Redefine Micro, Small, and Medium Enterprises Classification and the Potency of Baitul Maal wa Tamwiel as Intermediary Institutions in Indonesia

Paper ini dipresentasikan di First International Conference on Inclusive Islamic Financial Sector Development (University of Brunei Darussalam and IRTI-IDB)

Ditulis bersama Ascarya, Peneliti Senior Bank Indonesia

ABSTRACT

The micro, small, and medium enterprises (MSMEs) in Indonesia are considered as the most sustainable and crisis proof business entities. They are ranged from street seller and home industry to small factory with total asset up to Rp5 billion. The current classification of MSMEs seemed too broad so that the real micro businesses of the poor and low income society are not well catered by the government. Therefore, MSMEs classification should be redefined to be able to reach the poor and low income society, to assist and guide them to move their businesses up until graduated and self reliant. The proposed super micro enterprises are those personal businesses with asset less than Rp10 million and credit limit of less than Rp5 million. Meanwhile, micro enterprises are businesses with asset Rp10 – Rp100 million and credit limit Rp5 – Rp50 million. Moreover, small and medium enterprises are similar to those old classifications. When a company has grew bigger than medium scale, it considered to have graduated from needed assistance. This new proposed classification is intended to assist each business level to step the ladder up until graduated. Meanwhile, the most proper Islamic financial institutions to provide Islamic financial services to MSMEs, especially super micro and micro enterprises are Baitul Maal wa Tamwiel (BMT) that have natural characteristics to interact with them in their own habitat, since BMTs are spread out in the rural and suburban areas throughout Indonesia. With this, it is expected that unemployment be reduced and welfare of the poor and low income society can be improved.

JEL Classification: G23, G28
Keywords: Micro Business, Baitul Maal wa Tamwiel, Micro Finance