Liquidity Assistance on MSMEs’ Growth in the Time of Covid-19: Empirical Evidence of MSMEs in Indonesia

Abstract

This study aims to analyze the effect of providing social assistance, tax incentives, expansion of working capital, and credit restructuring on the development of MSMEs during the COVID-19 pandemic. The research was conducted on MSMEs in West Semarang, Central Semarang 2, and South Semarang. The population of this study was MSMEs’ actors who had taken advantage of tax incentives, received social assistance, and received injections of funds in West Semarang, Central Semarang 2, and South Semarang. Purposive sampling was employed to obtain a sample of 369 MSMEs. The research data were obtained through 84 weekly observations from April to October 2020. The results revealed that the provision of social assistance, tax incentives, working capital, and credit restructuring influenced the development of MSMEs during the COVID-19 pandemic. The study results can provide additional information for the government in evaluating protection programs and accelerating economic recovery for MSMEs affected by COVID-19, as well as evaluating MSME business strategies towards a modern MSME business model while maintaining health protocols.