Jakarta, CNBC Indonesia – PT Bank Rakyat Indonesia (Persero) Tbk (BBRI) again published the MSME Business Index for the first quarter of 2024 and Expectations for the second quarter of 2024. As a result, it was recorded that in the second quarter of 2024, MSME business growth continued, as reflected in the MSME Business Index at the level of 102.9.
BRI Micro Business Director Supari said that the growth of MSME businesses was driven by a number of factors. These include the main harvest of food crops which is starting to take place in several production centers, an increase in the prices of goods and services following tight supplies of basic necessities and seasonal factors ahead of the fasting month, an increase in orders ahead of fasting and Eid al-Fitr, and the 2024 election campaign.
“However, when compared with the previous quarter, the MSME Business Index for the first quarter of 2024 weakened slightly, which indicates that MSME business expansion has slowed slightly for several reasons, namely weakening people's purchasing power and delays in the harvest in several areas affected by El-Nino. Then normalization of demand for goods and services after the celebration of the National Religious Holiday (HBKN) Nataru, increasing prices of input goods/merchandise causing production volumes/sales volumes to tend to decrease, and increasingly tighter competition from online businesses and modern retailers, and limited operating time “during the fasting month for restaurant/stall businesses,” explained Supari, quoted from a press release, Friday (3/5/2024).
When viewed sectorally, almost all MSME sectors recorded business expansion compared to the first quarter of 2024, except for the transportation sector. The highest index occurred in the mining and quarrying sector due to increased demand for clean water and gas.
The increase in average selling prices and the bumper harvest that is starting to occur in some production centers are encouraging the expansion of the agricultural sector. The increase in business activity in the processing industry, trade and hotel and restaurant/stall sectors was also supported by an increase in average selling prices and campaign activities.
Meanwhile, business growth in the construction sector is driven by increased renovation or repair of houses ahead of fasting and holidays.
“In the second quarter of 2024, MSME players remain optimistic that their business expansion will continue, as reflected in the MSME Business Expectation Index which remains at a high level (129.9). Compared to the previous quarter, this optimism has strengthened again,” added Supari.
This condition is driven by a number of things, including the peak harvest of food crops which will occur in most production centers. Then the HBKN Idul Fitri celebration will increase demand for goods and services and more conducive weather as well as accelerate the implementation of government and private projects.
In line with the expansion of MSME businesses, the sentiment of MSME business people towards the economy and business in general remains good. This is reflected in the MSME Business Sentiment Index (ISB) for the first quarter of 2024 which was at the level of 118.7.
The two constituent components both experienced strengthening, where the Current Situation Index (ISS) rose 0.2 points to 92.5, while the Expectations Index (IE) increased 3.3 points to 145.0. The ISS which is still below 100 is mainly due to a decline in the assessment of MSME businesspeople regarding current general economic conditions due to the increase in prices of raw materials/basic necessities.
With MSME business conditions continuing to grow and expectations of increasingly better economic prospects, MSME business people are also giving a higher assessment of the government's ability to carry out its main tasks. This is reflected in the Trust Index of MSME players in the Government (IKP) which rose to level 135.3 in the first quarter of 2024.
Then looking at the constituent components, MSME business people gave the highest assessment of the government's ability to create a sense of security and peace (related index 156.3) and provide and maintain infrastructure (related index 148.8). Meanwhile, the lowest assessment was given by MSME players to the government's ability to stabilize prices of goods and services (index 128.4).
This seems to be related to the increase in prices of input goods and basic necessities experienced by most MSME business people. Most of the components that make up the IKP increased, with the largest increase occurring in the component that expressed the government's ability to enforce the law and provide a sense of justice (strengthened 3.4 points), and followed by the component that expressed the government's ability to create a sense of security and tranquility (strengthened 3.1 points). .
For information, the Bank Rakyat Indonesia MSME Business Activity and Business Sentiment survey has a sample of more than 7,000 MSME respondents spread across all economic sectors and in 33 provinces. Sample selection was carried out using the stratified systematic random sampling method, so that it could represent the business sector, province and business scale.
This survey was conducted by the BRI Research Institute from March 22 2023 to April 8 2024. Interviews were conducted by telephone with strict quality control so that the data collected was valid and reliable.
The information collected in this survey is the perception of MSME business actors regarding the development and prospects of the economy in general, the respondent's business sector, as well as the development and projections of the respondent's business performance. This information is used to compile the MSME Business Index (IB), Business Sentiment Index (ISB), and the MSME Business Actors' Confidence Index (IKP) towards the government.
These indices complement similar indices compiled by Bank Indonesia and the Central Statistics Agency where surveys were conducted on medium and large category business actors. In addition, information was collected regarding respondents' business conditions for monitoring purposes as well as to act as an early warning system (EWS) regarding the business continuity of MSME debtors.
In this survey, respondents answer a number of questions, where for each question the respondent can give a positive answer (Higher or Better), a negative answer (Lower or Worse), and a neutral answer (Same or Still). The diffusion index is calculated from the difference between the percentage of positive answers and the percentage of negative answers plus 100.
In this case neutral answers are ignored. The median value of the diffusion index is 100 and the range of the diffusion index will be in the range of zero to 200. If all respondents give a negative answer, the diffusion index will be zero and conversely if all respondents give a positive answer, the diffusion index will be 200.
A diffusion index above 100 indicates that positive answers outweigh negative answers. On the other hand, a diffusion index below 100 indicates there are more negative answers than positive answers.
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