Small and medium industries (SMIs) play a major role in sustaining the national economy. However, SMEs still face a number of challenges to increase their capacity so that collaborative efforts by stakeholders from both the government and the private sector are needed to encourage SMEs to be able to upgrade.

Despite being the largest contributor to gross domestic product (GDP) in Indonesia, the development of SMEs still faces a number of challenges, including the manufacturing competence and quality management system of SMEs, market access for SMEs with large industry players, the negative impact of the Covid-19 pandemic (sustainability business after crisis), as well as the opportunity to get financing support from government and private banks.

To answer these challenges, the Indonesian Chamber of Commerce and Industry (Kadin), together with the Ministry of Industry (Kemenperin) and PT Astra International Tbk through the Dharma Bhakti Astra Foundation, has been organising the 'IKM Closed Loop' programme since 2022. This inclusive partnership movement for 'IKM Naik Kelas' is organised to increase the capacity, opportunities and access to markets and financing for IKM, especially the conveyance industry sector.

"This programme started on 1 November 2022 at the Ministry of Industry Building through the Exhibition, Link & Match 2022 event. Until now, 'IKM Closed Loop' has produced many results, such as the opening of market opportunities and access, increased access to raw materials, and increased contribution to the level of domestic components (TKDN)," said Dini Hanggandari, Director of Metal, Machinery, Electronics and Transport Equipment Small and Medium Industries of the Ministry of Industry.

Referring to data from the Ministry of Industry (Kemenperin) in 2023, the number of SMEs grew to reach 4.4 million business units or equivalent to 99.7% of the total industrial business units in Indonesia. The IKM sector has also absorbed a workforce of 12.39 million people or 66.25% of the total workforce in the industrial sector.

Throughout 2023, participants of the 'IKM Closed Loop' programme received various training and guidance and mentoring, including basic mentality training, 5R training (Ringkas, Rapi, Resik, Rawat, Rajin), K3L training (Health, Safety, Security, and Environment), technical training, and marketing and financial management training for IKM players. In addition, there is also a review and monitoring of the realisation of the MoU throughout 2023 and an assessment to ensure that SMEs can upgrade as expected.

Vice Chairman of Kadin Indonesia for Industry, Bobby Gafur Umar said the 'IKM Closed Loop' programme not only improves quality, but also helps participants to get financing support. "Currently there are 32 IKMs that have signed MoUs and received purchase orders totalling 105 billion rupiah with tier 1 under PT Astra International. There are 5 financing institutions both banks and non-banks including Bank Rakyat Indonesia (BRI), Bank Mandiri, Bank Sinarmas, Astra Ventura, and Surya Artha Nusantara Finance. This institution provides credit contracts to 10 IKMs that support the 'IKM Naik Kelas' programme," Bobby said in the 'IKM Closed Loop' media briefing.

The inclusive partnership movement for 'IKM Naik Kelas' will continue in 2024 and is not limited to the 'IKM Closed Loop' programme, but also by holding the IKM Innovation Award. This award event for SMIs that make the best innovations is open to all SMIs in the conveyance sector.

Meanwhile, Chairman of the Standing Committee for Small and Medium Industry of Kadin Indonesia's Transport Equipment, Rama Datau, said this collaboration programme is an effort to build a more inclusive SME ecosystem. "With the collaboration between Kadin Indonesia, the Ministry of Industry, Dharma Bhakti Astra Foundation, and other financing institutions, we believe the SME sector can continue to grow, upgrade, and be able to meet the demands of quality, cost, delivery from large industries. And with the implementation of a culture of innovation in SMEs, SMEs will be able to continue to survive to answer the challenges ahead," he concluded.

Also present at this event were representatives of the Dharma Bhakti Astra Foundation Rahmat Handoyo and Setyo Budi Anang, representatives of IKMs assisted by Kardiyono and Rony Purwantoro, and several representatives of other financing institutions.