UMKM Can Turn Indonesia to Developed Country

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  • Bambang Brodjonegoro.

    Bambang Brodjonegoro.

    TEMPO.CO, Jakarta - Deputy Finance Minister Bambang Brodjonegoro said Indonesia should be able to escape middle income trap since the country has a large number of productive populations.

    The requirement to escaping middle income trap is creating new entrepreneurs and empowering micro, small and medium enterprises (UMKM). From the many middle-income countries, only a few can become developed countries.

    Some of them are East Asian countries like Japan and South Korea that can utilize their demographic bonus to become developed countries. "Those countries became developed [countries] not because of natural resources, but because of large numbers of entrepreneurs," said Bambang yesterday.

    Small and medium enterprises should become a strategy in maco policy. Besides Japan and South Korea, countries that implement similar strategy are Chile and Scandinavian countries.

    On the other hand, Indonesia’s UMKM development is too fixated on the number of UMKM without paying attention to which entrepreneurs can level up or fail.

    Bambang said in fiscal policies, the government has roles in empowering UMKM. One of them is implementing income tax of one percent for UMKM from their earnings in one year. This tax obligation aims to formalize UMKM sector.