Minister of Cooperatives and SMEs Teten Masduki revealed that most MSMEs in Indonesia are currently categorized as microbusinesses with low productivity.
Microbusinesses fall into the subsistence economic category, operating primarily to support survival and family needs.
Limited access to financing, technology, and markets is considered the main obstacle for microbusinesses in the country.
"Microbusinesses are indeed the largest contributors to employment, but if they continue to rely on the subsistence economy, it will be challenging to scale their operations," Masduki explained in a statement on Wednesday.
To address these issues, the ministry has designed several programs and policies to support the emergence of new entrepreneurs with innovative products and business models capable of competing in the global market.
The government is also working to integrate MSMEs into the global supply chain. Currently, only 4.2 percent of domestic MSMEs are integrated into the global supply chain, compared to Vietnam's 24.6 percent.
"Our MSMEs must be connected to industry. Therefore, in addition to transformation, restructuring is also crucial to create new MSMEs with a modern economy," Masduki said.
One concrete step in this direction is the Entrepreneur Hub program, which targets students at various universities, he added.
The program aims to produce new technology and research-based startups that can drive national economic growth.
"The presence of MSMEs is not only to absorb labor but also to contribute to national economic growth," he stated.
According to Masduki, as observed in many countries, the creation of MSMEs typically focuses on products and business models designed for the global market.
"Do not just think about exporting globally but also consider how domestic MSMEs can excel and compete with imported products from China," he added.
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Translator: Shofi Ayudiana, Yashinta Difa
Editor: Anton Santoso
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