25 4. CHAPTER 4 DATA ANALYSIS 4.1 External Business Analysis 4.1.1 PESTEL Analysis The PESTEL study was used to create the SWOT analysis that follows in order to better understand how the external elements that have already been mentioned affect the firm. The summary of PESTEL analysis will be shown through Table 4.1. Detailed explanation will be explained in the following sub-chapters Sub – Chapter 4.1.1.1 for Sub - Chapter 4.1.1.6 Table 4.1 Summary of PESTEL analysis Pestel Element Pestel Analysis SWOT Assessment Political The implemented restriction of Emergency Community Activity Restrictions (PPKM) in Java-Bali. Was a way to reduce the rate of infection of the coronavirus Threat Economic Indonesia has a faster economic growth rate faster than most countries only behind china and uzbekistan Opportunity Indonesia’s Inflation rate is still lower than many countries such as germany at 6% and Turkey at 47% Opportunity Social Indonesia has a growing middle class Opportunity Technology E-commerce market in Indonesia has grown to $32 billion in the year 2020 from $21 billion Opportunity 20% of Indonesian MSMEs have successfully reduced the impact of the pandemic through business digitalization and the use of internet marketing media. Opportunity Environment the clothing industry has had a detrimental impact on the environment in Indonesia, with pollution from the industry nearly paralleling water pollution Threat Legal Implementation on bans against imported second hand clothes in order to protect the growth of local fashion SMEs Opportunity 4.1.1.1 Political In early 2020, the Covid-19 pandemic hit Indonesia and restrictions in the country began to appear in an attempt to reduce the spread of the virus. In early 2021, President Jokowi set several restrictions, known as Emergency Community Activity Restrictions (PPKM), on a micro level to test the effectiveness of the restrictions. On July 3rd, he applied these restrictions on a larger scale in Java-Bali 26 (BPKP, 2021). These restrictions could affect many SMEs, especially those who could not fully make use of online business methods. 4.1.1.2 Economic According to an article by Fauziyah and Tempo.co [Tempo] (2023) and a statement by Airlangga Hartarto, the coordinating minister for Economic Affairs, Indonesia's economic growth in the second quarter of 2023 was 5.17%, up 3.86% over the previous quarter. The growth has outpaced that of the US and Singapore. Our [economic] growth is only behind China and Uzbekistan by 6.3% and 5.6%, respectively. Several other nations, like Vietnam, the US, Singapore, and Germany, are still experiencing contraction, according to Airlangga, who was speaking at a press conference on August 7, 2023, in Jakarta. Additionally, Indonesia's inflation rate of 3.08% in July 2023 is lower than Germany's inflation rate of 6% and Turkey's hyperinflation rate of 47%. 4.1.1.3 Social According to the World bank (2020), The middle class has been expanding more quickly than other social classes; there are already 52 million economically secure Indonesians, or one in every five Indonesians. Additionally, The Indonesian middle class has been a major driver of economic growth as the group’s consumption has grown at 12% annually since 2002 and now represents close to half of all household consumption in Indonesia. 4.1.1.4 Technology Due to the pandemic, digitalization of businesses has become a necessity. The e-commerce market in Indonesia has grown to $32 billion in the year 2020 from $21 billion in the previous year according to Janio Asia. According to new research conducted by Sya’bania et al. (2021), this phenomenon was induced by the Indonesian consumers being forced to isolate due to the pandemic and conducting their shopping all online.