Determinants of Indonesian MSME Exports and Their Performance during the COVID-19 Pandemic

Abstract

MSME proved resilient to crises, but its performance did not improve. Indonesian MSMEs when compared to other countries have low export competitiveness. The COVID-19 pandemic has weakened more than 50% of MSMEs. The research objectives are to analyze the simultaneous and partial effect of the rupiah against the US dollar exchange rate, the growth of MSME, investment, and bank credit on the export of MSME products; analyze the influence of MSME exports on GDP growth; and analyze the effect of MSME exports on employment; and to find out the export performance of MSME during the COVID-19 pandemic. Survey research with technical analysis of OLS Multiple Regression data on secondary data for the 2010-2020 quarter. Research results are: 1) Stability of the Rupiah/USD exchange rate, growth in the number of MSMEs, increased investment, and increased bank lending to the MSME sector as well as controlled inflation rates had a very significant impact on increasing exports of MSME products; 2) Exports of MSME products contribute greatly to GDP and have an impact on increasing people's per capita income; 3) The increasing export value of MSME products encourages MSME entrepreneurs to continue to increase their productivity so that this sector can absorb a significant workforce; 4) MSME's performance in the COVID-19 pandemic was shown by the decline in the value of exports and employment, but the number, investment, credit, and contribution to GDP continued to increase until the end of 2020.

Keywords: Bank Credit, Employment, Exchange Rate, Exports, GDP, Investment, Number of MSMEs