The Role of Information Communication Technology (ICT) in Shifting Informal MSMES to Formal MSMES in Indonesia: The Initial Trigger Model

Abstract

. This paper attempts to offer an alternative initial trigger model in developing and shifting informal MSMEs to formal MSMEs. The extant literature on the (i) financial report, marketing, human resources, and financing constraints faced by MSMEs in developing their business and (ii) ICT has been reviewed critically and used to propose an alternative model in developing MSMEs. The paper has developed ICT's Model as a strategy to shift informal MSMEs to formal MSMEs in Indonesia. This model is expected to provide Directorate General of Taxation to meet their liquidity constraint in developing and shifting informal MSMEs. It is also engaged in the involvement of the MSMEs platform based on ICT. The paper is based on conceptual explorations of literature in the area of MSMEs and ICT. This paper is conceptual, so it did not employ any empirical analysis. The findings of this paper will provide the Directorate General of Taxation with an alternative model in developing and shifting informal MSMEs. The present study also has implications for government and policymakers. By involving ICT's, it helps the government to increase the number of formal MSMEs for the higher tax revenue in Indonesia.