4-Article Text-75-1-10-20240327

Journal of Islamic Economic Development
Vol. 1 No. 1 November 2023

https://https://jied.staiku.ac.id/
Empowerment of MSMEs as a Strategy for Improving Welfare in the Indonesian Economic

Context
Andieni Cucu Putria1, Gama Pratama2

1&2
Fakultas Ekonomi dan Bisnis Islam X Universitas Islam Bunga Bangsa Cirebon
Email: [email protected] , [email protected]
Abstract
This research explores the role of empowering Micro, Small and Medium Enterprises (MSMEs) as a strategy
to improve prosperity in the Indonesian economy. Through the literature study method, this research
highlights the positive contribution of MSMEs to job creation, national income and economic inclusiveness.
MSMEs have the potential to reduce unemployment rates by providing employment opportunities for
vulnerable groups. Contribution to national income is seen through the creation of added value and
economic diversification. Empowering MSMEs also positively impacts social aspects and community
welfare, reducing disparities and strengthening local communities' social ties. Although promising, the
challenges of financing access and global competition must be overcome. Policy recommendations include
fiscal incentives, special financing facilities, and skills training programs. Indonesia can build a solid and
inclusive economy by strengthening the role of empowering MSMEs.
Keywords: MSMEs Empowerment, Welfare, Indonesian economy, Economic Inclusiveness, MSMEs

Challenges
Introduction
The Indonesian economy continues to experience significant development over time. As a dynamic
and densely populated country, economic challenges are becoming increasingly complex and require
appropriate strategies to achieve sustainable growth and improve people's welfare. In this context, the
Empowerment of Micro, Small and Medium Enterprises (MSMEs) has emerged as a critical strategy that is
considered capable of being the main driver of economic growth and positively impacting the level of
community welfare (Purnomo, 2016).
MSMEs play a central role in Indonesia's economic structure, covering various sectors and significantly
contributing to job creation and national income. Empowering MSMEs is about increasing productivity and
competitiveness and providing opportunities for small businesses to grow and develop sustainably. This
empowerment strategy is expected to make a real contribution to reducing economic disparities and
increasing welfare at various levels of society (Apip, 2020)
In this research, we will explore various aspects related to empowering MSMEs as the primary strategy
for improving welfare in the context of the Indonesian economy. We will analyse the role of MSMEs in
creating jobs, increasing income and creating added value for the national economy. Apart from that, this
research will also discuss the challenges and opportunities faced by MSMEs and formulate policy
recommendations that can strengthen the role of MSMEs in supporting inclusive and sustainable economic
growth in Indonesia.
Research Methods
The research method applied in this research uses a literature study approach. The initial stage involves
identifying the objectives and scope of the literature study, which includes establishing a focus on the
empowerment of MSMEs and their impact on economic growth and community welfare. A literature search
was conducted through academic databases, scientific journals, books, and other relevant sources of
information using keywords such as "empowerment of MSMEs," "economic welfare strategy," and
"Indonesian economic context." The selected literature is then evaluated based on relevance, novelty and
credibility. The results of the literature analysis and synthesis form a conceptual framework for research and
develop a solid theoretical foundation. A systematic literature review includes theoretical developments,
significant findings, and gaps in knowledge that form the basis for this research. The limitations of the
literature accessed are evaluated, and research conclusions are drawn based on a synthesis of the literature,
providing direction for further research in the field of MSME empowerment in the context of the Indonesian
economy.
Result And Discussion

Empowerment of Micro, Small and Medium Enterprises (MSMEs) has become the main focus in efforts
to improve the welfare of Indonesian society. This research aims to investigate the critical role played by the
empowerment of MSMEs in the context of the Indonesian economy, with a focus on strategies that can
increase the level of welfare. In conducting this research, the literature study method was used to develop a
solid conceptual framework and detail an in-depth understanding of related issues.
The importance of empowering MSMEs in the Indonesian economy can be understood from the
significant contribution made by this sector to job creation and national income. MSMEs are the backbone
of the economy and agents of social change by opening up economic opportunities at various levels of
society. Empowering MSMEs is a crucial strategy for achieving inclusive and sustainable economic growth
(Budiarto, 2018)
The importance of empowering MSMEs in creating jobs cannot be ignored. MSMEs can absorb large
amounts of labour, so they positively impact reducing the unemployment rate. MSMEs also provide
employment opportunities for community groups underserved by the formal sector, such as women, youth
and people in rural areas. Therefore, policy steps that support the empowerment of MSMEs can be a solution
to improve welfare through increasing access to work (Zuhra, 2023)
Regarding national income, MSMEs make a real contribution by creating added value and diversifying
the economy. By encouraging creativity and innovation, MSMEs can produce unique products and services,
increasing the competitiveness of the national economy. A targeted MSME development strategy can create
a sustainable business ecosystem, significantly increasing people's income and balanced economic growth
(Mariska et al., 2023).
Empowering MSMEs is not only limited to the economic aspect but also has the potential to improve
the welfare of society more broadly. Empowering MSMEs can reduce social disparities and increase economic
inclusiveness by providing business opportunities to previously marginalised groups, such as women and
other vulnerable groups. In addition, MSMEs often positively impact local communities' development,
strengthening social ties and improving the quality of life.
However, although empowering MSMEs promises many benefits, the challenges faced by this sector
cannot be ignored. Obstacles such as limited access to financing, lack of managerial skills, and challenges in
facing global competition are the main obstacles. Therefore, it is necessary to formulate supporting policies,
such as providing easy access to financing, skills training and supporting infrastructure to overcome these
obstacles.
Cooperation between government, the private sector and community institutions is critical in facing
this challenge. The government can play an active role in formulating policies that support the empowerment
of MSMEs, such as providing fiscal incentives, special financing facilities, and support for skills training. The
private sector and community organisations can also contribute by providing guidance, access to business
networks, and technical support.
In order to achieve sustainable and inclusive economic growth in Indonesia, empowering MSMEs must
be placed as a primary strategy. MSMEs have great potential to improve community welfare through their
vital role in creating jobs, increasing income and diversifying the economy. By overcoming existing challenges
and implementing supportive policies, empowering MSMEs can become a central pillar in building a resilient
and competitive economy at the global level.
Conclusion
In exploring the role of empowering Micro, Small and Medium Enterprises (MSMEs) as a strategy to
improve prosperity in the context of the Indonesian economy, this research highlights several significant
findings. Empowering MSMEs has proven to be the main driving force in creating jobs, increasing national
income, and promoting economic inclusiveness. Through the literature study method, this research details
the positive contribution of MSMEs to sustainable economic growth.
Empowering MSMEs is mainly reflected in its impact on labour absorption. MSMEs are a source of
income for society and provide employment opportunities for previously marginalised groups. Empowering
MSMEs can play a crucial role in reducing unemployment rates and providing access to employment to
vulnerable segments of society. Contribution to national income is also an important highlight. By creating
added value and diversifying the economy, MSMEs can be a catalyst for increasing national economic
competitiveness. MSME development strategies focusing on innovation and creativity can create unique
products and services, open export opportunities, and reduce dependence on specific economic sectors.
Besides economic benefits, empowering MSMEs also positively impacts social aspects and general
community welfare. Empowering MSMEs can reduce social disparities by providing business opportunities
to previously marginalised groups, such as women and people in rural areas. More than just creating jobs,
MSMEs can strengthen social ties in local communities, improve quality of life and build social resilience.
Although empowering MSMEs promises excellent potential, this sector's challenges cannot be ignored.
Barriers to access to financing, limited managerial skills, and global competition must be overcome.
Therefore, there needs to be close collaboration between the government, the private sector, and
community institutions to formulate supportive policies, provide easy access to financing, and provide the
necessary skills training.
In preparing policy recommendations, it is necessary to emphasise the need for cross-sector support
and cooperation to overcome the obstacles faced by MSMEs. Fiscal incentives, special financing facilities and
skills training programs can be concrete steps that support the growth and sustainability of the MSME sector.
By strengthening the role of empowering MSMEs as a primary strategy, Indonesia has the potential to build
a robust, inclusive and competitive economy at the global level. Through the implementation of supportive
policies and a deep understanding of the dynamics of MSMEs, the Indonesian economy can benefit from this
sector's potential, thereby creating a significant positive impact on the welfare of society.
Bibliography
Apip Alansori, S. E., & Erna Listyaningsih, S. E. (2020). Contribution of MSMEs to Community Welfare. Andi
Publisher.
Budiarto, R., Putero, S. H., Suyatna, H., Astuti, P., Saptoadi, H., Ridwan, M. M., & Susilo, B. (2018). MSME
development between conceptual and practical experience. UGM Press.
Mariska, R., Siregar, F. H., Ahmad, A. K., Hasanah, U., Pratama, C. W. A., Lubis, A. Y., & Susilawati, S. (2023).
Development of Superior MSME Products in Supporting Economic Growth Case Study Sukasari Village,
Pegajahan District, Medium Bedagai Regency. Journal Of Human And Education (GINGER), 3(2), 292-
298.
Zuhra, S. A. (2023). Analysis of the Role of Micro, Small and Medium Enterprises (MSMEs) UD. Bintang Tempe
in Gampong Tanjong Indah District. Want Jaya District. Aceh Besar in Increasing the Economic Benefits
of Workers (Doctoral dissertation, UIN Ar-Raniry).

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Journal of Islamic Economic Development

Vol. 1 No. 1 November 2023

Empowerment of MSMEs as a Strategy for Improving Welfare in the Indonesian Economic

Andieni Cucu Putria1, Gama Pratama2

Keywords: MSMEs Empowerment, Welfare, Indonesian economy, Economic Inclusiveness, MSMEs

Result And Discussion

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