Optimizing the Role of Regional Regulations in Promoting the Growth of Micro, Small, and Medium Enterprises

This study examines the role of regional regulations in fostering the growth of Micro, Small, and Medium Enterprises (MSMEs), focusing on a comparative analysis of the effectiveness of deregulation versus strict regulation. Within the framework of regional autonomy, local governments have the opportunity to innovate through policies that support local economic potential. The study employs a qualitative research method with a case study approach. The findings reveal that deregulation, such as the use of regulatory sandboxes, significantly accelerates MSME growth by simplifying licensing processes and providing regulatory flexibility. However, this approach poses risks related to inefficiency and inadequate quality control. On the other hand, strict regulation ensures high product quality standards but often hampers MSME growth due to complex and slow administrative procedures. The in-depth analysis also highlights that the successful implementation of regulations depends heavily on the capacity of local governments, including their human and financial resources. Therefore, a hybrid policy approach balancing flexibility with oversight is deemed most effective in supporting inclusive and sustainable MSME growth.