Promoting Information Openness, Growing MSMEs

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For the most part, the public procurement system of Semarang city government is participated by large-scale businesses, while micro, small, and medium enterprises, or MSMEs, remain on the sidelines – although not because they lack in number.

In fact, MSMEs thrive in Semarang and can be found in different business sectors from culinary to services. According to the Cooperatives and MSME Agency of Semarang, the number of the city’s registered MSMEs soared within four years from 996 in 2015 to over 16 thousand in 2019.

But the participation landscape has started to change in favor of MSMEs since Pusat Telaah dan Informasi Regional (Pattiro) Semarang, an NGO focusing on public service issues, launched the Open Contracting program. Commenced in March 2019 and supported by Hivos Southeast Asia, the program approaches and communicates with Semarang city government so that more MSMEs can access the public procurement system. Pattiro Semarang also coaches MSMEs to get their products registered in the system’s e-catalogue.

MSMEs’ pivotal role in the economy is undeniable, being the backbone of job creation for the majority of Indonesia’s workforce. Regulatory framework has been developed to facilitate their involvement in public procurement, such as Presidential Regulation Number 16 of 2018 on Public Procurement, whose Article 4 mandates the expansion of MSMEs’ role.

Regulatory framework has been developed to facilitate their involvement in public procurement, such as Presidential Regulation Number 16 of 2018 on Public Procurement, whose Article 4 mandates the expansion of MSMEs’ role

In Semarang, to carry out this mandate, the city government has in place an e-catalogue system that opens up the access to public procurement. Nevertheless, most of the vendors remain the big players of asphalt, concrete, and electronic machinery companies. Pattiro Semarang’s Open Contracting program intends to change it.

The journey hasn’t been easy. Ella Cahyaning Maghfuroh from Pattiro Semarang shared how they had to meet multiple times with the regional secretary of Semarang and other agencies to campaign for Open Contracting.

“The government was excited, but MSMEs’ product standardization became a challenge,” Ella said.

The first step to overcome this hurdle was to develop standard operating procedures (SOP), which was an onerous process. First, the government had to make an umbrella SOP and then translate that into subsets for each specific procedure in public procurement. Together with Pattiro Semarang, the government created a total of 13 SOP subsets that cover processes such as application, tender announcement, vendor selection, and order placement.

According to Ella, the writing of the subsets took most of the time, especially since they had to be very carefully crafted. While by nature an SOP contains detailed technical requirements of an activity, it also cannot be too complicated so as to burden MSMEs.

In early 2020, the Cooperatives and MSME Agency announced a plan to create a dedicated e-catalogue for food and beverages (F&B) procurement. This became a significant breakthrough for MSMEs. Although initiated by a single agency, the procurement system – called Gulo Asem – is accessible by all agencies under Semarang city government.

Gulo Asem adopts the idea of a marketplace. MSMEs can market their products to the target customers, namely government offices who need to procure meals for meetings or other activities.

“The F&B e-catalogue is interesting because F&B budget is allocated every year. The government also always needs meeting refreshments,” said Ella.

Facilitating MSMEs

The next phase was to convince the MSMEs to join the e-catalogue. Pattiro Semarang held a focus group discussion (FGD) in March 2020, attended by 11 MSMEs that represented different districts and by government officials.

All of the MSMEs were excited with the idea but it was not enough. They were quickly met with several challenges, including the largest block known as administrative requirements. The e-catalogue system asks each MSME to provide a Business Identity Number (NIB) and to be registered with Gerai Kop Mi, a government’s program that promotes micro businesses and cooperatives. Unfortunately, some MSMEs had no knowledge on how to obtain these requirements.

To educate the MSMEs, a series of training were delivered and Pattiro Semarang worked closely with MSMEs who were applying for NIB and Gerai Kop Mi. Once all requirements are met, their products are curated before finally displayed on Gulo Asem portal.

More challenges emerged in the process of getting the requirements. “Staff members in district offices weren’t even aware of Gerai Kop Mi,” Ella said, and added that, “The information has not been disseminated to district level.”

Consequently, some business owners had to go back and forth to the district office to get NIB and register to Gerai Kop Mi. So far, Pattiro Semarang has helped four MSME owners to be Gulo Asem merchants, Ella said.

Scaling Up

Gulo Asem app denotes a progress in the issue of information disclosure, particularly in the public procurement of Semarang city government. Prior to e-catalogue, government agencies tended to rely on their personal networks when it came to procurement. Ella believed it made the system prone to fraud and shut the door to healthy competition that could have involved MSMEs.

Gulo Asem app denotes a progress in the issue of information disclosure, particularly in the public procurement of Semarang city government

Gulo Asem has made tender information openly accessible, thereby giving MSMEs a level playing field and is conducive to oversight.

Now, Ella explained, Pattiro Semarang’s focus has expanded to F&B procurement considering the sector’s large pool of MSMEs and recurring demand. Nevertheless, Open Contracting may expand its focus in the future.

It has only been several months since Gulo Asem was launched. To attract users, Semarang’s regional secretary has introduced the app via a circular to all agencies. Certainly, this useful initiative deserves to be developed and scaled up. Opening up information means opening up access to small players and tipping the scale in their favor.