SMES STRATEGIES IN MANAGING CORPORATE DEBT PROBLEM AND GOVERNMENT INFLUENCE TOWARDS INDONESIAN SMES DEVELOPMENT

• Main Author: Bramantyo Andaru, Muhammad
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/42330
• Institution: Institut Teknologi Bandung

SME in Indonesia is the backbone of the country, it accounted for 90% of employment and enterprises. Debt and loan has been widely known as the most common financing method for SMEs in developing countries, it is required to attain business operation and needs. SME are found to have more financing hindrances than larger enterprise or firm, thus debt has been the most accessible and favorable financing method for SMEs, though debt comes with a high risk. In fact, other types of financing or funding may not be accessible for SMEs due to the legal and capital requirements. However, it is found that SME lacks of strategic planning which causes them to have an unstable growth and slow-moving development. Globally and Indonesia, SMEs also experience bankruptcy and financial distress, which are causes by the internal financial management strategies and business risks. There is no identical strategies between one SMEs to another, yet a firm strategy paradigm will result into a positive cash flow and financial management strategy is required for SMEs in order to achieve positive growth. With strategies such as financial feasibility, financial forecast, financial planning, and profitability ratio SME should be able to manage risk exposed from debt. Furthermore, government regulation plays an influential role in SMEs growth. Through government regulation and influence SME can experience the help improved access to finance and other means of help. SMEs financing remains as a global policy agenda, and government in 43 countries has created initiatives that can help these SMEs. This paper identifies and critically analyze the different set of strategies applied by Indonesian SMEs and government roles towards SMEs growth. Using the sample from SMEs that operates in manufacturing, advertising, fashion, construction, and health. The data is obtained through an extended interview, where the result is being translated into thematic coding, a qualitative analysis. This is done to derive the data analysis. The result indicates a slight difference between the theoretical framework and empirical framework. In addition, Indonesian SME should adapt to the framework model discussed in this paper, and adjust their strategies necessarily. In the meantime, Indonesian government are required to do an improvement of their program and regulation, essential for SMEs to achieve growth. This paper presents factors and aspects from both internal and external that influence and foster the growth