October 4, 2023

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Micro, Small & Medium Enterprises in Indonesia: Backbone of the Indonesian Economy


  • Indonesian MSMEs contribute marginally around 61 percent to Indonesia’s overall gross domestic product (GDP)
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  • Indonesian MSMEs take up all over 97 p.c of Indonesia’s domestic employment and
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  • All around 99 percent of current organization in Indonesia nowadays fall in the MSME category.
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These are all extremely amazing figures, while a person could certainly argue that when 99 % of current companies are MSMEs, their contribution to the overall economy at 61 percent is possibly fairly mediocre. Nevertheless, it does remain appropriate to phone the MSMEs the backbone of the Indonesian economic climate as they deliver so substantially economic exercise, together with the harvesting, producing and shipping of simple requirements -these types of as foods- to practically the whole population. Try imagining an Indonesian financial system with out the existence of the MSMEs, and every little thing would (form of) collapse as their existence is so influential, both equally in city and rural environments.

However, in addition to their rather modest influence on the country’s full financial advancement at 61 percent of GDP, it is also remarkable that they are inadequately integrated into the world’s provide and value chains, and consequently their contribution to Indonesia’s complete export efficiency is also fairly weak.

Last yr, Yulius, who is Skilled Team to the Minister of Cooperatives and SMEs for Efficiency and Competitiveness, stated on the IDX Channel that the MSMEs only lead about 14 percent to full Indonesian exports, which is a considerably reduced ratio in contrast to individuals noticed in other nations around the world. For illustration, in Singapore, the MSMEs account for 41 percent of the country’s exports, when in China the MSMEs account for 60 % of exports.

The weak involvement of Indonesian MSMEs in export undoubtedly tells us some thing. It is a solid indicator that Indonesian MSMEs lack competitiveness as opposed with regional counterparts. Crucial elements that occur to head are:


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