Center for
SME Movements

An independent think tank committed to foster the growth of Indonesian SMEs to be sustainable and globally competitive through digital innovation and collaboration with stakeholders.

The Challenges and Opportunities for SMEs in Indonesia

Indonesia is an archipelago with 17,000 islands and the potential of human resources of which 270 million population. Yet the GDP remains low at around 20% according to the Economist in 2022, because Indonesians remain in the majority of consumers. While the market is huge and full of potential, we have issues with production and capacity building. In addition, the unemployment rate is still at 5.9% in 2022. In this context, SME entrepreneurship can make a significant contribution to Indonesia by expanding manufacturing, growing the job market and the economy in general.

The Coordinating Ministry for Economic Affairs reports that the SME sector has contributed 60% to the national GDP and 97% to labor absorption.

However, research by COSMOS has found that the SMEs also face major challenges. In this archipelagic country of many separate islands, the majority of SMEs’ confront problems regarding capital and sales distribution channels, particularly for market expansion and supply chains, such as costly logistic and high shipping cost. SMEs need cheaper, faster and more efficient ways to get their products to the hands of their consumers.