Surabaya, E. Java (Antaranews Jatim) - East Java Governor Soekarwo said micro, small and medium enterprises (MSMEs or UMKM) have grown to become an economic backbone in the province.
"Processing industry has increased its share in the national economy in the past five years from,19.91 percent in 2013 to 21.70 percent in 2017," Soekarwo said in a ceremony attended by President Joko Widodo (Jokowi) here on Friday.
The governor said expansion of the manufacturing industry is required in order to accelerate improvement of the welfare of the people in the regions
In the past four years, food and beverage industry contributed 31.69 percent, tobacco manufacturing industry contributed 26.63 percent and chemical, pharmaceutical and traditional medicine industries contributed 8.03 percent to the economy of East Java, the governor said in a ceremony when Jokowi announced a cut in UMKM income tax to 0.5 percent from 1 percent earlier.
He said based on a survey, in 2008, there were 4.2 million units of UMKM in East Java .
Expansion of the manufacturing industry and trading sector had given rise to the number of UMKMs in the province, he said.
"Based on a national social survey in 2012, the number of UMKMs grew to 6.8 million units including 4.1 million units in the agricultural sector, and 2.7 million in various other sectors," he pointed out.
In an economic survey in 2016, the number of OMKMs in East Java grew significantly to 4.98 million units in the agricultural sector and to 4.61 million units in other sectors.
The rapid growth of UMKMs means growing role of UMKMs as the main sources of income of the people and in providing jobs in East Java, the governor said.
He said in 2016, East Java had a work force of 20.16 million and 13.97 million of them worked for UMKMs in non agricultural sector and 4.98 million for UMKMs in agricultural sector.
"That means 18.95 million of the workforce found jobs with 373,294 finding jobs in large corporations and 838,496 working age people (4.21 percent) still jobless," he said.
On that occasion, President Joko Widodo officially announced a cut on the income tax on UMKMs from 1 percent to 0.5 percent hoping that UMKMs would be more active in paying taxes.
The president said the tax cut is expected to boost the growth of UMKMs and increase their contribution to the country's economy.
UMKMs in the country have proved to be more resistant to economic crisis.
Meanwhile, Coordinating Minister for Economy Darmin Nasution said the country's tax revenues grew 14.13 percent year-on-year in May, 2018 and income tax from the UMKM sector contributed 2.2 percent to the total tax revenues.
Darmin said the contribution was relatively small but the trend had been positive since 2013. (*)
(A.Saragih)
