SYSTEM DYNAMICS MODEL FOR FISCAL INCENTIVES POLICY ADOPTION IMPROVEMENT BY EXPORTORIENTED SMALL MEDIUM ENTERPRISES IN BANDUNG, INDONESIA

• Main Author: Sigit Trianto, Andi
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/64911
• Institution: Institut Teknologi Bandung

This research investigates why the export-oriented small-medium enterprises (SMEs) in Bandung, West Java, Indonesia, did not employ the fiscal incentives policy provided by the Indonesian government. The policy itself enables exportoriented SMEs to waive the import duty and import taxes for raw materials and machinery imported to be used in their production. The primary data was collected through semi-structured interviews with customs officials and owners/managers of exporting SMEs in Bandung, both those who had used the fiscal incentives policy and those who had not. This study uses system dynamics methodology to create a holistic picture and address fiscal policy adoption issues to meet the research objectives. This research would focus on exporting SMEs with industrial characteristics in Bandung, West Java, Indonesia, which was awarded as one of the world's creative cities by the United Nations Educational, Scientific, and Cultural Organization (UNESCO). The research reveals that the lack of policy information dissemination and the government's poor reputation are obstacles to policy adoption. The poor acceptance rate of the policy is also affected by its userfriendliness, which is linked to the direct import and export procedure. The difficulty for SMEs in securing permits, which is reflected in Indonesia's ranking for ease of doing business, is another reason the policy has lost favour. Additionally, several intervention scenarios were offered by this study to address the issue.