Development Strategy on Business of Informal Sector and Its Role in Reducing Poverty in South Sulawesi, Indonesia

Syamsu Alam,Musran Munizu,Maat Pono

doi:10.5901/mjss.2016.v7n6p97

Abstract

The study is aimed to identify the problems of informal sector business, to design the models and strategy in developing informal sector business, and to analyze the role of informal sector in reducing poverty in South Sulawesi. The population of the study is the informal sector in Makassar, and Pare-Pare, South Sulawesi Province. The number of samples is 200 people. Purposive sampling is used as the sampling technique. Data is analyzed by descriptive statistics, and Analytical Hierarchy Processes (AHP). Then, data is processed by IBM SPSS 22 and Expert Choice. The results show that the main problems faced by the informal sector consist of: (1) the lack of government support, (2) access to capital is relatively difficult, (3) business management unprofessional, (4) lack of labor skills, (5) Lack of marketing network, (6) retribution, (7) the urban planning policy, (8) generally do not have a business license, (9) competition, and (10) the existence of illegal fees. There are three alternative strategies that can be used to develop the informal sector, namely: (1) empowerment, (2) formalization (legal / business licensing), and (3) the localization, which provides the location for the informal sector. Development of the informal sector requires the support and commitment from the stakeholders, especially local government. In addition, the support from the institutions such as universities, NGOs, and the private sector. The study also shows that the informal sector has a greater role as a source of people income. Furthermore, the informal sector also contributed as a provider of jobs, reduce poverty, and as a source of local revenue and economic growth. DOI: 10.5901/mjss.2016.v7n6p97

Highlights

The significance of the informal sector in providing an opportunity to generate wealth for Indonesian citizens cannot be undervalued
In this study will be carried out activities focus group discussion (FGD) and in-depth interviews with entrepreneurs are willing to voluntarily elected interviewed, and other stakeholders to sharpen the analysis of the study
The location of this study conducted in the city of Makassar, and the City of Pare-Pare, South Sulawesi

Summary

Introduction

The significance of the informal sector in providing an opportunity to generate wealth for Indonesian citizens cannot be undervalued. The sector plays a big role in economic development through job creation, the supply of affordable goods and services and the reduction of poverty. It is estimated that about 65 percent of the Indonesians workforce is employed in the informal sector. The sector is characterized by underemployment, bad working conditions, uncertain work relationships and low wages. Most of them are in central of the city (BPS, 2014). About 30-70% of the population in the urban labor force works in the informal sector (Widodo, 2005). In Asia selfemployment covers around 60 percent of the total informal sector (Becker, 2004)

Methods

Results

Conclusion