The Empowerment of Micro and Small Industry of Wood Lathe by

Department of Industry and Commerce: Case Study at Tanggung

Village, Blitar, Indonesia

Laily Nur Hasanah

Postgraduate School, Universitas Airlangga, Surabaya, Indonesia

Keywords: Empowerment, SMEs, Department of Industry and Commerce.

Abstract: Along with the growth of micro and small industries of wood lathe, there are also some problems in its

development. Therefore it is necessary to empower effort intensively and create integration executed by a

related institution which in this case is the Department of Industry and Commerce. This paper aims to

determine the empowerment of micro and small industries undertaken by the Department of Industry and

Commerce, identifying the constraining factors in the implementation and the efforts that have been made by

the Department in conducting the development of micro and small industries of wood lathe in Tanggung

Village, Blitar, East Java. The observation method used is an explorative method with an inductive approach.

Data is collected through observation, interview, and documentation. The results showed that there have been

efforts made by The Department of Industry and Commerce in Blitar for micro and small industries of wood

lathe. In the implementation of the empowerment activities, we found some obstacles such as difficulties in

terms of resources, public responses, communications, and institutional issues.

1 INTRODUCTION

Indonesia is a country with abundant natural

resources and a large population. One of the goals of

the Indonesian state is to promote public welfare. This

goal has consequences in that the government should

continue to strive to improve the implementation of

the development in all fields and all regions in order

to achieve a welfare state.

To develop a prosperous country, the government

has a challenge to face in the next 20 years. The

challenge is to actualize the development mandate

“Indonesia is advanced and independent, fair and

democratic, and secure and united as a Unitary State

of the Republic of Indonesia”. To achieve that, the

national development in the next 20 years is directed

towards the achievement of the main targets of

national development. The main targets of the

development are the establishment of a robust

economic structure where agriculture (in the broad

sense) and mining become the basis of economic

activity that produces modern products efficiently, a

global competitive manufacturing industry becomes

the driving force of the economy, services become

economically resilient, income per capita in 2025 can

reach around US $6000 with relatively good equity

and the number of poor people not more than 5%.

The desire to build a sturdy economic structure

based on competitive advantage in various regions of

Indonesia can be achieved through the creation of a

development strategy. As part of the national

development strategy implemented during the reign

of President Susilo Bambang Yudhoyono, one factor

is the harmony strategy between growth and equity.

This strategy is a correction of the previous

development policy that we know as the Trickle

Down Effect or economic growth that can be enjoyed

by the lower classes through the process of downward

propagation (redistribution). What stands out from

the development strategy of harmony between growth

and equity is the suppression of development through

social engineering techniques, one of which is

realized through empowerment of small industries.

This strategy is to improve and restore the standard of

living of the community including the workforce and

employers. This is as intended in the Law of the

Republic of Indonesia Number 17/2007 which

required not only diverting attention to large industry

or large entrepreneurs but also to protecting the small

industries in the region.

Hasanah, L.

The Empowerment of Micro And Small Industry of Wood Lathe By Department of Industry and Commerce.

DOI: 10.5220/0007536700100020

In Proceedings of the 2nd Inter national Conference Postgraduate School (ICPS 2018), pages 10-20

ISBN: 978-989-758-348-3

 2018 by SCITEPRESS – Science and Technology Publications, Lda. All r ights reserved

Based on the above provisions, the development

of micro and small industries is very important

because the micro and small industries are carrying

out the mission of equitable distribution to the whole

region. In addition to having high economic value,

micro and small industries and handicrafts are also

familiar with the social and cultural life of people

throughout the region.

Micro and small industry of wood lathe

empowerment involves activities carried out by the

Government of Blitar City in cooperation with the

Department of Industry and Commerce in Tanggung

Village, Blitar, East Java. This is done in order to

actualize the mission of the city of Blitar in the period

2011-2015 "Strengthening the implementation of the

Regional Economy Based on Democracy and Poverty

Alleviation". Blitar city is also famous as the

cemetery of proclaimers RI Ir. Soekarno. This makes

the city of Blitar one of the tourist destinations that

can bring in thousands of tourists both domestically

and internationally every year. It is a potential area

that is able to move the community around the tourist

attraction to introduce local products of wood lathe

handicraft as a souvenir.

The micro and small industries in Blitar city have

a major role in increasing the economic growth of the

people in the city. This is because the industry is able

to absorb a lot of labour and able to survive in a global

crisis situation. The existence of micro and small

industries in the city of Blitar deserves more attention

in its development, relatively and sustainably, in

order to compete in the modern market. So it is

important for us to see the empowerment of micro and

small industries of wood lathe by the Department of

Industry and Commerce in Kepanjenkidul, Tanggung

Village, Blitar, East Java.

2 LITERATURE REVIEW

2.1 Definition of Empowerment

Empowerment is etymologically derived from the

word 'power' which means the ability to do something

or the ability to act. Giving it a prefix it becomes

'empowered' which means powerful, capable,

resourceful to overcome something. Giving the prefix

and suffix it becomes 'empowerment' which can be

interpreted as making an effort or a process to make

able, so we can act or do something (Indonesia

Dictionary, 1995).

Implementation of society empowerment is

actually a real effort that concerns all aspects of life

that exist and occur in society. One form of society

empowerment activity is the empowerment of the

micro and small industry sector. According to Oos M.

Anwas (2013: 125-126) the empowerment of small

businesses is not only done for people who already

have a business. Empowerment in this aspect is how

the society is encouraged to be able to develop their

efforts in accordance with their potential. The main

empowerment of small business is how to build

strong human resources. They need to be fostered

from the production process to post-production

properly and efficiently. They need to be encouraged

to create innovative products that are competitive.

The ability to think and behave innovatively is vital.

Other skills and capabilities that are needed by small

business actors are managerial aspects, financial

management, marketing and mutual cooperation.

Small entrepreneurs also need to gain enlightenment

about banks so they can access additional business

capital. This requires continuous training and

mentoring activities. The instructor may involve

relevant agencies in government, business, or

community in the region who have relevant

experience with small business. Small business

empowerment is undertaken to make business actors

able to improve their insight and ability.

Empowerment in Roesmidi and Riza Risyanti

(2006: 2), according to Merriam Webster in the

Oxford English Dictionary has two meanings:

a. To give ability or enable to, which translates as

giving skills or ability to;

b. To give power or authority to, which means giving

power.

To identify the focus and objectives of

empowerment operationally, it is necessary to know

about various indicators of empowerment that can

show if someone is empowered or not. Schuler,

Hashemi and Riley in Suharto (2010: 63) developed

eight indicators, which they called the empowerment

index, namely:

1. Freedom of mobility

2. Ability to buy small commodities

3. Ability to buy large commodities

4. Engage in making household decisions

5. Relative freedom from family domination

6. Legal and political awareness

7. Engagement in campaigns and protests

8. Economic guarantees and contributions to

the family

Mardikanto (2012: 291) suggests several success

indicators used to measure the implementation of

society empowerment programs:

The Empowerment of Micro And Small Industry of Wood Lathe By Department of Industry and Commerce

1. The number of citizens who are obviously

interested in being present in every activity.

2. The presence frequency of each citizen in

each activity.

3. The convenience level of program

implementation to obtain citizens'

consideration or approval of the new idea

proposed.

4. Number and type of ideas put forward by the

society that aim at the smooth

implementation of the control program.

5. The amount of funds that can be extracted

from the society to support the

implementation of program activities.

6. The intensity of officer activity in problem

control.

7. The increase of public participation scale

capacity in the health sector.

8. The reduced number of community

suffering from malaria.

9. The increased awareness and response to the

need to improve health life.

10. The increase of public health independence.

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Please follow the instructions closely in order to make

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2.2 Definition of Small and Micro

Business

Small and Medium Enterprises (SMEs) are business

activities that are able to expand employment to

provide broad economic services to the community,

and can play a role in the process of equity and

increased community income, encourage economic

growth, and play a role in realizing national stability.

The general condition of SMEs in Indonesia can be

described from the population in 2007, there were

49.8 million business units, which is equal to 99.9%

of the number of business units in Indonesia. Whereas

employment = 88.7 million which is equal to 96.9%

of all Indonesian workers.

Marbun (1996: 49) defines the industry as

follows:

1. Activities to process or repair goods with the

target and equipment on a large scale.

2. Certain business sectors such as petroleum and

industry.

Law No. 20 of 2008 Article 1 concerning Micro,

Small and Medium Enterprises states that:

1. Micro business is productive business owned by

an individual or individual business entity

fulfilling the criteria of Micro Business as

arranged in this law.

2. Small business is a productive economic business

conducted by an individual or a business entity

that is not a subsidiary or not a branch of a

company owned or controlled by medium or

large-scale business as referred in this law.

Tambunan (2009: 16) explained that in Law

Number 20 of 2008, the criteria used to define Micro,

Small and Medium Enterprises as stated in Article 6

are net asset value or asset value excluding land and

building of business premises or total annual sales.

With this criterion, a micro business is a business unit

with an asset value at most Rp 50,000,000.00 or with

maximum annual sales Rp 300,000,000.00. While the

criteria for small business is a business unit with an

asset value more than Rp 50,000,000.00 up to Rp

500,000,000.00 or having annual sales more than Rp

300,000,000.00 up to Rp 2,500,000,000.00; and

medium-sized businesses are companies with net

asset value more than Rp 500,000,000.00 up to Rp 10

billion or having annual sales more than Rp

2,500,000,000.00 up to Rp 50 billion.

Rahardjo Adisasmita (2010: 134) explained that

the definition of Industry based on the nature of its

processing is divided into three groups, namely:

1. Basic/upstream industries are industries that

process natural resources, until they become semi-

finished goods and finished goods.

2. Small industry is an industry that can have a large

double influence on economic life further.

3. Downstream industry is an industry that processes

raw materials into semi-finished goods into

finished goods.

Furthermore, the understanding of the industry

based on its grouping is divided into two, namely:

1. Industrial locations that blend in, are industrial

locations that blend randomly with other socio-

economic activities in an area/city, they can be in

the form of small industries and downstream

industries.

2. Industrial locations in groups are industrial

locations on a land and a special area provided to

accommodate the development of various types

and quantities of industry (such as industrial

complexes and industrial estates) or specifically

for small industries (e.g. small industrial

environments and small industrial centers.

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2.3 Empowerment Program of Small

and Micro Business

A micro and small business empowerment program is

one form of policy undertaken by the government to

improve the living standards of the society. Public

policy in the definition of Dye is “whatever

governments choose to do or not to do”. From thus

statement, Dye wants to explain that any government

activity either explicit or implicit is a policy

(Indiahono 2009: 17).

According to Indiahono (2009: 31) the

implementation of public policy in accordance with

George C. Edward III mentions that there are four

variables that play an important role in the

achievement of successful implementation. The four

variables are:

a. Communication

Explains that every policy will be well

implemented if there is an effective

communication between program implementer

(policy) and the target. The purpose and targets of

the program/policy can be well socialized so as to

avoid distortion of policies and programs.

b. Resources

Explains that every policy must be supported

by adequate resources, both human and financial

resources. Both must be considered in the

implementation of government programs/policies

because without the reliability of the implementer,

the policy becomes less energetic, is run slowly

and patched-up.

Meanwhile, financial resources ensure the

sustainability of the program/policy. Without

adequate financial support, the program can’t run

effectively and quickly in achieving its goals.

c. Disposition

Describes the characteristics that stick to the

policy/program implementer. Important

characters possessed by the implementer are

honesty, commitment and a democratic approach.

These attitudes will reduce resistance from the

community and foster the trust and concern of the

target group towards the implementation and the

policy program.

d. Bureaucratic Structure

Bureaucratic structure is an important factor

for policy implementation. This aspect includes

two elements, namely mechanism and

organizational structure. Program implementation

mechanisms are usually established through

Standard Operating Procedures (SOP) listed in the

program/policy guidelines. A well-made SOP

includes a clear, systematic, non-conspicuous and

easy-to-understand framework for anyone as it

will become a reference in the operation of the

implementer. While the organizational structure

as far as possible avoids the convoluted, long and

complex factors.

The four variables above are contained in the

model built by Edward. These variables are related to

each other in achieving the goals of the

program/policy. Here is the conceptual application of

the Edward III model in the implementation of public

policy:

Table1: Conceptual Application of Edward III Model: Perspective of Policy Model: Perspective of Policy

Aspect

Scope

Communication

a. Who are the implementers and target groups of the program/policy?

b. How effectively is the program/policy socialization implemented?

• Method

• Communication Intensity

Resources

a. Implementer Ability

• Education level

• Level of understanding of the targets as well as the application detail

program

• Ability to deliver and direct the program

b. Availability of funds

• Amount of funds allocated

• Predicted strength of funds and the amount of costs for the program

or policy implementation

Disposition

Implementer Character

The Empowerment of Micro And Small Industry of Wood Lathe By Department of Industry and Commerce

Aspect

Scope

• Level of commitment and honesty: can be measured by the level of

consistency between the activities implementation with the guidelines

set. The more suitable means the higher the commitment.

• The democratic level can be measured by the intensity of the implementer

in sharing with the target group, finding solutions to problems

encountered and using different discretion from the guidelines to achieve

the program goals.

Bureaucratic Structure

a. SOP availability that is easy to understand

b. Organizational Structure

• How wide the range of control is between leader and subordinate

within the organizational structure. The wider means the more

complicated and the slower the response to the progress of the

program.

Source: Indiahono (2009: 31)

As one of the main pillars of the national

economy, SMEs must obtain the ultimate

opportunity, support, protection and development as

widely as possible as a form of firm alignment to the

people's economic business group, which is realized

through the empowerment of SMEs. Empowerment

is an effort made by the Government, Regional

Government, business world, and the community in a

synergistic manner in the form of climate

development and business development towards

SMEs so that they are able to grow and develop into

a resilient and independent business.

The policy of empowering SMEs is included in

Law No. 20/2008 concerning SMEs and President

Regulation No. 5/2010 concerning RPJMN 2010-

2014. Law No. 20/2008 mentioned the principles and

objectives of empowering SMEs.

a. Principles of empowerment of SMEs, including:

(1) growing independence, togetherness and

entrepreneurship of SMEs to work on their own

initiative; (2) the realization of a transparent,

accountable and just public policy; (3)

development of regional potential-based and

market-oriented businesses in accordance with

SME competencies; (4) increasing the

competitiveness of SMEs, and (e) implementing

integrated planning, implementation and control.

b. The purpose of empowering SMEs is to:

1. Realize a balanced, developing and equitable

national economic structure.

2. Grow and develop the ability of SMEs to

become strong and independent businesses.

3. Improve the role of SMEs in regional

development, job creation, income

distribution, economic growth, and poverty

alleviation.

In the framework of empowering SMEs, the

government has issued the partnership policies,

including: PP No. 44/1997 concerning Partnership.

As a follow-up, the government issued the

Presidential Decree No. 127/2001 concerning

Business Fields.

Types that are open to Medium or Large

Enterprises under the terms of partnership.

Furthermore, a technical policy was issued in the

Minister Regulation No. PER-05/MBU/2007

concerning the Partnership Program of BUMN with

Small Businesses and Community Development

Programs.

In empowering SMEs, it is necessary to pay

attention to the problems faced by SMEs themselves.

In the Annex of Perpres No. 5/2010 concerning

RPJMN 2010-2014, in Book II Chapter III it

mentioned the problems of SMEs, including: The

business climate is not yet conducive: cooperatives

and SMEs still face a variety of fundamental

problems in running their business, including the

challenges of competing in a global market. For this

reason, the empowerment of cooperatives and SMEs

still needs to be continued over the next 5 (five) years.

Cooperatives and SMEs in the next 5 years still face

problems related to the unfavorable business climate

as a result of: (1) as yet ineffective coordination and

synchronization of programs and activities for

empowering cooperatives and SMEs, planned and

implemented by various Ministries and institutions;

(2) the existence of high-cost procedures and

administration; (3) limited support for facilities and

infrastructure for the empowerment of cooperatives

and SMEs; and (4) lack of participation of all

stakeholders including the government, non-

governmental organizations, and the community in

empowering cooperatives and SMEs.

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Therefore, the development goals to be achieved

in the next 5 (five) years are:

(1) The implementation of cooperative and SME

empowerment in a national program as a strategic

step in guiding and harmonizing the programs and

activities of Ministries and institutions, as part of

efforts to improve the welfare of the community,

especially those who rely on life from cooperatives

and SME activities; (2) the realization of the

paradigm of empowering cooperatives and SMEs that

are more coordinative, business oriented, and

participatory; (3) the realization of a more efficient

bureaucracy based on meeting the needs of, by and

for local communities; and (4) increasing the role of

community institutions supporting cooperatives and

SMEs.

Problems in product development and marketing:

cooperatives and SMEs still face problems in product

development and marketing. These problems include:

(1) limited access for cooperatives and SMEs to

technology and R&D institutions; (2) lack of

awareness of cooperatives and SMEs concerning the

requirements for quality and product design and

consumer needs; (3) lack of incentives for developing

cooperative and SME supporting institutions; (4) the

partnership principle has not been established in a

single business development structure/strategy that

synergizes in accordance with the value chain; and (5)

there is still a gap in the high growth needs of SMEs

and the availability of resources.

Therefore, the development objectives to be

achieved are (1) the availability of technology and

R&D results that are in accordance with the needs and

scale of cooperatives and SMEs; (2) increasing the

ability of technopreneurship cooperatives and SMEs;

(3) increasing the amount of capacity and reach of

institutions providing business development and

financing services; (4) the development of a strong

partnership-based business network; and (5) the

development of business support institutions that can

facilitate the development of potential and small

business bargaining positions.

c. The low quality of human resources,

characterized by: (a) consideration of the

characteristics of entrepreneurs in the

development of SMEs; (b) the low capacity of

small and medium scale entrepreneurs and

managing cooperatives; (c) The problem of low

motivation and micro entrepreneurial culture in

building trust; and (d) the low level of skill and

capacity of business managers. Therefore, the

development targets to be achieved are: (1) the

functioning of the business culture development

system and entrepreneurial competence in

accordance with the characteristics of

cooperatives and SMEs; (2) increasing technical

competence and management of small and

medium scale entrepreneurs and cooperative

managers, especially in producing quality,

innovative and creative products; and developing

the business of marketing its products; (3)

improving the quality and competency

development system of small and medium scale

businesses and cooperative managers; and (4)

increasing entrepreneurial culture and endurance

of micro-enterprises.

2.4 Wood Lathe Handicraft

Wood lathe handicraft is processed using a wood

lathe machine with raw material in the form of

mahogany wood. Once finished and formed in a

variety of models then this wood lathe will be carved,

decorated and painted in accordance with market

desires. Products of micro and small industry of wood

lathe are

3 METHOD

The method used in this research is an explorative

method with an inductive approach. Explorative

research is a type of research used to search for the

answer why certain events occur (Arikunto, 2010:

14). While the inductive approach begins by

presenting statements that have a unique and limited

scope in arranging the arguments and end with

general statements. In this study the author tries to

describe the actual situation in the field by collecting

data, analysis, and then formulating the conclusions

of the data. Irawan (2011: 34) explained that

exploratory research can be conducted in several

ways, namely a survey of literature, or a survey of

experiences and studies with specific cases. Data

collection is done by interviews, observation and

documentation. In this study, the authors perform data

analysis that has been developed by Miles and

Huberman (in Sugiyono, 2011: 246) using interactive

model analysis through three procedures, namely data

reduction, data presentation, drawing conclusions and

verification. The location of the research was at the

Department of Industry and Commerce of Blitar City,

East Java, Indonesia.

The Empowerment of Micro And Small Industry of Wood Lathe By Department of Industry and Commerce

4 ABOUT THE DEPARTMENT

OF INDUSTRY AND

COMMERCE CONCLUSIONS

Based on the Regional Regulation No. 07/2008 about

Organization and Working Procedures of Blitar City

and Blitar Mayor Regulation Number 46/2008

concerning tupoksi and working procedures, the

Department of Industry and Commerce of Blitar City

is a local government agency headed by the head of

the Industry and Commerce Department who is

responsible to the Mayor through the Regional

Secretary.

The Department of Industry and Commerce is a part

of the government which is also a form of

organization because it has a clear structure and tasks.

In accordance with Law No. 5/1984 about industry,

the role of the Department of Industry and Commerce

is to create a healthy and steady business climate by

providing guidance for small industries. With this

role then every industry needs to be given facilities in

accordance with its role.

The Department of Industry and Commerce of Blitar

City has the main duties in carrying out the task of

decentralization in the field of industry and commerce

involving industry, trade, investment and promotion.

The functions of the Department of Industry and

Commerce of Blitar City are:

1. Formulation of technical policy of program

preparation, controlling, coaching and

supervising in the field of Industry and

Commerce.

2. Implementation of licensing.

3. Implementation of supply, distribution of goods,

services and promotion.

4. Implementation of metrology and consumer

protection.

5. Improvement of local revenue.

6. Preparation of evaluation and reporting.

5 FINDINGS AND DISCUSSION

Small and Medium Industry in Blitar City plays a

major role in increasing the economic growth of the

society. This is because the industry is able to

independently meet the needs of local and regional

markets. In addition, the industry is also able to

absorb a lot of labor, as well as survive in a global

crisis situation. Therefore, the existence of Small and

Medium Industry in Blitar City deserves more

attention in the development as a whole and being

sustainable in order to compete in modern markets.

Guidance and supervision of Micro and Small

Industry can be implemented in accordance with the

realization of the vision and mission of Blitar City.

This can be achieved if it is supported by the role of

National and Regional Government in providing

good facilities and infrastructure.

The micro and small industry of wood lathe in

Tanggung Village has been running slowly since the

1980s. The micro and small industry of wood lathe

has involved many people around Blitar City,

especially in Tanggung Village. The micro and small

industries are more or less accomplished with the help

of various parties. The development of this industry

can generally be described through several aspects,

namely the establishment, the wood lathe processing,

the number of industries, the volume of labor and the

marketing process of micro and small industry of

wood lathe. The micro and small industry of wood

lathe is expected to increase the income of the local

people by absorbing labor from every craftsman in

Tanggung Village. With the guidance and

development conducted on micro and small

industries, it is expected to support the development

carried out in Tanggung Village.

The empowerment of micro and small industry wood

lathe conducted by the Department of Industry and

Commerce of Blitar City is related to several aspects,

namely resources, communication, public response

and institutional factors. Here are the research results

about the development of these four aspects:

1. Resources

Implementation of empowerment of micro and

small industry wood lathe by the Department of

Industry and Commerce of Blitar City certainly

needs funding and human resources who are

experts in the industrial field. For industrial

empowerment and implementation by industrial

sector, the budget is Rp 700,000,000.00 (seven

hundred million rupiahs) per year used for the

provision of education, training and coaching to

industry owners. In addition to training and

coaching, the fund is also used to provide

equipment supporting industrial production. The

equipment and production machinery

accommodation is directed to the owners of micro

and small industries and as the initial capital of

industry for people who are willing to start in the

wood lathe business.

Furthermore, the competent human resources in

the industry field at the Department of Industry

and Commerce of Blitar City are still very limited.

In the field of industry there are only seven civil

servants, and there is only one who forms the

technical personnel in the field of industry who

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acts as an empowerment assistance. Therefore,

until now it still needed industrial technical

personnel to launch and facilitate the

implementation of all programs and activities in

the field of industry.

2. Communication

Communication in the implementation of

industrial empowerment can be provided by

socialization through talk shows, seminars, and

training for industry owners. Through the

socialization, seminars, talk shows and training

for the community and the owners of micro and

small industries of wood lathe it is expected to

make the community more empowered and have

skills in producing wood lathe.

Implementation of training activities is basically

an effort to improve the knowledge, skills,

attitudes and behavior of the community of micro

and small industry entrepreneurs. This activity is

intended for them to act dynamically, creatively,

productively and efficiently in processing and

developing their business so they can utilize every

opportunity available in order to improve welfare.

To develop wood lathe craft several steps have

been taken as follows:

(1) Provide counseling to business units through

regular meetings with topics about production,

quality, marketing and so on.

(2) Provide financial administration guidance and

practical bookkeeping techniques.

(3) Provide support to the owners of business

units to innovate, create and improvise in

producing new types of products so the businesses

can be further developed.

(4) Build networks with the potential buyers.

(5) Offering guidance to the center of the wood

lathe industry.

Based on an interview with the Head of Industry

and Commerce Department of Blitar City on

February 18, 2014, it is known that:

"Technical training and development of micro and

small industry of wood lathe conducted by the

Department of Industry and Commerce of Blitar

City comprise training of wood lathe production

aimed to improve the product quality and the

creativity of wood lathe craftsmen. Furthermore

there is a wood batik training where the coach is a

wood batik craftsman from Krebet village,

Bantul, Jogjakarta. In addition, there is a painting

training with instructors from the Prophan Paint

Company Sidoarjo. A comparative study was

conducted in Cipacing, Sumedang, West Java to

study and to see the products of wood lathe and

for comparison with the products produced in

Blitar."

Technical training and coaching activities that

have been done can provide benefits to the

development of micro and small industries of

wood lathe such as follows:

(1) The development of micro and small

industries of wood lathe from a total of 50

business units in 1997 up to 120 business units in

2013.

(2) The absorption of labor up to 414 people in the

year 2013 and even more now that every

household in Tanggung Village has become a

wood lathe craftsman.

(3) The sales turnover of wood lathe production

also increased from 108,100 in 2011 to 163,000 in

2013.

3. Public Response

The public response in Tanggung Village to the

empowerment activities undertaken by the

Department of Industry and Commerce of Blitar

City is very great. They received well all the

directions, guidance, education and training

provided by the Department of Industry and

Commerce of Blitar City. However, there are still

some elements that need to be changed by the

community and the owners of the micro and small

industries of wood lathe. It is in their mindset that

they still think pragmatically and traditionally in

running their production. This is evident from the

lack of variety in wood lathe products. This is

because the craftsmen are only fixated on one type

of goods without trying to be creative in

producing other goods that are more attractive to

the consumers.

4. Institutional

Blitar City Government together with the

Department of Industry and Commerce of Blitar

City launched the One Village One Product

(OVOP) program where one area is involved with

one type of goods or production. This activity

aims to improve the society welfare. The concept

of OVOP is a regional revitalization movement to

develop original products of the region in order to

be able to compete in a global market. The product

can be a superior product of a region or a product

that is a characteristic of local culture.

The OVOP program in Blitar City was held

through the inauguration of Tanggung Village as a

"Tourism Village" in 2005 which was triggered by

Blitar Mayor in the period 2004-2009. However, this

has not been significantly implemented in improving

The Empowerment of Micro And Small Industry of Wood Lathe By Department of Industry and Commerce

the development of micro and small industry of wood

lathe in Tanggung Village. This is because the

capacity and capability of human resources in the

micro and small industries of wood lathe is still not

good enough. In addition, the facilities and

infrastructure supporting this village are also not well

organized, for example the unavailability of outbound

locations and homestay for the visitors.

The readiness of supporting technology also

hasn’t spread evenly yet among some micro and small

industry craftsmen in Tanggung Village. The wood

lathe craftsmen are still not ready when visited by

tourists, so it needs a continuous synergy between

government and business actors in preparing this

tourism village in Blitar City. The government is

expected to be able to encourage the movement and

development of micro and small business sectors with

the distribution of technology as well as sustaining

aspects of product promotion.

Starting in 2011, the implementation of micro and

small industry’s empowerment in Tanggung Village

is collaborated with the PNPM Tourism program

which aims to revive and develop the tourism village

in Tanggung Village which had been dead and

undeveloped before. In this case there is a

coordination between the community of Tanggung

Village, Department of Cooperatives and SMEs

Regional, Department of Communication,

Informatics and Tourism Regional, and the

Department of Industry and Commerce of Blitar City

in preparing everything needed to develop the tourism

village again. Among them is the preparation of

educational tour packages, outbound locations and

homestay around Tanggung Village for the tourists

who want to visit the city of Blitar. In addition, they

also prepare the mental readiness of the community

in Tanggung Village in running the tourism village.

Currently the Tanggung Village Tourism Village has

become a member of the East Java Tourism Village

Association (ASIDEWI).

With the program conducted by the Department of

Industry and Commerce it can help the owners of

industry and the craftsmen in improving the

production quality of micro and small industries of

wood lathe in Tanggung Village.

5.1 Empowerment of Micro and Small

Industry Wood Lathe

The implementation of micro and small industry

empowerment of wood lathes in Tanggung Village by

the Department of Industry and Commerce of Blitar

City consists of four aspects:

1. Capital

The main problem most often faced by micro and

small industry entrepreneurs in wood lathe in general

is the lack of capital to develop a business. The

majority of micro and small-scale industrial

entrepreneurs in the Tanggung village use their own

capital to maintain and run the production process.

The capital factor is a determining element for the

success, continuation, and development of a business.

Without the availability of sufficient capital, any

effort will obviously not work well in accordance

with the objectives expected and will not go

according to what was planned together. However, at

present most of the micro and small industry

craftsmen in wood lathe have difficulty in obtaining

loans or soft loans from banks to develop and improve

their businesses, because they are not able to pay the

amount of collateral or bank loans in the form of cars

or land and building certificates.

The regional government cooperates with SMEs

in providing soft credit for micro and small industry

owners, but many soft credit funds such as these are

misused for purposes beyond the management of their

industries. Then there are many micro and small

industry owners who claim lack of capital but the

reality differs. Therefore, at this time if you are going

to borrow money or ask for soft loans for capital

purposes, you must include the industrial

administration data or the industry's financial

bookkeeping. If there is no accounting evidence, the

loan application is not accepted. Due to these

provisions, many SME owners submit training on

production management and financial management at

the Regional Office of Industry and Trade in the City

of Blitar.

2. Materials

Regarding raw material assistance, the Office of

Industry and Trade does not provide raw material

assistance directly but acts only as a facilitator or

becomes a bridge with the Blitar City Forestry

Service in facilitating the craftsmen to bring in raw

materials from outside the Blitar City area. If there is

already a letter of recommendation or permit from the

Forestry Office, it is expected that when bringing in

the amount of mahogany wood which is not small in

number, it is not suspected as an element of illegal

logging.

The availability of raw materials for the

implementation of production will be a driving factor

for the development of micro and small industries.

Raw materials are very important components in the

production process of an item, as without the

availability of sufficient raw materials, the production

process will be hampered. The main raw material in

making this wood lathe is mahogany. The availability

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of mahogany in the area of Blitar City is not sufficient

for the needs of woodworking industry workers, so

they must procure raw materials from other areas

around Blitar City such as Blitar, Malang,

Tulungagung, Kediri, Nganjuk and Trenggalek.

3. Marketing

In terms of marketing, The Department of

Industry and Commerce of Blitar City only acts as a

facilitator, because consumers can directly obtain

wood lathes at the location of their own industrial

centers. The Department of Industry and Commerce

of Blitar City only helps find and build business

partners for SMEs using wood lathes. Furthermore, to

further expand the area of marketing of wood lathes,

the wood lathe was introduced by participating in

exhibitions and expos aimed at growing the structure

of the national business world that was more robust

and efficient so that it could master and develop the

domestic market while increasing global

competitiveness.

In addition, currently The Department of Industry

and Commerce of Blitar City has collaborated with

Telkom in running the e-Toko program. This e-shop

program is like an online shop that sells goods or

products from SMEs throughout Blitar City including

this wood lathe industry. With the existence of this e-

Toko, the craftsmen find it easier to promote their

industrial products outside the Blitar City area.

4. Production Engineering

The efforts of the local government of Blitar City

in empowering SMEs in the industries of wood lathe

through the Department of Industry and Commerce of

Blitar City in addition to providing education,

training and coaching also provided production

technology assistance in the form of wood lathes and

equipment to the owners of SMEs in the industries of

wood lathe and Blitar City community as initial

capital in starting a business to become a wood lathe

craftsman. In addition to wood lathes and equipment,

the Industry and Trade Office also provides assistance

in the form of equipment to design wood lathe

products, including equipment for making carvings

and designing carving as well as materials for

painting.

Then the Department of Industry and Commerce

of Blitar City also carried out management guidance

for the owners of micro and small industries of wood

lathes:

a. Production Management

• Supervising / sorting / grading raw

materials

• Supervising product quality

• Prioritizing the results of products that are

in accordance with marketing standards

• Producing according to consumer tastes

b. Financial Management

• Perform efficient and effective operations of

activities

• Perform practical bookkeeping

• Record every transaction that occurs at any

time and report every month to see the

development of the industry

c. Marketing Management

• Work on potential markets for product

marketing

• Maintain chief relations/good relations with

marketing channels

• Maintain consistency in the quality of goods

or the quality of goods from producers to

consumers

• Creating marketing networks both within

Indonesia and abroad

5.2 Constraining Factors

The problems occurred even though the wood lathe

craftsmen and the community were given various

training that was useful to improve the quality and

quantity of production; their mindset is still pragmatic

and they do not want to change. They still think

traditionally and do not want to go forward. For

example, there is a small and micro industry owner

who makes “yo-yos”. From the beginning until now

he just made yo-yos and does not want to switch to

other goods such as making tambourines or kendangs

as the selling price is higher and generates more

profit. Many craftsmen only accept their

circumstances without considering the greater things.

This is what the Department of Industry and

Commerce of Blitar City will attempt to change.

The Head of the Department of Industry and

Commerce in Blitar City also explained that in the

implementation of technical training and coaching,

there are some obstacles faced. The obstacles are the

lack of trainers or experts in the implementation of

technical training and coaching or we can say that the

trainers still lack in quality and quantity so it is still

less convenient in dealing with the proper needs.

Furthermore, the participants themselves are still less

responsive and less persevering when they are given

training. They consider themselves already capable

with such training. The last obstacle is the

characteristic of the raw material of wood lathe

(mahogany) that cannot be painted (batik). This is

known only after being practised by wood lathe

craftsmen when designing the wood lathe products.

So the batik training of wood lathe felt less efficient.

The Empowerment of Micro And Small Industry of Wood Lathe By Department of Industry and Commerce

Another problem is related to the production

management, especially financial management. The

owners of micro and small industries today still don’t

have good financial management. They still don’t

have a bookkeeping system in their production

activities so they only measure their profits through

items they can buy like a new car or a bigger house.

Those who have financial bookkeeping of production

are only the owners of large industries of wood lathe.

In fact there has been training about wood lathe

production goods, how to design and the production

management training, especially financial

management. But it’s still poorly absorbed by the

owners of micro and small industries of wood lathe.

5 CONCLUSION AND

RECOMMENDATION

Based on the discussion in the previous section, it can

be concluded that the empowerment facilitated by the

Department of Industry and Commerce for micro and

small industries in Tanggung Village has grown quite

well. This is indicated by the increase in production,

sales turnover, innovation and creativity of craftsmen,

income and living standards of the community in

Tanggung Village. Moreover, Village Tourism of

Tanggung Village also began to grow.

Factors inhibiting the empowerment of micro and

small industries of wood lathe are:

1. Human resource factors i.e. the lack of

competent technical personnel.

2. Communication factors i.e. number of

trainers that are still lacking.

3. Community response factors i.e. (a) the

mindset of the craftsmen and community

who are still pragmatic; (b) the lack of

innovation and creativity of craftsmen.

4. Institutional factors i.e. Village Tourism of

Tanggung Village that has not run in

accordance with the planning.

Therefore, it is expected that the Department of

Industry and Commerce can increase the number of

competent human resources in the field of industry so

the industrial activities can grow more efficiently; it

is also suggested that the Department of Industry and

Commerce conduct an annual evaluation related to

the empowerment activities of micro and small

industries of wood lathe based on indicators of

empowerment by the government and the

community.

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