Palu – Government policies aimed at empowering micro, small, and medium enterprises (MSMEs) in Palu have significantly contributed to local economic growth by promoting digital transformation, expanding access to financing, simplifying business licensing, and strengthening business support services. However, the long-term sustainability of these initiatives continues to face challenges, particularly in infrastructure, digital literacy, and financial accessibility. These findings were reported in a study conducted by Ladua, Luthfi, and Sading from Universitas Tadulako, published in 2026 in the East Asian Journal of Multidisciplinary Research (EAJMR).
MSMEs have long played a vital role in Indonesia's economy by creating employment opportunities and supporting regional economic development. Despite their importance, many small businesses continue to struggle with limited capital, restricted market access, business licensing issues, and inadequate adoption of digital technology. In Palu, these challenges became even more significant following the devastating natural disaster several years ago, making effective government empowerment policies essential for accelerating economic recovery and improving community welfare.
The research was conducted at the Palu City Department of Cooperatives, MSMEs, and Labor using a descriptive qualitative approach. Data were collected through field observations, in-depth interviews, documentation, and triangulation involving at least 25 key informants, including government officials and MSME owners representing various business sectors. The researchers analyzed the information using the interactive Miles and Huberman model to obtain a comprehensive understanding of how MSME empowerment policies have been implemented in Palu City.
The study found that digitalization has become one of the strongest drivers of MSME development in Palu. Most business owners have adopted social media platforms such as WhatsApp, Facebook, and Instagram to promote their products and services. Businesses in the culinary and fashion sectors have gone further by utilizing online marketplaces, food delivery applications, and the Indonesian QRIS digital payment system. The adoption of digital technology has expanded market reach beyond Sulawesi to cities such as Makassar and Jakarta while reducing dependence on physical stores. As a result, many businesses have experienced revenue growth of approximately 30 to 40 percent.
The research also highlights the positive impact of government support in improving access to business financing. Through the People's Business Credit (KUR) program, entrepreneurs can obtain loans with subsidized interest rates as low as six percent or even zero percent under specific stimulus schemes. Local authorities have also provided production equipment, including industrial machines, blenders, commercial stoves, and raw materials, enabling MSMEs to increase production capacity without significant upfront investment. Nevertheless, many entrepreneurs still prefer to rely on personal savings or family loans because they perceive bank financing procedures and collateral requirements as complicated.
Business licensing has also improved considerably through the implementation of Indonesia's Online Single Submission (OSS) system. MSME owners reported that obtaining a Business Identification Number (NIB) has become faster, simpler, transparent, and free of charge. Having formal business legality allows entrepreneurs to access broader partnership opportunities with both government agencies and private companies. However, the study also found that many micro-business owners still mistakenly believe that business licenses are necessary only for large corporations. In addition, obtaining follow-up certifications such as Halal certification and BPOM distribution permits remains a lengthy and complicated process.
Government support has extended beyond financing and licensing by providing integrated business service centers, culinary business zones, and trade exhibitions to help MSMEs market their products more effectively. These initiatives have encouraged the downstream processing of local commodities into higher-value products with more attractive packaging. Businesses in the service sector have also introduced service innovations to improve customer satisfaction and strengthen competitiveness.
Despite these achievements, the study identifies several major obstacles that continue to hinder MSME development. Older entrepreneurs often face difficulties adapting to digital technology, while unstable internet connectivity, electricity outages, limited clean water supply, and high inter-island transportation costs reduce business productivity and competitiveness. Access to commercial financing also remains challenging for some entrepreneurs due to collateral requirements and unfavorable credit records following previous natural disasters.
According to Ladua, Luthfi, and Sading from Universitas Tadulako, successful MSME empowerment depends not only on financial assistance but also on strong collaboration among government institutions, financial organizations, infrastructure providers, and business owners. Adaptive public policies supported by responsive bureaucracy and adequate resources are essential to ensure that empowerment programs remain sustainable and continue generating positive economic impacts for local communities.
The findings suggest that comprehensive empowerment strategies are necessary for strengthening MSMEs. Digital transformation, affordable financing, simplified business licensing, and reliable infrastructure should be developed simultaneously to create a supportive business environment. The study provides valuable insights for policymakers, local governments, financial institutions, and development agencies seeking to design more effective MSME empowerment programs, particularly in regions recovering from natural disasters while pursuing sustainable economic growth.
Authors
Research Source
Article Title: Implementation of MSME Empowerment Policies in Improving the Community Economy in Palu City
Journal: East Asian Journal of Multidisciplinary Research (EAJMR)
Publication Year: 2026
DOI: https://doi.org/10.55927/eajmr.v5i7.233
Journal Link: https://journaleajmr.my.id/index.php/eajmr
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