The Development of Small Industries and Economy of Indonesia

           Small indusrties or in this case Small and Medium Enterprises (SMEs) are small firm that operating in producing goods or services. Usually this kind of business has a little capital, limited equipment or tools, a few employment, and little output or product. There’s so many kind of product that be produced by SMEs company. Usually there are so many SMEs in one country (especially in little countries or developing countries) and because of that reason, SMEs give significant development in litlle countries or developing countries.

          Indonesia is one of developing countries in economy and because of that, SMEs give so many development in this country. From the data in 2001, there are 99,97% SMEs company in this country and there are 97,85% employee work in SMEs company. The comparison between Big Industries and SMEs company in this country is too large and of course this fact gives significant impacts for this country.

From the data above, we can see that SMEs have a big role as a job provider for the vast majority of the people and reducing unemployment in this country. Recently, unemployment is one of the biggest problem for this country. Because of so many unemployments in this country, the government must take responsibility for their life, for example give some subsidy to ensure their life. Moreover, with so many unemployments in this country, human resources in this country can’t be distributed and be used properly, the circulating of money don’t balance, and that make a gap in economic cycle in this country. So, the function of SMEs as a job provider is very important for this country.

            From this function, we can see that SMEs have a vital function in combating poverty, distributing income, and economic growth of this country. As we can see, there’s so much people live in proverty. That is happen because a big gap from many people who have money and who don’t have money. The distributing of income (or in this case is money) can’t reach people with low economic condition, and back again the real reason for this case is because it’s not easy to get job. With SMEs in this country, this problem can be reduced because there are so many SMEs in this country and because of them, many people can get income easily. When this problem reduced, the economic growth of this country will be better and better. That happen because the economic gap in this country will be reduced and the circular of money is this country will be more efficient.

             Another function of SMEs in this country that important is increasing non-oil export. Indonesia is one of oil exporter country (especially crude oil), but we cannot always become an crued oil exporter because crued oil is one of limited and raw product. And based from that fact, we need some product that can be exported to other country to increasing income for this country. There are so many SMEs in this country and every firm makes some output or product that can be sold to another country. And when that happen, cash income for this country will increasing.

               Besides from that, it’s not easy for SMEs to compete in the global market and it is hard to become a big and stable company. Intense competition in the market is still the biggest problem for SMEs company to compete in the market. Many people already know another product from other brands and trusted that brand as the best product in the market. It’s not easy for SMEs to make their product and their brand become a famous product, be known by people (instill the brand image), and be trusted by others.

Another problem for SMEs is their low capital. As a small and medium company, SMEs of course still have limitation in capital section. Many SMEs company who still don’t have their land and equipment. They just used their simple tools or they need to rent it from others. They don’t have much money to hire many employment or buy some technology to support their businesses.  That problem will affect the procces of production and the output of the company. The output will fewer with the higher cost, and that will impact to the product price that will be higher than other product.

              Another weakness from SMEs company is knowledge and experience. Knowledge and experience is an important factor for the company to running their business. With knowledge and experience, a company can make a great decision for their company policy and strategy to gain market. As a small and medium company, logically SMEs still have a fewer knowledge and experience than another big company and this fact makes SMEs harder to become a big company .

From companies side, SMEs company need to be opened to market needs and market changes. To gain the market, SMEs company need to make some innovative idea when they produce their product. The innovation product will make people interest to buy their product and make their brand be known by others. After people have a brand image, the company will be more easier to compete and gain the market.

             From the society side, people must be opened their mind to try and trust SMEs product in the market. This step will help the company growing and of course as the result, the company will give a positive feedback to society by hire more employment and reduce the economic gap in the society.

From the government side, based on the functions of SMEs, the government must see SMEs company as a benefit for this country (even until now, the fact is the government still can’t give much help to SMEs company growing). Economic issues can be reduced and economic growth problem in this country can be resolved by SMEs company. The government need to find a solution for SMEs company weaknesses to make this company survive in the market. There are some action that the government can do.

•         the government can give some capital subsidy or loan to make SMEs company grow and become a stable and big company.

•                                The government can make some policy that helped SMEs and give some protection to SMEs company to grow bigger, for example make SMEs easier to make business license or make a limitation for foreign companies operate in this country.

•         the government can give a training and information about how to producing, advertising, and marketing SMEs product in the market. It can help SMEs company to compete in the market.

•         the government can help SMEs company with built some facilitate for the company create partnerships with exporters or buyers from other countries.

               So, from the data above the condition about SMEs company in Indonesia, the function of SMEs company in this country, and the weaknesses of SMEs company, we can conclude that Small and Medium Enterprises really important for this country. Because of that, the government must keep supporting SMEs company so this company can compete in the market. Moreover, from SMEs company side, the company need the innovative idea and from society side, people must open their mind to support SMEs companies grow bigger. 

Daftar Pustaka

http://en.wikipedia.org/wiki/Small_and_medium_enterprises
http://www.smecda.com/deputi7/file_infokop/riana.htm

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Name : Vicky Ferdian
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Cigarette and Economy of Indonesia

 Nowadays, cigarette has been something can not be separated from the people's lives in Indonesia. Almost each level of ages consuming the cigarette. Start from kids,  junior-senior high school students (teenagers), adults, up to the eldest. The same with the levels of the social life, each level (low, middle, high) consuming the cigarette. We can also see frequency of consuming the cigarette in  our society on various type of job, for example labors, drivers, salesmans, employees, businessmans, officials, and others, many of them are consumer. Even now, gender has become something not important anymore, each woman feel free to smoke anywhere or anywhen they want.

The number of smokers in Indonesia continue to increase from 1995 until now. As many as 34.7 million to 65 million smokers. It is based on data from the National Social- Economy Survey and Health Research Association. "Based gender in 1995 there were an estimated 33.8 million male smokers and 1.1 million female smokers. However, in 2007 this figure rose dramatically to 60.4 million male smokers and 4.8 million female smokers, "said UI Demographic Research Institute, Abdillah Hassan. Increase also occurred in consuming cigarettesamong teenagers, where in 1995 only 7 percent and then 12 years later increased to 19 percent. This drastic increase proves how effectivetobacco industry strategies and how weak the government in protecting teens from smoking.

This is a big problem and we should not ignore it. We can see there are many things happened caused by this, most of them are bad things. The one that we can clearly see is problems on health, cigarette ruin health so much. But besides ruin the health, some said that cigarette give a good impact in economy of Indonesia, they said that Indonesia’s economy quite dependent on cigarette industry, it is because cigarette industry contribute a large amount to the foreign exchange and Indonesia’s APBN. Government decision which made cigarette industry become one of the big parts to contribute in Indonesia’s APBN make cigarette industry become more passionate to promote and to sell their product to the society in Indonesia. Based on data from the Demographic InstituteFaculty of Economics UI, production of 220 billion sticks of cigarettes (2006) has increase to 270 billion cigarettes (2010). If the price perstem Rp 500, Rp135 trillion burned by Indonesia’s smokers a year. So then it will become harder to prevent the development of this industry in our country.

As an industry, there are many things needed to make this industry going well, one of them is the raw materials like the tobaccos. This needs automatically provide an employment for the society to tobacco farmings, which then help to increase the economy of the society. Not only help the farmers of tobacco, there are many people survive because of the benefits of cigarette, such as tobacco companies, cigarette factory workers, selling cigarettes as well as people who sell services to the cigarette manufacturer. Cigarette has a big role in the low level of society, we can see there are so many of them such as the vendors selling the cigarette on the street as their way to keep alive. Many people helped by selling cigarette. This situation made the government do not dare to stop the development of cigarette industry in Indonesia, because they think it will cause a big impact for the economy. And all of this things become their reasons why Indonesia’s economy need cigarette industry.

Even tough many people said that cigarette industry has a great contribution in our economy there are still many reasons come to againts. Cigarette actually contributes the greatest loss to our country. Losses incurred cigarettes is not only a health problem but also a problem of moral and financial. Loss will be felt in the next dozen years, there will be the ‘lost generation’. Because actually smoking really damaging the youth. We lost too much productivity, too many productive generation. The state will lost their youth which one day could be the one who build this country to be the better one. According to data of Ministry of Health in 2004, the totalcost of consumption or expenditure toRp 127.4 trilliontobacco. Cost are inclusive of the cost of health cares, treatments and deaths fromtobacco. Meanwhile, state revenues from tobacco tax was Rp 16.5 trillion. "It means expenses for handling health problems caused by smoking  7.5 times more thanthe cigarette tax revenues itself”. It can be seen that the cigarette industryis not the industry that can significantly improve the life ofthe people in Indonesia. Even the growth of the tobacco industry must be paidby the people of Indonesia, consumer of cigarettes is too much suffering in almost every aspect.

From the study conducted by the Institute of Demography (LD UI) in 2007, showed that the tobacco industry contributed only 1 percent of the total national output and ranks 34th. While the contribution of the employment in the same year (2007), the tobacco industry ranks only 48th, while tobacco farming was ranked 30th among the 66 sectors. We must have the courage to admit that Indonesia is far behind in the effort to protect people against the effects of cigarette’s smoke. Compared with neighboring countries in the ASEAN region, such as Thailand, Singapore, Philippines and Malaysia. In these countries, several regulatory instruments have been created to overcome these adverse effects of tobacco products. Such as that contained in the Framework Convention on Tobacco Control (FCTC), with an increase in cigarette taxes, prohibittobacco advertising and the 100 percent smoke-freesociety that aims to protect non-smokers. Moreover, inthese countries are already implementinghealth warning which is not only just a form of writing, but also by usingthe graph or pictureof health effects of cigarettes in each pack.

So, in terms of profits, income country by the production of cigarettes isvery large but equal to the expenditures becausecustoms are quite large. Benefits of smoking onlyon manufacturers that produce cigarettes. Of course, also for the workers and laborersassociated with the manufacture ofcigarettes. Because of cigarettes they can achieve great benefits and can survive. As with the users, especially teenagers and parents who consume the majority of cigarettes everyday, until there are so many heavy smokers around us, smoking can damage our health because of the chemical elements contained in. So, if the government was intending to protect citizens from the effects of smoking, they need to take a real action, stop protect the cigarette industry in our country, stop make an excuse that said Indonesia really depend on this industry. In addition, the government also should immediately discuss the effects of Tobacco Control Bill into law, so the legalaspects of tobacco’s control is getting stronger. The impact of tobaccocontrol regulation will not necessarily reduce the consumption of cigarettesbecause cigarettes are addictive. But at least thisaccession will protect children, young people, women, pregnant women, the prospective novice smokers and non-smokers from the dangers of secondhand smoke.

Source 

http://www.scribd.com/doc/99783107/Analisis-Keuntungan-Dan-Kerugian-Rokok-Bagi-Indonesia

http://nusantaranews.wordpress.com/2009/01/26/mitos-industri-rokok-penting-bagi-negara/ 

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Name : Siti Afifah
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Taxes and Economy in Indonesia

Tax is a fee that every individual, property owner, firms have to pay in order to support the government.  There are many kinds of tax such as income tax, sales tax, property tax, toll tariffs, custom tax, import tax, alcohol drink tax, and service tax. Tax is not a voluntary donation to the government, but every person enforced to pay the tax. Taxes can be used to public service such as infrastructure development, fuel subsidy, education subsidy, national defense, etc.Some of us should have an experience about paying tax. One of the simplest examples is PPN. If we go to a fast food restaurant, the price that we pay must be 10% higher than the price that listed on the menu. It’s because every food or beverages that we ordered were charged 10% for PPN or Pajak Pertambahan Nilai. Tax has an important part in economy. With taxes, government can build a better infrastructure and public facilitiesthat can improve our economics activities. For the example, government use taxes to build a bridge that connects two regions. People inside these two regions can interact and do economic activities that can increase the economic growth for the country. Government also uses the tax money to buy weapons and arsenals to protect the country from any threats for the good of the people. So there is an indirect reciprocity between citizen and the government.

Income tax is a tax that charged on the income of individuals, companies, firms, or other legal entities.There are many ways to set the amount of Income tax. There are Official Assessment system and Self-Assessment System. Official Assessment System means that the amount of tax is set by the government’s policy.  And the other side is Self-Assessment System.  Self-Assessment System differs to Official Assessment System. It gives taxpayer the authority to count the amount of tax by themselves. But there are major weaknesses of Self-Assessment System. Because not every Indonesian people or firms want to pay tax and they tend to seek a way to not pay tax such as tax evasion. Because the tax system in Indonesia is Self-Assessment system, many firms in Indonesia try to falsify their financial reports, hiding any real transactions.So the firm can pay less income tax or maybe possibly the firm didn’t have to pay any income tax.

One of the famous tax cases is known as “tax mafia” which is done by Gayus Tambunan.  Gayus is the one who did many of the tax evasion activities inside tax office. His position in Directorate General of Taxes in Indonesia as a reviewer’s objection staff makes him easier to do any “tax evasion” activity for his client. He utilizes the weakness spot of the self-assessment system by making a tax consultant to falsify his client’s financial reports. Corruption is also one of the problems that often happened in tax offices. Money that people pay weren’t used to do any public service. Otherwise the officers inside the tax office took the tax money and use it for themselves. One of the examples is BOS or known as Biaya Operasional Sekolah (School Operating Cost). BOS use to be some kind of educational subsidy from government that giving free education fee for elementary and junior high school. But practically BOS many times being corrupted and the people didn’t felt the benefit from that educational subsidy.

The effect of this condition to economics is of course affecting the growth of Indonesian economic. Tax evasion will affect the competition between companies. The company that didn’t pay the taxes will get more profit than the company who pay taxes even with the same business and productivity. Tax evasion also causes a stagnation growth of economy. If the company didn’t pay tax, the company won’t have to increase the production. Otherwise they will do the tax evasion to get more profit. Corruption inside the tax office also makes the condition of the economic is even worse. The tax money that the people pay was used for their own accord instead of public service. Then the result is broken bridge, damaged public schools, non-functioning public facilities, broken roads everywhere even in the big cities because lacks of maintenance. The increase of educational cost because of the corrupted educational subsidy makes the poor people hard to get an education. This condition will increase the level of poverty. The public facilities such as roads or bridges will disturb the economic activity. People who want to go to certain location will obstructed by the broken roads. It will make the transportation process even longer and inefficient. 

As a citizen, we must do something to overcome this condition. The steps that society must do to overcome the weaknesses and the effects of this condition is people have to concern about the condition if somebody doesn’t pay tax. People have to realize that he/she is living in a nation which ruled by the government. The land and building that people used to live and stay is not entirely belong to the people themselves. If people pay the taxes, the government can get more income. So then they can use it for many public services. After that, he/she can register to Tax Service Office (Kantor Pelayanan Pajak) to get a “taxpayer number” in Indonesia we called them NPWP or Nomor Pokok Wajib Pajak. And then, people have to pay taxes frequently. Not just for one or two months. People who pay taxes also get a pride for themself. He/she already showed that he/she contributed to the government in efforts to increase the economic condition. The people doesn’t have to worry about the tax will affect his/her economic condition because there is a regulation about setting the amount of tax. Tax should not affect the economic condition and slowing down the public efforts to pay the taxes.

The government also must do something to overcome this condition. The things that government must do are tax socialization. With tax socialization, we hope that more people will concerned about paying the tax. Nowadays, government already done many things to socialize tax such as commercial break on TV, billboards, etc. but I think it’s not enough to make people concerned about tax. If the effort to make people concerned about tax fails, I think government has to change the tax system from self-assessment system into the official assessment system. Therefore there will be no more tax evasion because the amount of tax is set by the government. All the citizen has to do is just pay the tax and everything will be much simpler. In order to set the amount of tax, the government also needs regulations that won’t affect the economic condition of individuals and firms.The next thing that government must do is to clean any corruption inside the tax office. If there’s no corruption, the public service will be even better and make our economic condition better. The broken roads will be fixed. The infrastructure and public facilities will be maintained properly. Poor people can get an educational subsidy from BOS and get a proper education. I think that’s all about my opinion about taxes and economics in Indonesia. I hope you get useful information from this essay.

Source list:

http://id.wikipedia.org/wiki/Pajak

http://id.wikipedia.org/wiki/Penghindaran_pajak

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Name : Rafael Martin
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