Survey shows gloomy SMEs employment growth in Indonesia

The Jakarta Post, Jakarta

Despite feeling optimistic about their businesses this year, about two-third small and medium-sized enterprises (SMEs) in the country will not add more employees, an HSBC sponsored survey says.

Of 300 respondents surveyed within October until November in Jakarta, the survey says, approximately 66 percent refused to add more employees, four percent plans to cut less than 20 percent of their workers and one percent to let go more than 20 percent.

On the positive side, about four percent plans to add more than 20 percent additional workers while the remaining 25 percent expects to add less than 20 percent.

Should the survey reflects the actual condition in the market, the total loss for potential employment would be worrysome as there are about 40 million SMEs in the country.

According to the Central Statistic Agency, some 10.01 million Indonesians were unemployed in August last year, with some 3.84 million in Greater Jakarta alone.

The government hopes to lower Indonesia's open unemployment rate to 5.1 percent by 2009, and the poverty rate to 8.2 percent.

"I cannot really comment as to why they are reluctant to add more workers as the survey does not include the reasoning behind the choices."

"Nevertheless, most of them are very upbeat on the prospects of their businesses," said HSBC senior vice president Andre S. Sudjono after presenting the survey, titled Asia-Pacific Small Business Confidence Survey, on Tuesday.

Despite the gloomy picture, the survey shows that about 41 percent of the respondents expects to see their business expansion growth, measured through capital expenditures, to remain steady as last year, 33 percent expects to increase the speed of their expansion and approximately seven percent plans to boost the growth significantly.

On the down side, about 13 percent plans to lower the growth of their businesses while the remaining six percent will aggresively lowering expansion.

Besides Indonesia, the survey was also conducted in China, Hong Kong, India, Malaysia, Singapore, South Korea, and Vietnam in October 2007. The 2,700 SMEs being surveyed earn less than US$10 million in annual revenues.

"More than half of the Indonesian SMEs that are doing international trade expect to increase their trade volume by up to 20 percent within six months beginning in November 2007," Andre said.

In comparison to that, Andre said, nearly half of the SMEs in Asia also expect to increase their international trade volume.

More than 70 percent of the other eight emerging Asian economies, the survey says, also decided not to add their employment and only few of them would reduce the number of their staff members.

"Hong Kong, Taiwan and Singapore are the most active countries that are doing international trade with China, and the rest of the world," said Andre.

This year, Indonesia is on the fourth among the nine surveyed countries in Asia, which are optimistic about the economic growth after Vietnam, India and China.

"Nowadays, the emerging economies seem more optimistic about the economic growth in Asia rather than the developed ones like Singapore and Hong Kong," he added.