Micro, Small and Medium Enterprises (MSMEs) Closure Rate Reached 7.06 Percent at the End of 2020 Amidst the Pandemic

The Central Statistics Agency (BPS) reported that 7.06% of micro, small, and medium enterprises (MSMEs) closed in the fourth quarter of 2020. This was due to the inability of MSMEs to adapt to the impact of COVID-19 the previous year. Furthermore, social restrictions also led to an increase in the percentage of MSMEs that closed.

A total of 4.28% of MSMEs closed in the first quarter of 2020. This increased to 5.43% in the second quarter of 2020 and continued to rise to 6.03% in the third quarter of 2020. The peak was reached in the fourth quarter of 2020, with 7.06% of MSMEs closing.

Meanwhile, MSMEs that remained operational generally temporarily ceased product sales. The highest impact was in the second quarter of 2020, when Indonesia first implemented social restrictions to curb the spread of the coronavirus. At that time, the percentage of MSMEs temporarily ceasing production increased from 13% in the first quarter of 2020 to 15.35% in the second quarter of 2020. Then, as restrictions were eased, the percentage decreased to 11.55% in the third quarter of 2020 and 11.25% in the fourth quarter of 2020.

On the other hand, businesses that remained in production with the same industrial activities (based on the Indonesian Standard Industrial Classification/KBLI code remaining unchanged) decreased at the end of 2020, from 80.11% in the third quarter of 2020 to 79.39% in the fourth quarter of 2020.

Furthermore, the number of businesses that remained in production but changed their type of industrial activity (2-Digit KBLI changed) decreased from 0.22% in the third quarter of 2020 to 0.18% in the fourth quarter of 2020.