MSME players are at risk of going bankrupt due to the weakening of the Bangka-Belitung economy

If the Bangka-Belitung economy is not immediately saved, the people who are the main victims will suffer even more.

KOMPAS/ADRIAN FAJRIANSYAH

Activity at Warung Kopi Abang, Pangkal Pinang City, Bangka Island, Bangka-Belitung, on Thursday (25/4/2024). Since the tin corruption case was uncovered, the economy in Bangka-Belitung has been sluggish. One example can be seen in the sales level at coffee shops, which are the most common type of MSME in Bangka-Belitung.

PANGKAL PINANG, KOMPAS — As a region that is highly dependent on the tin mining sector, the economy of Bangka-Belitung is experiencing a downturn following the alleged corruption case in the management of tin in mining business permits PT Timah 2015-2022. If this continues, this could threaten the sustainability of a number of micro, small and medium businesses in the island province.

This is true for a number of coffee shop owners in Pangkal Pinang City, Bangka Island. Like other areas on the coast or islands of Sumatra, coffee shops are the most common type of MSME in Pangkal Pinang and Bangka-Belitung.

Also read: Is it possible for Bangka-Belitung to escape its dependence on tin?

The owner of the Abang Coffee Shop in the Batin Tikal area, Taman Sari, Pangkal Pinang, Dede (30), said that when the situation was normal or before the tin corruption case emerged, especially since the tin businessman from Bangka In the middle, Tamron alias Aon was detained by Attorney General investigators on February 6 2024. The coffee shop can sell 40 kilograms of coffee per month.

In normal conditions, the turnover value of the small shop reaches Rp 1 million per day or Rp 30 million per month. With such a turnover, Dede can still save Rp 7-8 million per month. "Basically, this small shop that can accommodate 30-50 people is almost always full throughout the day, from the opening at 06:00 until 23:00/24:00," said Dede when met on Thursday (25/4/2024).

KOMPAS/ADRIAN FAJRIANSYAH

Activity at Warung Kopi Abang, Pangkal Pinang City, Bangka Island, Bangka-Belitung, on Thursday (25/4/2024). Since the tin corruption case was uncovered, the economy in Bangka-Belitung has been sluggish. One example can be seen in the sales level at coffee shops, which are the most common type of MSME in Bangka-Belitung.

However, suddenly the situation changed 180 degrees after the tin corruption case with alleged state losses of IDR 271 trillion boomed in mid-February 2024. Suddenly, sales dropped drastically to around 10 kilograms per month with a gross turnover of more than less than IDR 10 million. The turnover is only enough to pay the salaries of two employees and rent for the shop house.

Rent for the shop and electricity bill amount to Rp6 million per month. "February was the toughest period. After Tamron was reported to be detained, we only earned Rp92,000 in a day because there were almost no customers here," said Dede, who opened the Abang Coffee Shop since 2020.

After Tamron was reported to have been arrested, we only earned Rp 92,000 in one day because there were almost no customers at all here.

Consumers depend on tin

This is all, Dede said, because the characters of the consumers are freelancers or daily workers and workers in financial companies, aka leasing. Consumers' purchasing power is very dependent on tin mining activities. When mining collapsed after the tin corruption case was revealed, consumers automatically lost their main source of income, which ultimately hit their purchasing power.

In the morning, for example, customers at Warung Kopi Abang are traditional market vendors. Now, their sales have drastically declined. In the end, those who usually buy coffee in packages no longer buy coffee.

KOMPAS/ADRIAN FAJRIANSYAH

A chicken seller at Pasar Besar Pangkal Pinang, Boy (28), when met on Wednesday (24/4/2024). Since the revelation of the tin corruption case, including the arrest of a tin businessman from Bangka Tengah, Tamron alias Aon, on February 6, 2024, the economic activity of the community has drastically decreased.

During the day, the majority of consumers are drivers or employees of financial companies. Currently, many financial companies are facing non-performing loans or debtors who cannot pay. As a result, those who used to hang out during lunch break no longer come. "Well, it's understandable, they must prioritize their basic needs over buying coffee," he said.

Up to now, the sales condition of Warung Kopi Abang has not fully recovered. Sales are starting to improve but are still at 40 percent of the normal situation. However, if it does not fully recover within the next four months, according to Dede, his business could be at risk. It is not impossible that the business could fold.

Also read: Tin Corruption and Momentum to Save Life Sustainability in Bangka-Belitung

"At the moment, the revenue generated is almost not profitable, it even causes losses. So far, we have been using our past savings to cover operational costs. This can only last for maybe up to four months. Beyond that, we might have to close down," said Dede.

Bad debts soared

Doni (in his 30s), an employee at a national financial company which will not be named, stated that he is currently handling around 20 debtors with vehicle loans and approximately 30 debtors with motorcycle loans who are experiencing payment difficulties. The losses incurred have reached Rp 1 billion in the past two months.

KOMPAS/ADRIAN FAJRIANSYAH

Fishermen seek their livelihood not far from the fishing village in Pangkal Arang, Pangkal Balam District, Pangkal Pinang City, Bangka Belitung Province, on Wednesday (24/4/2024). The fisheries and marine sectors of Bangka Belitung have great potential for development as the island province is surrounded by the sea. This can be a substitute source of income besides the tin sector.

In total, there are six credit collectors from the financial company concerned. "If we count all our leasing officers in Bangka, the value of bad loans has reached IDR 6 billion in the last two months," said Doni.

According to Doni, since he entered the world of leasing in a number of companies starting in 2008, this has been the nadir of the Bangka-Belitung economy. "In fact, our manager from Jakarta came down directly to check the situation in Bangka-Belitung. That's because the phenomenon that occurs is unusual. Previously, the level of credit payment compliance here was always in the top ten highest nationally. "Now, we are actually in the bottom three," he said.

Also read: Pros and Cons of Responding to the Government's Plan to Manage Smelters Confiscated by Tin Corruption

Just like what Dede revealed, this is due to 60 percent of the debtors being tin workers, including traditional tin miners, workers in smelters (facilities for processing mining products), and contract workers at PT Timah. The rest are workers in other sectors but are affected by tin mining, including traders in the market.

"We have repeatedly contacted the debtors and at the end of the month met with them in person, but they all answered that they couldn't pay because the tin yield couldn't be sold. Fortunately, there were those who were willing to return their credited vehicles because they didn't know when the tin yield could be sold again," said Doni.

KOMPAS/ADRIAN FAJRIANSYAH

Illegal tin mining continues to occur around fishing villages in Pangkal Arang, Pangkal Balam District, Pangkal Pinang City, Bangka-Belitung Province on Wednesday (24/4/2024).

Hope it's finished soon

Given the current condition, both Dede and Doni sincerely hope that everything will soon improve for the sake of economic recovery in Bangka-Belitung. They believe that this could happen if there is immediate certainty in the investigation process of the ongoing tin corruption case.

If the legal process drags on, tin mining sector workers will continue to be in a stalemate. That is because the tin collectors or buyers and smelters are not yet able to operate normally.

"It is common knowledge that collectors and smelters have not dared to operate due to the ongoing investigation of the tin corruption case. Everyone is still waiting for the sustainability or legal capacity of the case," said Doni.

Also read: Disclosure of Tin Corruption Doesn't Stop Illegal Mining in Babel

The head of the Master of Management Program at the Faculty of Economics and Business of Bangka Belitung University, Reniati, stated that based on data from the Central Statistics Agency, the economic situation in Bangka Belitung is not in good condition. In the first quarter of this year, deflation occurred in Pangkal Pinang and Tanjung Pandan (Belitung Island). This indicates a decrease in the selling price of basic commodities caused by a decrease in purchasing power of the community.

On the export side, there have not been any commodities exported from Bangka-Belitung until February. This is because there is no tin that can be exported, thus affecting other sectors. Prior to the tin corruption case being revealed, 83 percent of Bangka-Belitung's exports came from the tin processing industry.

KOMPAS/ADRIAN FAJRIANSYAH

Acting Governor of Bangka-Belitung Safrizal ZA attended a Public Consultation on the "Preparation of Strategic Environmental Impact Assessment for Bangka-Belitung's Medium-Term Regional Development Plan (KLHS RPJMD) 2025-2029" in Pangkal Pinang, Bangka-Belitung, on Wednesday morning, April 24, 2024.

"So, when the smelters are not operating, many of their workers have no means of livelihood. Yet, their household spending contributes significantly to the economic growth of Bangka-Belitung," said Reniati.

Looking for a solution

Acting Governor of Bangka-Belitung, Safrizal ZA, does not deny that the revelation of the tin corruption case has led to an 80% decline in tin mining activity. This has caused economic turbulence in Bangka-Belitung.

All relevant stakeholders, from local to central government, are currently working to find solutions to revive the economic growth here.

Moreover, around 30 percent of the total population of approximately 1.5 million people in Bangka-Belitung are directly dependent on the sector. "Therefore, all relevant stakeholders, from local to central government, are working to find solutions to revive the economy here," he said.

KOMPAS/ADRIAN FAJRIANSYAH

The Head of the Asset Recovery Agency of the Attorney General's Office, Amir Yanto, gave a press statement after the Cross-Sector Coordination Meeting regarding the "Follow-Up Action on the Seizure of Five Tin Smelters on Bangka Island" at the Bangka-Belitung Governor's Office, Pangkal Pinang, Bangka Island, on Tuesday (23/4/2024).

Following a Coordination Meeting Across Sectors discussing the “Follow-up of Confiscation of Five Tin Smelters in Bangka Island” at the Bangka-Belitung Governor's office in Pangkal Pinang on Tuesday (23/4/2024), Head of the Asset Recovery Agency of the Attorney General's Office, Amir Yanto, stated that all relevant agencies agreed to manage the five smelters seized in the tin corruption case. The management will be handed over to the Ministry of State-Owned Enterprises.

The aim is to anticipate the decline in asset value and to save the workers involved. "The smelters have high asset value. If left non-operational, the asset value will drastically decrease to become a pile of scrap metal. If left abandoned, it will have a more severe negative effect on the economy of Bangka-Belitung since around 30 percent of the community's livelihood comes from tin," said Amir.