterprises are companies with a net worth of more than
Rp. 500 million to a maximum of Rp. 100 billion from annual sales of
over Rp. 2.5 billion to a maximum of Rp. 50 billion.
d) Apart from using monetary value as a criterion, a number of government
agencies such as the Ministry of Industry and the Central Statistics Agency
(BPS), have so far used the number of workers as a measure to
differentiate the business scale between micro, small, medium and large
businesses. For example, according to the Statistics Agency (BPS), a
micro business is a business unit with up to 4 permanent workers, a small
business with 5 to 19 workers, and a medium business from 20 to 99

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 people. Companies with more than 99 employees are included in the big
business category.
e) Micro, small and medium enterprises are the main players in economic
activity in Indonesia. The future of development lies in the ability of
micro, small and medium enterprises to develop independently. The
contribution of micro, small and medium enterprises to GDP in Indonesia
in 1999 was around 60%, with details of 42% being the contribution of
small and micro enterprises, and 18% being medium enterprises.
Empowerment of Micro, Small and Medium Enterprises (MSMEs) is very
important and strategic in anticipating the future economy, especially in
strengthening the structure of the national economy.

The existence of a national economic crisis like the current one has greatly
affected national, economic and political stability which impacted on the
deterioration of large business activities, while UMKM and cooperatives were
relatively able to maintain their business activities. In general, the goal or target to
be achieved is the realization of strong and independent Micro, Small and
Medium Enterprises (MSMEs) that have high competitiveness and play a major
role in the production and distribution of basic needs, raw materials, and in capital
to face free competition. MSMEs are productive business units that stand alone,
which are carried out by individuals or business entities in all sectors of the
economy.

2. MSME Criteria

According to Law Number 20 of 2008, MSMEs have the following criteria:

a. Micro-enterprises, namely productive businesses owned by individuals or
individual-owned enterprises that meet the following criteria:
1) Have a net assets of not more than IDR 50,000,000 (fifty million rupiah),
excluding land and buildings for business premises,
2) Have annual sales results of not more than IDR 300,000,000 (three hundred
million rupiah)
b. Small Business, namely independent productive economic enterprises carried
out by individuals or business entities that are not subsidiaries or not a branch of a
company that is owned, controlled or is a part, either directly or indirectly, of
medium-sized or large-scale businesses that meet the following criteria:
1) Owning net assets of more than Rp.50,000,000.00 (fifty million rupiah) up to a
maximum of Rp. 500,000,000.00 (five hundred million rupiah) excluding land
and buildings for business premises; or

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2) Have annual sales revenue of more than Rp. 300,000,000.00 (three hundred
million rupiah) up to a maximum of Rp. 2,500,000,000.00 (two billion and five
hundred million rupiah).
c. Medium Enterprises, namely independent productive economic enterprises,
carried out by individuals or business entities that are not subsidiaries or branches
of companies that are owned, controlled, or are part of, either directly or
indirectly, with small or large businesses that meet the following criteria:
1) Have a net worth of more than Rp. 500,000,000.00 (five hundred million
rupiahs) up to a maximum of Rp. 10,000,000,000.00 (ten billion rupiah) excluding
land and buildings for business premises; or
2) Has annual sales revenue of more than Rp. 2,500,000,000.00 (two billion and
five hundred million rupiah) up to a maximum of Rp. 50,000,000,000.00 (fifty
billion rupiah).
According to the Central Statistics Agency (BPS), it provides a definition of
MSMEs based on the quantity of labor. A small business is a business that has a
workforce of 5 to 19 people, while a medium-sized business is a business that has
a workforce of 20 to 99 people.

3. Classification of UMKM
In the perspective of its development, Micro, Small and Medium Enterprises (MSMEs)
are the business groups that have the largest number. In addition, this group has proven
to be resistant to various kinds of economic crisis shocks. So it is imperative to
strengthen the Micro, Small and Medium Enterprises group that involves many groups.
The following is the classification of Micro, Small and Medium Enterprises (MSMEs):
1) Livelhood Activities, are Micro, Small and Medium Enterprises (MSMEs) which are
used as work opportunities to earn a living, which are more generally called the informal
sector. For example, street vendors.
2) Micro Enterprise, is a Micro, Small and Medium Enterprise (UMKM) which is a
craftsman but is not yet entrepreneurial.
3) Small Dynamic Enterprise, is a Micro, Small and Medium Enterprise (UMKM) that has
an entrepreneurial spirit and is able to accept subcontract and export work.
4) Fast Moving Enterprise, is a Micro, Small and Medium Enterprise (UMKM) that has an
entrepreneurial spirit and will transform into a big business (UB).
4. Characteristics of Micro Enterprises
Small businesses in Indonesia have great potential to be developed because of the wide
market, readily available raw materials and large human resources which are the
supporting variables for the development of these small businesses, but several things
need to be considered along with the development of small-home businesses such as:
business development must be followed by good management, good planning will
minimize failures, mastery of science will support the sustainability of the business,
manage an efficient and effective production system, and make breakthroughs and

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innovations that make differentiation from competitors a step towards success in
managing the business.
In Pandji Anoraga's book, it is explained that in general, the business sector has the
following characteristics:

4. Characteristics of Micro Enterprises

Small businesses in Indonesia have great potential to be developed because of the

wide market, readily available raw materials and large human resources which are
the supporting variables for the development of these small businesses, but several
things need to be considered along with the development of small-home
businesses such as: business development must be followed by good management,
good planning will minimize failures, mastery of science will support the
sustainability of the business, manage an efficient and effective production
system, and make breakthroughs and innovations that make differentiation from
competitors a step towards success in managing the business.
In Pandji Anoraga's book, it is explained that in general, the business sector has
the following characteristics:
a) The bookkeeping system is relatively simple and tends not to follow standard
bookkeeping administration principles. Sometimes the bookkeeping is not up
to date so it is difficult to assess the work of the business.
b) The operating margin tends to be thin considering the very high competition.
c) Limited capital
d) Managerial experience in managing companies is still very limited.
e) The economies of scale are too small so it is difficult to expect to be able to
reduce costs to reach a long-term point of efficiency.
f) Marketing and negotiation capabilities as well as market diversification are very
limited.
g) The ability to source funds from the capital market is lowest, given the limitations
of the administrative system. To get funds in the capital market, a company must
follow a standard administrative system and must be transparent.

The characteristics possessed by micro businesses imply the existence of

weaknesses that are potential for the emergence of problems. This caused various
internal problems, especially those related to funding, which seemed difficult to
find a clear solution.

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B. Strengths and Weaknesses and Role of MSMEs
1. Strengths and Weaknesses of MSMEs
MSMEs have several potential strengths which are the mainstays on which to become
the basis for future development, namely:
a) Provision of employment the role of small industries in the absorption of
labor should be taken into account, estimated and absorbed up to 50% of
the available workforce.
b) Sources of new entrepreneurship. The existence of small and medium
enterprises has been proven to support the growth and development of new
entrepreneurs.
c) Has a unique market business segment, carries out simple management
and is flexible to market changes.
d) Utilizing surrounding natural resources, most of the small industries make
use of waste or products from large industries or other industries.
e) Has the potential to develop. Various coaching efforts that have been
carried out show results that illustrate that small industries are capable of
being developed further and are able to develop other related secto
Weaknesses, which are often also an inhibiting factor and problems for Micro
Enterprises consist of 2 factors:
1) Internal Factors
a) Internal factors, which are classic problems of MSMEs, include:
b) The human resource capacity is still limited.
c) The constraints on product marketing, most of the Small Industry
entrepreneurs, prioritize the production aspect, while the marketing
functions are less able to access it, especially in market information and
market networks, so that most of them only function as craftsmen.
d) The tendency of consumers who do not trust the quality of Small Industry
products.
e) Business capital constraints, most of the Small Industries use their own
capital in a relatively small amount.

2) External factors
External factors are a problem that arises from the developer of the UMKM dam
builder. For example, the solutions given are not right on target, there is no
monitoring and overlapping programs.
From these two factors, there appears a gap between internal and external factors,
namely the banking side, BUMN and other supporting institutions are ready to
provide credit, but which MSMEs are given, because of various conditions that
must be met by MSMEs. On the other hand, MSMEs also have difficulty finding
and determining which institutions can help with their limitations and this

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condition is still ongoing even though various efforts have been made to make it
easier for MSME players to get credit, and this has been going on for 20 years.
The current pattern is that each institution / institution having the same function
does not coordinate but runs independently, whether it is banking, BUMN,
department, NGO, private company. On the other hand, with its limitations,
MSMEs become the pillars of the economy to become the wheels of the economy
into a reality.
2. The role of MSMEs
From a world perspective, it is recognized that micro, small and medium
enterprises (MSMEs) play a very vital role in economic development and growth,
not only in developing countries (NSB), but also in developed countries (NM). In
the literature it is widely recognized that NSB, UMKM are very important
because their main characteristics are different from big business (UB), namely as
follows:
a) The number of companies is very large (far exceeding the number of UB),
especially from the category of micro business (UMI) and small business
(UK). Unlike UB and UM (medium enterprises), UMI and UK are
scattered throughout rural areas, including in relatively isolated areas.
Hence, this business group has a special “local” significance for the rural
economy. In other words, the progress of rural economic development is
largely determined by the progress of the development of MSMEs.
b) Because it is very labor intensive, meaning it has a very large potential for
employment growth, the growth of MSMEs can be included as an
important element of national policies to increase employment
opportunities and create income, especially for the poor. This is also what
can explain why the growth of MSMEs is becoming increasingly
important in rural areas in NSB, especially in areas where the agricultural
sector has stagnated or is no longer able to absorb the annual growth of the
supply of labor in rural areas. According to the theory of A. Lewis
(unlimited labor supply), the condition of excess labor in rural areas will
create a continuous flow of people from rural to urban areas. If urban
economic activities are not able to absorb these newcomers, the number of
unemployed will increase, and many related social problems will arise in
urban areas. Therefore, non-agricultural activities in rural areas, especially
industry, are always expected to function as a source of absorption of
excess labor supply to the agricultural sector, so as to limit the flow of
migration to urban areas, and in this case, rural MSMEs can play a crucial
role. .

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 B. The Impact of the Covid-19 Pandemic on MSMEs in Indonesia

In early March Indonesia began to be attacked by the Covid-19 pandemic. The Covid-
19 virus that is currently spreading does not only have a negative impact on health.
However, it also has an impact on the educational, social, and especially very influential
on the Indonesian economy. The pandemic has had a major impact on the micro, small
and medium enterprises (MSMEs) sector. In 2018, according to the Ministry of
Cooperatives and Small and Medium Enterprises (Kemenkop UKM), the number of
MSMEs in Indonesia is around 64,194,057 units, with absorption capacity of 116,978,631
total workforce. This figure is equivalent to 99% of the total business units in Indonesia,
with the percentage of labor absorption in the economic sector equivalent to 97% and
the remaining 3% in the large industrial sector.

D. Challenges, Opportunities, and MSME Development Strategies in the

Middle of the Covid-19 Pandemic
1. The Challenges of MSME Development Amid the Covid-19 Pandemic
The outbreak of the Covid-19 pandemic has an impact on almost all sectors,
especially MSME players. There are three main challenges that must be faced by
MSME actors. First, in terms of supply. After the implementation of Large-Scale
Social Restrictions (PSSB) in almost all regions, many MSME sectors
experienced difficulties in obtaining raw materials. The existence of the PSBB
policy also disrupted logistics distribution.

2. MSME Development Strategy in the Middle of the Covid-19 Pandemic

MSMEs are the spearhead of the national economy and play a major role in
national economic growth. In 2019, MSMEs contributed to gross domestic
product (GDP). MSMEs contribute 60 percent of GDP and 14 percent of total
national exports. However, this year, MSMEs have become one of the sectors that
has suffered from the Covid-19 pandemic. Even though the absorption of labor by
MSMEs is very high, which has grown to reach 96.99% - 97.22% with the
number of MSME players reaching 62 million or around 98 percent of national
business actors. In fact, since the beginning of the pandemic, the government has
placed MSMEs as priority beneficiaries in national economic recovery.

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 CHAPTER III
INTRODUCTION

A. Conclusion
The Covid-19 pandemic has a significant impact on all people's lives, especially
for Micro, Small and Medium Enterprises (MSMEs) actors whose economic
turnover is highly dependent on the traffic of goods, services and people, who are
experiencing a period of limited movement. This results in decreased productivity
of all elements in the MSME ecosystem and affects the welfare of MSME actors.
The challenge for MSMEs that must be faced is how to create a strategy to fill the
needs of the domestic market as well as the global market. Even though it is full
of challenges, the MSME sector still has hopes and opportunities to increase the
scale of its business. In order to survive amid the outbreak of the Covid-19
pandemic, Micro, Small and Medium Enterprises (MSMEs) must take advantage
of opportunities and strategies, namely by using electronic trading systems or e-
commerce in marketing their products.

B. Suggestions
That is the material that we convey in this paper, we are aware that this paper
certainly still has shortcomings, therefore we as writers really look forward to
criticism and suggestions from all readers. Hopefully this paper can be useful for
all readers.

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 REFERENCE

http://repo.iain-tulungagung.ac.id/8370/5/BAB%20II.pdf

http://eprints.stainkudus.ac.id/841/6/6.%20BAB%20II.pdf

https://www.researchgate.net/publication/346968128_Makalah_Strategi_Pe
ngembangan_UMKM_di_Tengah_Pandemi_Covid-19

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