Spatial Distribution on Recovery Strategy Due to The Impact of The Covid-19 Pandemic on The Conditions of Micro Small Medium Enterprises (MSME’s) in Central Java Province, Indonesia

Abstract

MSMEs are the backbone of the economy in Indonesia. However, most MSMEs were collapse due to the Covid-19 pandemic. Therefore, MSMEs recovery is needed to restore the real sector, particularly in Central Java. The study analyses the impact and economic recovery strategies during and after Covid-9 in the MSME sector. The research used a descriptive qualitative method. Data were collected by electronic survey and in-depth interviews and analyzed by SWOT. The results showed the Covid-9 pandemic significantly reduced MSME business actors’ profits due to decreased sales, while production costs remained or even increased. The vulnerability of MSMEs closes their businesses based on the subjective perceptions of business actors is that most of them can survive for more than a year ahead (33.1%) and the next six months to one year (30%). The rest can last for less than one month to the next six months, starting from December 2020. MSME entrepreneurs took several strategies to keep their business running. The methods include looking for new markets, providing discounts and bonuses, diversifying products, giving a consignment, looking for cheaper suppliers/raw materials, and purchasing raw materials with the last payment due. Potential risks when MSMEs are unable to maintain business are (1) lousy credit; (2) layoffs for workers and bankruptcy for business owners; and (3) supply and demand drop. The government should take action to recover MSMEs. The promising policies are (1) Facilitate MSMEs with capital for purchasing raw materials, (2) Development local supply chains through trading houses and regional logistics, (3) Facilitating access to financing, production, and marketing, (4) Encouraging product diversification according to the current needs of consumers, (5) Development of the MSME entrepreneurial ecosystem with a multi-stakeholder approach.

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