The sunset of small and medium enterprises

During the 1997 economic crisis, small and medium enterprises (SMEs) were praised as the back bone of Indonesian economy. At that time, most of the major and big industries had to close down due to large amount of debts in foreign reserves.

Ten years after, however, the story is very different. Most of the big industries have revived and some even succeeded to exceed their level of pre-crisis assets (see previous post related to this in here).

On the other hand, current increase of oil and basic goods prices have made many SMEs come to bitter decision of closing down their businesses. Bisnis Indonesia daily reported that noodles and bread producers have stopped their operations as a result of global wheat price hike.

The closure of these businesses is an addition to last week's temporary production halt of tempeh and tofu.

The government's reaction is also different. When the big businesses collapsed, the government intervened the market by bailing out their foreign debts. Now, we can hardly see any actions taken by the government.

economy