FACTOR INFLUENCING MSMES PERFORMANCE MEASUREMENT - A LITERATURE REVIEW

University of Oradea, Faculty of Economic Sciences Oradea University Publishing House, Oradea, Romania FACTOR INFLUENCING MSMES PERFORMANCE MEASUREMENT - A LITERATURE REVIEW TUMIWA Johan, TUEGEH Octavia, NAGY Adrián Szilárd University of Debrecen, Faculty of Economic and Business, Károly Ihrig Doctoral School of Management and Business Abstract: MSME is a significant determinant of economic growth, has an enormous contribution to national GDP, and help in creating jobs, and also played a critical role in a time of economic crisis. MSMEs is demanded to be able to compete in marketing their business. The writing of this article tries to explain how to measure performance in MSMEs with the size and assessment of existing performance. This study uses a literature research approach with secondary data collected through books, research reports, scientific journals, official agency documentation such as the Indonesian Central Statistics Agency. The empowerment of MSMEs becomes very strategic because of its high potential in driving the economic activities, and at the same time, becoming the source of income for most people in improving their welfare. The creation and development of local business that create jobs and potential economic opportunities are essential for the rural economy. The region can gain competitiveness and, in turn, can increase the local income and employment. The benefits of performance appraisal can be felt by the owner with a measure of business success that can be seen from the increased level of sales, increased capital, increasing the number of workers, increased levels of income and profits, and sales or a wider market. The evaluation of MSME's performance is carried out on the internal and external parties of MSMEs. Thus, the MSME's performance will be known from inside and outside MSME in order to achieve a successful business and be able to compete in national and international markets. Keywords: Internal factors; external factors; MSMEs performance. JEL Classification: F01; M21. 1. Introduction Indonesia is a country with abundant natural gifts. Indonesia consists of 17,504 islands with a total land area of 1.9 million km2, which 27 percent (0.54 million km2) is freshwater. Coastlines around 81,000 kilometres and seawater area are 7.9 million km2. The area (1.3 percent of the earth's land area), has biodiversity includes 11 percent of the world's plant species, 10 percent of mammalian species, and 16 percent of bird species. It is the second largest of biological diversity after Brazil. Indonesia has 109.96 million hectares of forest area, classified as the richest in biodiversity in the world. The land suitable and available for agriculture is 100.8 million hectares, but only 68.8 million hectares utilized. Marine fish is around 6.26 The Annals of the University of Oradea. Economic Sciences Tom XXIX 2020, Issue 1 (July 2020) ISSN 1222-569X, eISSN 1582-5450  151 University of Oradea, Faculty of Economic Sciences Oradea University Publishing House, Oradea, Romania million tons per year, with an allowable catch of 5.01 million tons per year (Indonesian Statistic, 2017). The potential for energy and mineral resources is also huge, makes Indonesia beautiful fantastic blessed with abundant natural wealth. The large economy makes Indonesia become a member of the G20 countries. According to IMF 2019, Indonesia is the 7th highest-ranking country in terms of GDP. This is one of the reasons why Indonesia is no longer categorized as a developing country by the USA government. United States Trade Representative (USTR) at the World Trade Agency (WTO) since mid-February 2020, eliminating Indonesia as a developing country. However, Indonesia is still far from developed countries in terms of several parameters to measure a developed country. Human development parameters, such as poverty rate, infant mortality, adult literacy, and life expectancy, are still low in Indonesia. Inferring from the Human Development Index (HDI), education in Indonesia is still low, with the majority of the population equivalent to junior high. From the agriculture sector, the majority of farmers in Indonesia still use conventional methods, differ from developed countries, have already used high technology, and even based on Industry 4.0. The World Bank recorded Indonesia's Gross National Income (GNI) in 2018, which is 3,840 USD that far below the minimum limit of 12,235 USD. According to World Bank data, Indonesia is not in the category of high-income countries or developed countries. On the other hand, the trade war between the US and China made a negative impact on other countries including Indonesia (Kim, 2019; Adekola, 2019; Nwoke, 2020). For instance, in the automotive industry in Indonesia, imported parts from several countries in the world, such as from Costa Rica, Romania, Thailand, and dozens of other countries. Imported parts from those countries, 20% of them are from China. The current global 2020 pandemic has delayed production in China (Ozili and Arun, 2020), resulting in those countries failed to provide to Indonesia. To survive, China will use its USD as a tool against the US. China uses it to invest in Indonesia as Foreign Direct Investment, with one objective is to generate more USD. To encounter this situation, USTR revokes Indonesia from the developing country list, which will get an exemption from the Generalized System of Preferences (GSP) incentives from the US for Indonesia (Nwoke, 2020). Revocation of Indonesia from the list of developing countries, making export products Indonesia to the US will have difficulty competing with other developing countries, such as Vietnam. This situation makes China no longer want to invest in Indonesia, and at the same time, the US prefers to invest in other countries such as Vietnam and India. To address the various problems above, the Indonesian Government makes every effort to maintain economic growth by cooperating with other countries such as Hungary (Ministry Of Foreign Affairs Of The Republic Of Indonesia, 2020). The cooperation between Indonesia and Hungary that has been implemented is a clean water project that has been implemented in 36 locations in 12 provinces in Indonesia. Another collaboration is a scholarship program provided by the Hungarian Government for 100 Indonesian students. The Hungarian Government is also committed to simplifying the visa process for Indonesian citizens. Hungary and Indonesia also establish agreement related to sports, training of Indonesian soccer players in Hungary. Hungary also offers cooperation in building hospitals that focus The Annals of the University of Oradea. Economic Sciences Tom XXIX 2020, Issue 1 (July 2020) ISSN 1222-569X, eISSN 1582-5450  152 University of Oradea, Faculty of Economic Sciences Oradea University Publishing House, Oradea, Romania on cancer therapy and oncology, as well as developing military hospitals and joint investment for infrastructure. T (...truncated)