Empowered by East Java MSME Clinic
Micro, small and medium enterprises (MSME) are still the backbone of the economy, because of their robustness in times of crisis. However, these people-based enterprises are often entangled in complicated problems that make it difficult for them to grow.
In response to this challenge, the government has created a public service innovation called the East Java K-UMKM Clinic (UMKM is the Indonesian acronym for MSME). Nurul Huda stands in front of a group of women sat on a plain carpet on Friday (28/4). One of her hands was holding a cambric cloth that was full of patterns, while her other hand was holding an empty canting, or spouted bowl. In a loud voice she explained the correct use of the canting, wax and cambric cloth.
“A canting with a big tip is used to block or paint the edges of the cloth, while a canting with a small tip is for drawing patterns,” said Huda, who owns the AL Huda written batik business in Sidoarjo regency.
Nurul Huda is one of the coaches at the East Java Micro, Small and Medium Enterprises – Cooperatives Clinic (K-UMKM) and has been assigned to teach written batik to 30 participants in the course. The batik training course is one of the services given to the community. The day before, there was a graphic design training event for product packaging.
The head of the East Java Cooperatives and MSME Agency’s production and restructuration department, Sumbangto, said that 15 different services were provided to entrepreneurs. These include short training courses on business development, business information and business consultation.
“Other than that, [issues covered are] business advocacy services or mentoring, funding access, product marketing, cooperatives, library services, information technology for entrepreneurs and permit information service. The clinic also offers services related to product standardization, exports, business meetings, skills training and business development training,” said Sumbangto.
All the services aim to strengthen cooperatives and MSMEs. Their role is highly strategic in improving the economy of the people, local government and the country. They are able to increase the revenue of a region, create jobs and eliminate poverty.
To put this in numbers, there are 31,171 cooperatives and 6.8 million MSMEs in East Java, which contributed 54.98 percent to the gross regional domestic product (GRDP) in 2014. Moreover, they also employed up to 12 million workers.
Despite their huge contribution, most of the entrepreneurs are poor people that are surrounded by limitations concerning capital, marketing, knowledge on marketing strategy and market competition. They need the help of the government to grow their businesses.
The public service innovation, which was inaugurated in March 2008 by Governor Soekarwo, initially only provided four types of services, which were business consultation, business innovation, advocacy and training courses. However, because the services were deemed unable to resolve the complicated problems faced by cooperatives and MSMEs, a new service was introduced every year, like the funding access service, the product marketing access service, the business library and information technology.
All the services can be accessed by the general public to encourage people to start businesses of their own. For existing entrepreneurs, the clinic can hopefully open up new business opportunities and help them win in competition.
To improve the capabilities of MSME entrepreneurs and offer solutions to their problems, the K-UMKM Clinic has prepared tutors that are experienced in their fields. These tutors are mostly reliable practitioners and academicians from renowned universities and volunteers from non-governmental organizations.
Nurul Huda, for example, is a written batik artist whose work is well-known domestically and internationally. Huda became a tutor because she wants to share her knowledge about written batik, so that people would become interested in opening new businesses. She is never worried that her product would lose customers, because she is always innovating.
Facilities
Apart from providing training programs and instructors, the East Java K-MSME Clinic also provides facilities such as computers and a training room. The organizers usually hold continuous training in order achieve optimal results that can be applied in the world of business.
The written batik training course, for example, needs at least seven sessions so that the participants are not only able to make batik but also understand the art of batik well. All the training is funded by the East Java regional budget.
The operational cost is extremely affordable for the provincial administration, while the benefit for the people is huge. Therefore, the K-UMKM Clinic has inspired the Cooperatives and SME Ministry in developing national strategic solutions for cooperatives and empowering MSME and has been replicated in the form of integrated business service centers (PLUT).
The central government in 2013 established PLUT in 16 provinces, namely Aceh, Riau, West Java, Central Java, East Java, East Java, West Kalimantan, South Kalimantan, NTB, Bali, Southeast Sulawesi, South Sulawesi, Maluku, Jambi, Yogyakarta, Papua and West Papua. Meanwhile, in East Java, PLUT has been established in Batu city and Pacitan, both of which started operations in 2014.
East Java K-UMKM Clinic manager Dedy Prasetyo Winarto added that this innovation was the initiative of the East Java Cooperatives and MSME Agency. Since it was first established, the service facility has served thousands of entrepreneurs. There are 1,505 entrepreneurs that have sought consultation and 2,290 entrepreneurs that have participated in training courses in 2014.
In 2015, the number of people that accessed the clinic’s services increased sharply. As many as 4,136 entrepreneurs are recorded to have sought consultation and 2,845 entrepreneurs have taken part in trainings courses. However, compared to the MSME entrepreneurs in East Java, which number 6.8 million, only a few have felt the benefit of the clinic.
Therefore, the government is trying to expand the access of its services by building networks in the regencies and cities of East Java. Of the 38 regencies and cities in East Java, around 25 have replicated this clinic concept.
Furthermore, it is hoped that the entrepreneurs that have graduated from this clinic would help develop the MSMEs in their respective areas.