p–ISSN: 2723 - 6609 e-ISSN: 2745-5254

Vol. 5, No. 10, October 2024 http://jist.publikasiindonesia.id/

Indonesian Journal of Social Technology, Vol. 5, No. 10, October 2024 3827

The Role of the Ministry of Industry as the Main Stakeholder

in the Development of IKM Centers in Indonesia

Amirullah

1*

, Asep Jubaedillah

2

, M. Zidane Qadafi Lubis

rate which indicates that the country is increasingly advanced. So developing countries

continue to strive to strengthen the industrial structure to increase their contribution to

GDP (Rinta-Kahila et al., 2016).

The contribution of the industrial sector to high national economic growth is

inseparable from the role of small and medium industries (SMEs). The national industrial

structure is formed by 99.7 percent of industries with micro, small, and medium scales.

The Ministry of Industry stated that the number of Indonesian SMEs reached 4.19

business units and was able to absorb a large workforce, which was 65.52 percent of the

total national industrial workforce. SMEs are also considered to have great potential

because they have resilience beyond large-scale industries, especially in difficult times

innovation and technology transfer (Smallbone et al., 2022).

In line with the increasing importance of SMEs in the country's economic

development and to increase the productivity of SMEs, it is very important to strengthen

the business organization of SMEs (Games et al., 2022) As well as develop and grow

SMEs (Mamun, 2018). To implement it, efforts are needed that focus on improving the

performance of SMEs to maintain and develop their businesses sustainably. Company

performance or business performance is generally defined as the result obtained from the

way a company achieves its strategic goals which can be measured from financial

advantages, competitive advantages, and market share. (Olan et al., 2019).

To facilitate the development of the SME business, one of the efforts of the Central

development of industrial centers is to equitably distribute and accelerate industrial and

economic development in Indonesia. (Asmara, 2018).

The IKM Center is the gateway to a strong national industrial structure. Building a

center requires a large budget and careful preparation. Not only building physical

facilities but also preparing human resources and the region or region itself. (Ananda,

2018). So that the Ministry of Industry, which is an agency that is given the mandate to

build industrial centers, must focus on developing strategies so that they are not only large

in number but also effective in accelerating their empowerment. From the managerial

side, it must also be more efficient so that operations are more structured and orderly. So

that the products produced have high competitiveness. The government also cannot run

industrial center, the management is handed over to business actors consisting of

administrators, managers, members, and technical services of the center. However, this

institution is still not optimal in improving the performance and quality of SMEs. There

is still a hampered supply chain and this indicates a weak structure. The Ministry of

Industry noted that more than 70% of industrial centers need to be revitalized so that their

functions run as the original goal of industrial center development, namely the growth of

implementation of the development of IKM Centers in Indonesia.

This study uses a descriptive qualitative method to examine the role of the Ministry

Primary Data: Interviews with relevant stakeholders, such as officials at the

Ministry of Industry, managers of IKM Centers, and SME business actors who are

members of the center.

Secondary Data: Data collection from official documents, such as laws,

and government regulations, as well as publications and reports from the Ministry of

Industry related to the development of IKM Centers. Data from BPS and the annual report

of the Ministry of Industry will also be used.

Data Analysis Techniques

The collected data is analyzed using thematic analysis, namely by identifying the

main themes that emerge from the data, such as the role of the Ministry of Industry as a

accuracy and consistency of the data.

Results and Discussion

The results of the study will present a comprehensive overview of the role of the

Ministry of Industry and how the policies and implementation of the SME Center program

have an impact on the development of small and medium industries in Indonesia.

To realize economic improvement through the IKM Center, stakeholder

involvement is very necessary. In the most basic concept of governance, it is stated that

three main stakeholders interact with each other and carry out their respective functions,

The Role of the Ministry of Industry in the Implementation of the Development of

IKM Centers in Indonesia

The Indonesian government, through the Ministry of Industry, plays a very strategic

role in the development of Small and Medium Industries (SMEs) centers. The IKM

Center is an industrial activity center that groups several small and medium business units

in one location to improve the efficiency of production, marketing, and product

development. By the mandate of Law Number 3 of 2014 concerning Industry, the

Ministry of Industry is given a mandate to carry out the empowerment of small and

medium industries (SMEs), one of which can be done by building an IKM center. In

carrying out the mandate of the Law, there are several important roles of the Ministry of

of 2021 concerning the Development of Small and Medium Industries in IKM Centers

Through One Village One Product, and Regulation of the Minister of Industry Number 7

of 2023 concerning Technical Instructions for Strengthening the Institutional Capacity of

Small and Medium Industry Centers through Special Allocation Funds Non-physical for

the 2023 Fiscal Year, the Government through the Ministry of Industry can accelerate the

development and growth of the industry through Industrial Centers. Through these

regulations, it is hoped that it can create a conducive business climate for the industry.

b. Catalysts and Facilitators.

In this case, the government provides stimulus, challenges, and encouragement, so

that business ideas move to a higher level of competence.

value chains. The OVOP (One Village One Product) program that was initiated then

became a whip for business actors and local governments to recognize the potential of

their regions and markets and, of course, to initiate to production of superior products by

the potential of the region or region. As for the IKM Center Revitalization Program, it

was initiated based on the physical condition of 70% of the centers that have been built

in Indonesia that are damaged and unmaintained. The revitalization of the IKM Sntra will

easier for its members to develop their industries related to licensing, halal certification,

HACCP, IMD, SNI, and so on. With the facilitation of the above elements, business actors

will be more concerned about their business development. In addition, the government,

both central and regional, can also take a role in encouraging partnerships and

collaboration between large industries and small industries. Small industries through the

center can supply raw materials for large industries, large industries can transfer

technology and innovation to small industries.

c. The government as an investor.

It was explained that the government must be able to empower state assets to be

productive in the industrial scope and be responsible for industrial infrastructure

physical DAK of this year's IKM Center consists of two menus, namely the construction

of the IKM center and the revitalization of the IKM center.

d. Strategic Planner.

This is related to the Compiler of the Industrial Center Development Master Plan.

The IKM Center Development Strategy has always been a Priority in the Direction and

Policy of Industrial Development. In this case, it is stated in the RIPIN (National

Industrial Development Master Plan) of the Ministry of Industry, the RPJP and RPJM of

the Ministry of Industry, and the Strategic Plan of the Ministry of Industry. The purpose

of all these plans or master plans is to encourage the growth of existing industries to

strengthen the national industrial structure. The importance of empowering small and

significantly to the national economy. This analysis confirms that a holistic approach

involving cross-sector cooperation and the use of technology is the key to success in

developing SME centers and achieving inclusive and sustainable industrial development

goals.

However, to strengthen the role of the government in implementing the

development of IKM centers in Indonesia, several additional aspects need to be

Utilization of Information and Communication Technology (ICT)

The use of digital technology in the operation and marketing of SMEs must be

further improved. The government can facilitate SMEs' access to e-commerce platforms

and other digital technologies to expand markets and improve production efficiency.

b. Strengthening Supply Chain

The government must encourage vertical and horizontal integration in the SME

supply chain. This includes cooperation between SMEs and large industries as well as the

development of interrelated industrial clusters to create a strong and competitive

industrial ecosystem.

c. Monitoring and Evaluation

The industrial area development policy is one of the efforts of the Government of

Indonesia in terms of accelerating the equitable distribution of industrial areas using a

spatial approach, this is by what is contained in Law No. 3 of 2014 concerning Industry

and Government Regulation No. 14 of 2015 concerning the National Industrial

Development Master Plan (RIPIN). One of the programs contained in the regulation is

the construction of Small and Medium Industry Centers (IKM).

This policy is carried out in every Regency/City area in an area where it is not

possible to build an industrial area. This is because it is not technically and economically

feasible and is directed to support large industries, generate added value, absorb labor,

and support the use of local resources and industries that support regional

throughout Indonesia (Government Regulation No. 123 of 2016 concerning Technical

Instructions for Physical DAK). Due to the existence of an integrated system and reducing

capital barriers, the existence of the IKM Center is expected to make it easier to carry out

business activities (Ellita, 2022).

The policy of developing SME centers is a strategic step that has several important

implications for the national economy:

economy.

2. Integration of production value chains.

The IKM center allows for better integration in the production value chain. By

gathering various business units in one location, synergies between various stages of

production can be optimized, from raw material processing to final product distribution.

3. Increasing the Competitiveness of SMEs

Through the provision of adequate infrastructure and supporting facilities, SME

centers can increase the competitiveness of SME products in the domestic and

international markets. Facilities such as training centers, testing laboratories, and access

to cutting-edge technology are essential to improve the quality of SME products.

The IKM Center development program was carried out starting in 2016 in various

locations and different industries. The dominant IKM centers are located on the islands

of Sulawesi, Sumatra, and Nusa Tenggara. In terms of the investment process, the Small

and Medium Industry Center (IKM), which is financed by the central government through

the Special Allocation Fund (DAK), also depends on the proposal and support of the local

government. The local government helps by providing land availability, compiling

planning documents for the development of the IKM Center, providing operational funds,

preparing the IKM that will occupy the IKM Center, and providing institutions and

management. With a large government investment of 1.2 trillion rupiah from 2016 to

2019, there has been no evaluation of the impact of the development of the IKM Center,

In addition, the 2020 Directory of Indonesian Industrial Centers, released by the

Central Statistics Agency, shows that there are 13,762 industrial centers in Indonesia,

consisting of micro, small, and medium-scale industrial centers. Around 77.30% of this

industrial center is a micro-scale industry.

Over the years, small and medium-sized industries have become an important part

of the national economy. This is shown by 4.4 million SME business units, which

contribute 21.47% to the total value of national industrial output. SMEs have also proven

to be able to survive from year to year in facing various crises that occur in Indonesia.

Therefore, the Ministry of Industry pays special attention to the future of SMEs through

Strengthening Entrepreneurship and MSMEs in the priority program of the Ministry of

Games, D., Hidayat, T., Fhardilha, J., Fernando, Y., & Sari, D. K. (2022). The impact of