Measure the effectiveness of MSME entrepreneurship development programs
Policies Involved
Challenge
There is no shortage of MSME development programs in Indonesia, especially in the capital city of Jakarta. These often take the form of business incubators, structured programs that provide early-stage enterprises with the support and services they need but find it difficult to access, such as networking opportunities and exposure to financing1. Other MSME development programs are business training run by corporations, financial institutions or the government, each set up with their own goals and objectives, while others offer resources and support exclusively for MSMEs in specific sectors. However, without diagnostic data on their effectiveness on supporting MSMEs, their impact risks being suboptimal.
Current Policy
There are several policies concerning MSME development programs
given the myriad of programs that are currently available2. Before the issuance of the Government Regulation No. 7 of 2021
on the Ease, Protection and Empowerment of MSMEs (GR 7/2021),
business incubators were regulated by the the Presidential
Regulation No. 27 of 2013 on the Development of Entrepreneurship
Incubator and its implementing regulation, the Ministry of
Cooperatives and MSMEs Regulation No. 24 of 2015 on the Norms,
Standards, Procedures and Criteria of Entrepreneurship Incubator
Development. While the newly issued GR 7/2021 had introduced
changes to the implementation of business incubators - such as the
process of curating and ranking of incubators - not all of the
changes pertaining to incubator development are included in the
recently issued ministerial regulation3 4.
In the private sector, business training run by
civil society organizations and large enterprises tend to be
untracked and short-lived. They often do not use standardized
curriculums and are often set up to meet the organizations’ own
organizational goals. GR 7/2021 now mandates these organizations
to inform and convey their plans, implementation, and outcomes to
the Minister for Cooperatives and MSMEs5. Such a requirement is important because it can help the
government to estimate each program’s impact on the growth and
performance of MSMEs in a systematic way.
At the
regional level, the Governor of DKI Jakarta Regulation No. 2 of
2020 on Integrated Entrepreneurship Development, which facilitates
the flagship region-wide Jakpreneur program in DKI Jakarta,
includes provisions on program monitoring and evaluation.
Monitoring and evaluation are necessary to identify whether the
program is successful in meeting their objectives, but at this
time, there are little known indicators used to measure program
success beyond the number of sign-ups.
Action
MSME development programs must set success metrics, not only to
understand how well they are performing, but also to identify
whether there are gaps between the program they are delivering and
the needs of MSMEs. First, categorizing the variations in MSME
development program designs can allow policymakers to design key
performance indicators (KPIs) that account for their differences.
Second, developing metrics and milestones to identify success
beyond sign-up numbers for business incubators and Jakpreneur will
improve the value that the programs bring to its participants.
Lastly, to ensure that the success measurement data on these
programs can be easily accessed by relevant stakeholders, a
digital platform can be set up to allow data input, and a
dedicated team assigned to process the data.
In
addition to the revision of existing regulations, the Ministry of
Cooperatives and MSMEs may consider creating a separate
operational regulation to encourage the business world and civil
society organizations across the country to measure the impact of
the myriad of business training they are currently running for
MSMEs across the country. Such regulation should understand the
priorities of the stakeholders involved and avoid becoming a red
tape that disincentivizes them from running the programs.
Indicator of Success
- According to the Minister of Cooperatives and MSMEs Regulation No. 3 of 2021 as the Implementing Regulation of GR 7/2021, incubators can be run by national or regional governments, education institutions, formal or informal enterprises, and civil society.
- For ease of understanding, the term ‘MSME development programs’ encompass business incubators, business training by civil society organizations and large enterprises, and government-run programs, such as Jakpreneur.
- GR 7/2021, Article 134.
- Minister of Cooperatives and MSMEs Regulation No. 3 of 2021 as the Implementing Regulation of GR 7/2021 was issued to implement parts of GR 7/2021, such as Articles 9(3), 50(4), 92(3), 97(3) and 135(4).
- GR 7/2021, Article 97.