THE IMPLEMENTATION OF

CORPORATE GOVERNANCE
IN MICRO, SMALL & MEDIUM
ENTERPRISES (UMKM)
By Rafinal Wathan (195030200111045)

01
"Corporate Governance"
04

Basic Principles
of Corporate
Governance
•Transparency
•Accountability
•Responsibility
•Independency
•Fairness
The Benefit of
Implementing
Corporate
Governace
•Reducing agency costs
•Reducing the cost of capital
•Increasing the value of the
company's shares
•Creating support from
stakeholders

(Daniri, 2007)
 Definition of Micro Small &
Medium Enterprises
(UMKM)

In general, SMEs or commonly known as small and medium enterprises is a

term that refers to a type of business that is founded by individuals and has a
net worth of at most Rp. 200. 000. 000, 00 (not including land and buildings.
According to Irfan et al (2017, p. 4) MSME is "a company classified as MSME,
namely a small company owned and managed by one person orowned by a
small group of people with minimum wealth and income.

 03

Strengths & Challenges of

Micro and Small Enterprises

 05

Strength
The existence of micro-enterprises
is clearly proven to be able to
support the growth of
entrepreneurship which has an
impact on reducing the number of
unemployed people.

Able to utilize natural resources

around certain areas that have not
been managed optimally.

(Irfan, 2017)
04

Challanges
Lack of compatibility (mismatch)
between available funds that can
be accessed by MSMEs.

There is no systematic approach

to MSME funding

The number of MSMEs that are

not yet bankable is due to the
absence of transparent financial
management.
(Niode, 2009)
 Implementation of Corporate
Governance in MSMEs

In general, SMEs or commonly known as small and medium enterprises is

a term that refers to a type of business that is founded by individuals and
has a net worth of at most Rp. 200. 000. 000, 00 (not including land and
buildings. According to Irfan et al (2017, p. 4) MSME is "a company
classified as MSME, namely a small company owned and managed by one
person orowned by a small group of people with minimum wealth and
income.

 (Wahyudi, 2008):
FACTOR 1
Indonesian culture contains GCG values
​and principles, such as fairness, mutual
openness, mutual care, honesty, and so
on. SMEs have a very close relationship
with their culture. In other words,
unconsciously, all this time SMEs have
also implemented some of the GCG
principles.
FACTOR 2
Referring to Law number 20 of 2008
concerning Micro, Small, and Medium
Enterprises, the Government and Local
Government strongly support the growth of
the MSME sector by establishing laws and
policies covering aspects of: funding,
facilities and infrastructure, business
information, partnerships , business
licensing, business opportunities, trade
promotion, and institutional support.
 09

The Application of The Principles of

Corporate Governance in MSMEs
 08

TRANSPARENCY ACCOUNTABILITY
Transparency is used to maintain The existence of accountability values ​in
objectivity in running the business so the company makes the company get the
that the company must provide material right management and responsibility. In
and relevant information to accordance with the principle of
stakeholders. The implementation of accountability, there have been
transparency in MSMEs is realized by accountability values ​that have become
the existence of financial recording part of the daily life of MSMEs.
activities and the existence of
transparency in payroll by MSME
owners.
 RESPONSIBILTY
The principle of responsibility provides
an understanding that companies must
comply with applicable laws and
regulations and carry out their
responsibilities to the community and
the environment so that business
continuity can be maintained. Based on
the principle of responsibility in
corporate governance, the values ​of
responsibility already exist in the
activities of SMEs
INDEPENDENCE
The application of independence by
MSMEs includes freedom of influence in
making decisions about supplier
selection and employee recruitment.
With the value of independence in
MSMEs, MSME owners are free to make
decisions according to their wishes
because MSME owners know well the
conditions that exist in MSMEs so that a
work team will be created according to
the wishes of both MSME owners,
employees and suppliers.
 FAIRNESS
In carrying out its activities the company
must pay attention to the interests of
stakeholders based on the principle of
justice. This is characterized by equal
treatment between family and non-family
employees. The existence of fairness
values ​in MSMEs shows the concern for
the rights and obligations of MSME
owners to the justice obtained by
stakeholders in MSMEs.
15 UKM Mart is a cooperative-based modern retail
store. UKM Mart is used as a kind of stimulus for
the cooperative movement to be more able to

STUDY CASE
organize its management capabilities. The
Ministry of Cooperatives and UKM Mart in 2013
projected the number of UKM Mart outlets to
approach 260 units throughout Indonesia. UKM
Mart opens itself widely to local commodity
"UKM MART" supply from cooperatives and SMEs. The UKM
Mart business network that will be developed is
also based on the potential of local products.
The existence of UKM Mart has the potential to
build a business network between UKM Mart
outlets and UMKM with suppliers. In addition,
UKM Mart is currently also applying the
principles of corporate governance in its
business activities
 Before Good Corporate Governance
Benefits before application Implementation
employees only get wages for overtime Basic Salary,
Premiums, Allowances. This is because the company's
profits are not entirely evenly distributed to

THE IMPACT
employees, so the facilities are still limited. The
income of UKM Mart employees is calculated from

IMPLEMENTING the total basic salary based on class plus work

realization.
CORPORATE
GOVERNANCE After Good Corporate Governance
The implementation of Good Corporate Governance
PRINCIPLES (GCG) IN (GCG) or what is often referred to as good corporate

UKM MART governance in UKM mart brings so many benefits to

employees such as tolerance and empathy for
employees with other employees bonding well with
each other, communication goes well, good
cooperation, and can perform and account for the
work well, have ethics and morals that do not violate
the laws that have been regularly.
THANK YOU