MSME’s behavior according to law: definition, type, and officials it needs

Maybe my friend always heard the term MSME, but what is MSME? And what is the official criteria according to Indonesian laws? Understanding definitions, types, and conditions are very important, especially for people who plan on starting or developing a business. This article will completely explore ins and out of MSMEs based on available regulations. See the following discussion!

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Understanding MSMES According to the Law

What is msme? MSME is a micro abbreviation, small and medium business. Referring to Law Number 20 in 2008 about micro, small and medium enterprises, MSMES divided by micro businesses, small businesses. The core of this classification is based on capital limits or annual sales results.

Overall, MSMES is an effort made of households, individuals, groups, or groups of people. UMKM today is the establishment of the people’s economy of Indonesia because it is considered to be competent to arouse the economic sector. Currently, MSMEs are considered the Indonesian economy foundation because it has a significant role in developing the community economy sector.

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MSME behaviors according to law

MSME morals are included in Article 35 of the Regulation Regulation Number 7 in 2021 about the easement and micro-defense of the capital-based on the capital-based on the business of business activities. While, for providing relief, Protect MSMEs in addition to the criteria for business capital, also used criteria for annual sales income.

Micro Enterprises

1. Micro businesses have business capital up to maximum RP1,000,000,000.00 (a billion rupiah) excluding ground and buildings in business areas.
2. The maximum annual sales of micro businesses cost RP2,000,000,000,000.00 (two billion rupiah).

Small business

1. Small businesses have business capital more than RP1,000,000,000.00 (a billion rupiah) to highest RP5,000,000,000.00 (five billion rupiah) excluding lands and business buildings.
2. The annual sales method for small businesses is more than RP. 2,000,000,000,000.00 (two billion rupiah) to maximum RP. 15,000,000,000,000.00 (fifteen billion rupiah).

Medium business

1. Medium enterprises have business capital more than RP. 5,000,000,000,000.00 (five billion rupiah) to highest rp10 billion billion (ten billion rupiah), including land and buildings.
2. Annual sales for medium businesses is more than RP. 15,000,000,000,000.00 (twelve billion rupiah) to highest rp 50,000,000,000,000,000,000.00 (fifty billion rupiah).

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The difference between msmes based on surgical aspects

Based on aspects of operation, MSME differences appear from the following items:

1. Organizational structure

Micro businesses usually have a simple structure, often handled by a person or family. Small businesses begin to have a small formal structure with divisions, while medium businesses have a more clear organization structure, complete with organizational managers, complete with organizational managers, complete with managers in Organization, complete with organizational managers (eg, finance, finance, and marketing).

2. Handle and handle

Micro Business Management is often irregular and no good financial records. Small businesses begin to make simple records and implement a basic management system. Medium enterprises have a more structured and automated management system, including financial, production and marketing.

3. Access to capital

Micro businesses typically depend on personal capital or loan from relatives. Small businesses have already begun access to capital from financial institutions in micro finance or banks with larger conditions. Medium businesses have wider access to capital, such as bank loans, investments, or even capital market.

4. technology

The use of technology in micro businesses is still limited. Small businesses begin to adopt technology to help operate, such as simple machines or cashier software. Medium businesses use more sophisticated technology, such as ERP system (Entrucise Resource Planning) or E-Commerce integrated.

5. mark

Medium businesses typically sell their conventional products, such as word in mouth or in the surrounding environment. Small businesses begin to expand onto sales, for example by using social media. Medium enterprises have wider and more structured sales strategies, including online promotions, advertising, and cooperation with other parties.

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Examples of types of businesses that include MSMES

Seeing above behaviors, many business classes are attached to the MSME category. Some examples include:

1. Micro businesses, which are food stalls, street vendors, grocery stores, house -nased-seased businesses of handicraft, or seams.
2. Small business, which is to cater for more turnover, small harvest shops, motorcycle repair shops, or laundry in kilograms.
3. Medium businesses, which distributes smaller products, restaurants with large branches, or tone of Toofu with a significant production measure.

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Support regulations for MSME standards

The government continues to support the development of MSMEs in different regulations. Outside of Law No. 20 in 2008 and PP No. 7 to 2021, there are many other business related regulations to noused

In addition, there are regulations also related to financing methods (Kur – business

Number 6 in 2023 about building government government at Liegu of Law Number 2 in 2022 about the task copyright related to the provisions related to the provisions associated with MSMES.

In this regulation, MSMEs are expected to easily develop and contribute more to the national economy. Understanding MSME behaviors not only gives a clear picture, but also open opportunities to access different programs and facilities from the government. If you have a business, be sure to check if your business is attached to MSME behaviors to maximize potential support available.

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(This article is edited by Perqara Editorial Team)

Legal basis

1. Law Number 20 in 2008 about micro, small and medium and medium enterprises;
2. Government regulation number 7 of 2021 about ease, protection and empowering cooperatives and micro, small and medium businesses;
3. Government of Regulation No. 5 in 2021 about execution of risk -made deception;
4. The regulation of the coordination minister for economic economic activities 1 of 2023 regarding regulation of amendment to the Condomic Minister of Indonesia number 1 of 2022 about business guidelines.