Newest MSME Criteria PP 7 of 2021

Newest MSME Criteria PP 7 of 2021


Newest MSME Criteria PP 7 of 2021

PP No. 7 of 2021 contains various policy regulations on ease of business establishment, licensing, facilitation, access to financing, access to supply chains, and market entry for cooperatives and MSMEs.

A total of 49 regulations derived from Law no. 11 of 2020 concerning Job Creation (Law on Job Creation) was promulgated on February 2, 2021. Among the 49 derivative regulations, one of which was enacted was Government Regulation Number 7 of 2021 concerning Ease, Protection, and Empowerment of Cooperatives and Micro, Small, and Medium Enterprises. and Middle (PP 7 of 2021).

Previously, the MSME Law applied MSME criteria based on net worth and annual sales results. However, this criterion was changed through the Copyright Act. In the Copyright Act, the measure used is based on business capital or yearly sales results.

It should be noted that the Job Creation Law has changed some of the existing provisions in Law No. 20 of 2008 regarding Micro, Small and Medium Enterprises (MSME Law). One of the amended provisions is regarding the criteria of the MSMEs themselves.

But the Job Creation Act only stipulates the criteria without describing them in detail. Thus, it is only mandated to be further regulated in a Government Regulation (PP). This is answered in PP UMKM, to be precise in Article 35-36 PP UMKM.

In that article, it is regulated that the grouping of MSMEs is based on business capital or annual sales results. The criteria for working capital are applied to the group of MSMEs that are just about to be established after the PP on MSMEs comes into effect. Meanwhile, the annual sales criteria are used for grouping MSMEs that existed before this PP came into effect.

Read: Understanding and Criteria for MSMEs You Must Know

Latest MSME Criteria PP 7 of 2021

Furthermore, the latest criteria capital for MSMEs based on Article 35 paragraph (3) of PP 7 of 2021 are as follows:

1. Micro Enterprise

Have a business capital of up to a maximum of Rp. 1 billion, excluding land and buildings for business premises.

2. Small Business

Have a business capital of more than IDR 1 – 5 billion, excluding land and buildings for business premises.

3. Medium Enterprise

Have a business capital of IDR 5 – 10 billion, excluding land and buildings for business premises.

However, there are exceptions for not using the criteria for working capital. In the case of such exceptions, the criteria for annual sales results are used.

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Criteria for Newest MSME Annual Sales Results

The criteria for annual sales results as referred to in Article 35 paragraph (6) of PP 7/2021 are as follows:

1. Micro Enterprise

Have annual sales of up to a maximum of IDR 2 billion.

2. Small Business

Has annual sales of IDR 2 – 15 billion.

3. Medium Enterprise

Has annual sales of IDR 15 – 50 billion.

Both the criteria for working capital or annual sales results can still be changed by economic developments.

Applying the criteria for working capital and annual sales results but PP 7 of 2021 also regulates other measures that can be used. According to Article 36 paragraph (1) PP 7/2021, for specific interests, ministries/institutions can use the criteria for turnover, net worth, investment value, number of workers, incentives and disincentives, local content, or use of environmentally friendly technology by measures for each business sector.

The application of these criteria is carried out by the technical minister or the head of the institution with the obligation to receive consideration from the Minister of Cooperatives and Micro, Small and Medium Enterprises.

Comparison of the Latest MSME Criteria

Before this PP on UMKM, the criteria for UMKM were explicitly regulated in the UMKM Law. In more detail, the requirements for MSMEs are held in Article 6 of the MSME Law between the two; there are striking differences. For comparison, here are the differences:

Comparison of MSMe Criteria
Comparison of MSMe Criteria

Entrepreneurs need to understand regulatory developments related to their business. Apart from being a form of awareness of the surrounding environment, understanding the latest regulations can be the basis for determining steps to be taken in the future.

Here we attach the download link for the Government Regulation (PP) regarding the Ease, Protection, and Empowerment of Cooperatives and Micro, Small, and Medium Enterprises. It may be helpful.
Download PP Number 7 of 2021.pdf

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