Banadhi Kurnia Dewi - 1901508070

The Reinforcement of Indonesian SMEs through Digital

against ASEAN Free Trade Area

It has been fifty years of Indonesian participation in ASEAN membership since the
establishment of ASEAN on August 8, 1967 in Bangkok, Thailand and currently AFTA
(Asean Free Trade Area) has been running for two years and Indonesia has not shown
significant changes as targeted by AFTA where trading in Indonesia is still dominantly
partnering with countries outside ASEAN such as America, Japan and Europe. The enactment
of AFTA on the one hand will provide opportunities due to the free flow of goods, services,
investments, capital, and skilled labor. Actually, AFTA will encourage Indonesia to be more
integrated, dynamic and competitive in the face of regional and global trade competition,
consequently in a global market, it’s really important for countries to take advantage of
technology. Indonesia as one of ASEAN countries could be more competitive by evolving all
the Small and Medium-sized Enterprises (SMEs) with digitalization. Hence, ASEAN Free
Trade Area should not be a threat for Indonesian SMEs in this digital era.

In order to face the AFTA, SMEs in Indonesia are having an important role as well as
expected to survive in his own country and also be able to compete in the global economic.
Moreover, SMEs can increase employment and GDP in Indonesia, therefore the number of
exporter will multiply. The contribution of Small and Medium-sized Enterprises to gross
domestic product (GDP) has been increasingly wriggling in the last five years. Ministry of
Cooperatives and Small and Medium Enterprises noted the contribution of the SMEs sector
increased from 57.84 percent to 60.34 percent. Not only that, The SMEs sector also helped
the absorption of workforce in the country. Labor absorption in the SMEs sector grew from
96.99 percent to 97.22 percent in the last five years (Mutmalnah,2016). As a SMEs
performer, we are required to be smart, aware, and be able to take opportunity ahead with
innovation and creation upon the development of Technology and Information in the digital
era because is now making SMEs business development becomes faster and easier in trading.

Technology become one of crucial factor, therefore, innovation and creativity are
essential to avoid dreary production. “To Strengthen the competitiveness, it is time for SMEs
to move to digital (Goes digital) because the technology can open many opportunities”, said
Director of Enterprise and Business Services Telkom, Muhammad Awaluddin. Technology
becomes the major reason why the SMEs cannot run conventionally, it’s compulsory to
follow the improvement of digital era, therefore, the SMEs can survive in the market.
Moreover, the competition that happened in the digital era became all-horizontal by cause of
the invention and development of internet make everyone in the market having a same
opportunity to accelerate. Here are some key steps which SME performers can achieve in
order to advance their business: utilizing e-commerce to make it faster in promoting their
products, using social media as a platform of giving information and interact to their
Banadhi Kurnia Dewi - 1901508070

customer, create a website that consist of a valuable and wonderful content of the product
along with mastering digital marketing to increase the brand awareness.

The ease given due to the presence of technology create so many rivals from outside
Indonesia in the global economic competition between ASEAN countries. On the other hand,
let’s view AFTA as a challenge and opportunity for Indonesia to move forward and become a
leader in the market and absolutely not as a threat. As long as the UKM performers are
courageous to create and develop an outstanding business idea in this digital era that has its
own characteristic and uniqueness that differentiate them from other ASEAN country’s
products whereas the products to be traded is not just in domestic level but requisite to
compete with another businesses in ASEAN countries such as Singapore, Malaysia,
Philiphines, etc. You can’t roll out the “same-old, same-old.” Your product has got to have a
cool new-look that’ll make the consumer sit up and take notice (Harrington,2013). Besides
having an uniqueness, the product is expected to have quality and quantity that can attract
foreign intention by bringing and promoting certain characteristics in Indonesia.

As a conclusion, AFTA(ASEAN Free Trade Area) is a great platform for SMEs in

Indonesia to support local products go International in order to advance the Indonesian
economy and become the leader on ASEAN economic community. Especially in this digital
era, Indonesia SMEs will be able to become more competitive players both in regional and
global and increase their productivity in facing AFTA through technology and creativity. The
success of SMEs also can be supported by facilitating them in a form of technology
reinforcement for both production and promotion. If everything can synergies well, certainly
Indonesia SMEs can win the the competition. SMEs will be well-prepared to compete not
only domestically but also with foreign products. We can compete in terms of quality,
uniqueness, and in marketing SMEs products.
Banadhi Kurnia Dewi - 1901508070

Blibiography

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