Survey: Residents Agree 40 Percent of the Regional Budget Should Be Allocated to MSMEs

The Indonesian government mandates that ministries, institutions, and regional governments spend at least 40% of their national (APBN) and regional (APBD) budgets on locally produced goods from micro, small, and medium enterprises (MSMEs) and cooperatives.

This policy is stipulated in Presidential Instruction Number 2 of 2022 concerning the Acceleration of Increased Use of Domestic Products and Products of Micro, Small, and Medium Enterprises and Cooperatives. The Instruction also supports the target of at least Rp 400 trillion in APBN and APBD spending on domestic production, prioritizing MSMEs and cooperatives.

The public, still economically impacted by Covid-19, welcomes this policy. According to a Kompas Research and Development (Litbang Kompas) survey, a majority (61.6%) of respondents agreed with the obligation for regional governments to spend at least 40% of their APBD on locally produced goods from MSMEs and cooperatives. Furthermore, 21.4% of respondents strongly agreed with the policy.

However, 12.2% of respondents disagreed and 0.3% strongly disagreed with the policy requiring regional governments to spend at least 40% of their APBD on locally produced goods from MSMEs and cooperatives. Meanwhile, 4.6% of respondents said they did not know.

The survey also revealed that the public is confident that this policy can be implemented, with 53.9% expressing confidence and 5.2% expressing strong confidence.

Nevertheless, the government's efforts to boost the economy by developing a system for purchasing locally produced goods from MSMEs and cooperatives need to be followed by several steps and hard work for swift realization.

"Several problems faced by MSMEs and cooperatives from upstream to downstream still require guidance from the central and regional governments," said Kompas Research and Development researcher Bambang Setiawan, as quoted from *Kompas.id* on Monday (September 5, 2022).

At the upstream level, Bambang continued, the main issue in MSME development is capital. A majority (55.7%) of the public and MSME business actors still find it difficult to obtain business capital. Besides capital, MSMEs also face increasingly expensive raw materials, a lack of training, and uneven distribution of technology assistance.

This survey was conducted through telephone interviews with 604 respondents from 34 provinces between August 18-20, 2022. The sample was randomly determined from Litbang Kompas panel respondents according to the population proportion in each province.

Using this method, at a 95% confidence level, the sampling error is approximately 3.99% under simple random sampling conditions.