The Bill on Micro, Small, and Medium Scale Enterprises Passes the DPR

The Bill on Micro, Small, and Medium Scale Enterprises has finally passed the House of Representatives (DPR) on 10 June 2008. All of the fractions of the DPR agreed to the passage of the bill in the format that is attached to this ILB.

The bill recognizes the importance of micro, small, and medium scale enterprises (Usaha Mikro, Kecil, Menengah / UMKM) to Indonesia’s future economic development and perhaps as a means of ensuring that economic power does not become too centralized in a few large-scale business enterprises. The bill also sets out some very clear definitions as to what a micro, small, and medium scale enterprise is.

For example, a micro-scale enterprise is one that has wealth of IDR 50 million (not including land and buildings) and sales of less than IDR 300 million. For small-scale enterprises the figures are wealth of more than IDR 50 million and less than IDR 500 million and sales of between IDR 300 million and IDR 2.5 billion. Finally, medium-scale enterprises are those with wealth between IDR 500 million and IDR 10 billion and sales between IDR 2.5 billion and IDR 50 billion.

Ultimately, the new law is expected to provide enhanced legal certainty to players in the UMKM sector, regulate partnerships between large-scale enterprises and players in the UMKM sector, clarity in licensing procedures, infrastructure development, provision of business information, and promotion of goods and services from the UMKM sector, among others.

This Regulation comes into force on its enactment and all implementing regulations are to be confirmed within 12 months of the enactment of the bill into law.