Every moment of Ramadan, small and medium enterprises (SMEs)—especially home industries—increase in society. During Ramadan, there is an increase in consumption of various products and services, especially everything related to iftar and Eid al-Fitr. Based on data from Bank Indonesia (2024), the 2020–2023 Consumer Confidence Index (IKK) increases as Ramadan approaches. SMEs take advantage of consumer optimism regarding economic conditions to expand their businesses.
Lecturer at the Department of Economics, Faculty of Economics and Business (FEB) Universitas Indonesia (UI) and the Head of the FEB UI SME Center, Zahra Kemala Nindita Murad, Ph.D., said that the role of SMEs, especially home industries, has played a significant role in encouraging Indonesian economy. The home industry has a crucial role, including providing jobs, developing villages, increasing diversification of economic activities, and contributing to the Gross Domestic Product (GDP).
During Ramadan, the production in the home industry is usually not too large, so it will be sold out on the same day. This industry also does not require large capital, so it does not require the help of financial institutions. Apart from food and beverages, home industries also operate in textiles and small-scale convection. Even though the outcome of the home industry is relatively small, when calculated collectively, it significantly contributes to GDP and impacts the economy.
Home industries during Ramadan contribute greatly to Indonesia’s economic growth. This is because they create economic opportunities for people involved in producing and selling various products and services, as well as increasing overall household income. On the other hand, increased economic activity during Ramadan can positively impact other sectors, such as transportation, logistics, and financial services.
According to Zahra, the circulation of money during Ramadan is not only driven by the Hari Raya Allowance (THR). Still, it is supported by other factors, such as increased consumption, zakat, shopping for Eid clothing, and discounts. Iftar is also used to meet with relatives, friends, or business partners, resulting in higher expenses. Approaching Eid al-Fitr, Muslims buy various necessities. Thus, money circulation in the retail sector and traditional markets increases. Big deals and discounts during Ramadan are appealing to consumers.
Zahra said that the profitable economic conditions during Ramadan are challenging to replicate at other times because of Indonesia’s demographic tendency to celebrate Islamic holidays more than other holidays. Yet, there is still the possibility of creating similar economic situations outside of Ramadan. There are Christmas, New Year (Nataru), and school holidays in Indonesia. That time could increase national consumption even though the impact on home industries is insignificant.
“Under these conditions, opportunities to increase the contribution of home industries still exist. For example, during the Christmas season, home industries can make craft products such as Christmas decorations and gifts, produce Christmas food and cakes, and provide services and entertainment. Another example of home industries during the school holiday season could be childcare services, private lessons or tutoring, sales of children’s products, catering/ready-to-eat food, school supplies, and the clothing industry,” said Zahra.
According to Zahra, there are several steps to create similar economic circumstances outside Ramadhan. First, regular promotions and discount campaigns during national holidays or other special events. Second, social and cultural activities, such as festivals and art exhibitions. Third, financial or tax incentives to encourage consumption and investment.
Moreover, the government can increase business activity/consumption by increasing access to financing for SMEs, and increasing people’s purchases by strengthening general welfare. The tourism and entertainment industry can be a source of income because it attracts visitors and increases regional spending. In this way, a dynamic economic environment can be achieved.
