Legal Expert Proposes Drafting Government Regulation to Strengthen UMKM Digitalisation Ecosystem
Jakarta (ANTARA) - Legal and development expert Hardjuno Wiwoho has proposed the drafting of a Government Regulation (PP) on Strengthening the UMKM Digitalisation Ecosystem.
He stated that the regulation could serve as an overarching cross-sectoral legal framework to harmonise various dispersed and unsynchronised regulations, including the Electronic Information and Transactions Law, the UMKM Law, the Law on the Development and Strengthening of the Financial Sector, and Government Regulation Number 7 of 2021.
“UMKM are not merely small-scale businesses. They represent the true embodiment of the people’s economy mandated by the constitution,” Hardjuno said in a statement in Jakarta on Thursday.
Therefore, he opined that when digitalisation arrives without adequate legal protection, it does not empower but rather creates new exclusions.
In addition to the PP, Hardjuno also recommended the establishment of the Indonesian UMKM Digitalisation Council as a national coordinating body to connect the central government, regional governments, industry players, and digital communities.
According to him, out of the 64 million UMKM units in Indonesia that absorb 97 per cent of the national workforce and contribute more than 60 per cent to the Gross Domestic Product (GDP), only about half have utilised digital platforms for their business activities.
Overlapping regulations, uneven digital infrastructure, low legal literacy among UMKM actors, and the dominance of large platforms that disadvantage small businesses are identified as significant barriers.
Through his research titled Reformulation of Legal Policies for Creating a UMKM Digitalisation Ecosystem to Improve Community Welfare in Indonesia, Hardjuno offers three conceptual yet applicable innovation models.
First, a tripartite legal protection model that proportionally regulates relationships between UMKM as sellers, consumers, and third parties such as digital platforms, payment service providers, and logistics services.
He continued, second, an integrated UMKM payment system model that ensures legal certainty for transaction funds through fund segregation and the use of virtual accounts in the name of UMKM.
The third model is strengthening the legal standing of UMKM as digital legal subjects with rights to objections, defences, and access to fair and effective dispute resolution.
“The PP can be used as a normative instrument to operationalise these three models,” he said.
Meanwhile, the government, in supporting UMKM growth, is now focusing on improving and fostering a fairer digital market.
Deputy Minister of Communication and Digitalisation Nezar Patria stated that to support the growth of digital UMKM in Indonesia, the current government focus is no longer on creating the number of online UMKM, but on enhancing UMKM capabilities to expand capacity, broaden markets, and upgrade their level.
“If we say UMKM must go online, that is already done. Now we are talking about how they can go productive and go competitive,” Nezar said in his statement received and confirmed in Jakarta on Wednesday (8/4).
Digitalisation opens opportunities but also brings new risks. Many UMKM face pressure from cheap imported products entering through digital platforms.
Nezar emphasised the importance of fairness in the digital ecosystem. The government is pushing for an equal playing field, a level playing field, so that UMKM do not lose to the power of platforms and global products.