SMEsinIndonesianEconomyand

PoliciestoEnhanceDevelopmentand
EmpowermentofIndonesianSMEs

HafizRahman
PreparedforandPresentedin
The1stInternationalSEPNetWorkshopon
InternationalComparisonsonPrivateSectorDevelopmentStrategies
HaikouCity,P.R.China,610November2004

`CommunityBasedEconomyand
CooperativesareFoundationsand
PillarsofIndonesianEconomy`
(IndonesianStateGazette,Year1945)

Brief
1. OverviewofIndonesianSMEs
2. PoliciesandStrategies
3. ImplementationofStrategies
OtherProgrammes

Brief
1.

RolesofSMEsincountry`seconomycanbeseenin
theMacroeconomicsIndicators:
a. GivingcontributiontoGDP(ACt,1999)
b. Generatorsofattractiveemployment
opportunities(Urata,2002)
c. Minimizeunemploymentrate(Acset.al.,
1999)
d. Minimizeinflationrate(Acset.al.,1999)
e. Improvingemploymentopportunity(Acset.
al.,1999)
f. Agent/sourceofnewinnovation(Acset.al.,
1999)

2.SMEsinIndonesia;

a. Number:99,98%oftotalnumberof
enterprises
b. Support59,36% ofGDP(inlast5years
average)
c. Contribute99,44% ofthetotalemployeesin
Indonesia(inlast5yearsaverage)

3.

FrameworksofDevelopmentandEmpowerment
ofIndonesianSMEs
BasicFoundations

DevelopmentandEmpowermentPolicies

DevelopmentandEmpowermentStrategies

I.OverviewofIndonesianSMEs
A. BusinessSectorsandNumberofEnterprises
BusinesssectorsofIndonesianSMEs:

Agriculture,AnimalHusbandry,Forestryand
Aquaculture
Mining
Processingindustries
Electricity,gasandwater
Construction
Trading,hotelandrestaurant
Transportationandcommunication
Financeandleasing
Services

NumberofSMEs:

SmallEnterprises:about99,80%ofall
enterprises

MediumEnterprises:about0,14%ofall
enterprises

About56%ofallSMEshavebusinessesin
Agriculture,AnimalHusbandry,Forestryand
Aquaculturesectors

B.ContributionofSMEstoEconomicPerformance

Contributiontoemploymentrate:morethan
99%

ContributiontoGDP:54% 59%

Contributiontoexport:14% 15%

C. ProblemsofIndonesianSMEs
1. Financial/capital
a. Accesstocreditandcapital
accummulationislimited
b. Proceduralconstraints
c. Interestrate
d. Trustandinterestoffinancial
institutions
2. Availabilityofrawmaterials
a. Pricesincreaseveryhigh
b. Therefore,inventoryisnotoptimal

3. Marketing
a. Limitationtodevelopthemarket
b. Unabletocompeteinqualityandservice
4. Difficultiesinpayingworkerssalariesand
wages
a. Revenuethatcomesfromsellingis
decrease
b. IncreasinginRegionalMinimumWages
(UMR)
5. Energy
a. Tariffofelectricityincreasesveryhigh
b. Tariffoffuelandgasincreasesveryhigh

6. Technicalandmanagerialcapability
a. Unpracticaleducationoriented
b. TrainingopportunitiesforSMEs
practitionersarestilllimited
7. Competition
a. Marketstructureisnotfriendly
b. Muchproductproducedbylarger
enterprises
8. IntellectualPropertyRights
9. LegalstatusofSMEs

C.Prioritiesandtargetsofthedevelopmentof
IndonesianSMEs
a. Motorofregionaleconomicsdevelopment
basedSMEs
b. SupportingindustriesbasedSMEs
c. Exportoriented importsubstitutionbased
SMEs
d. KnowledgebasedSMEs
e. NewinitiativesSMEs

II.Policies
1.

BasicFrameworksandFoundations
a. Idealfoundation:FivePrinciplesofNation
(PANCASILA).
b. Constitutionalfoundation:IndonesianState
Gazette,Year1945.
c. Operationalfoundation:NationalMain
Guidelines(GBHN)1999 2004

2.

DevelopmentandEmpowermentPolicies
a. IndonesianStateGazetteNo.9/1995about
SMEs
b. IndonesianStateGazetteNo.25/1992about
Cooperatives
c. IndonesianStateGazetteNo.22/1999about
RegionalGovernment
d. GovernmentalDecrees,Rules&
Regulationse.g.;
ForbiddenBusinessFieldsforlarge
enterprises
JointVenturesbetweenSMEs

3.

10DevelopmentandEmpowermentStrategies
a. Usingresearchoutputandtechnology
b. Developingnewproductdesignandadjust
itwithmarkettrends
c. Improvingmanagementofthebusinessin
general
d. Developingexportmarket
e. FormulationofstandardizedBusinessPlan
andFeasibilityStudy

f. CreatingNetworksbetweenSMEsand
strategicalliancesbetweenSMEsandlarger
enterprises
g. StrenghteningSMEscapital
h. Developingandimprovingsuitable&
enableinfrastucturesatmesolevelfor
SMEs
i. Formulatingrulesandregulationwhich
protectSMEsfromallunfaircompetition
j. DevelopingNetworksbetween
Government,PrivateInstitutionsand
NGOs

III.ImplementationofStrategies
1.

BottomUpandUpGradeClustering

2.

SentraIndustriKecil(SmallIndustrialCenter)
OneVillageOneProduct

3.

CreditInformationSystems

4.

CreatingSMEsPortal

5.

StandardizationandCertificationofSMEs
products

6.

Enhancingprivatesectorsparticipations

7.

Developing&improvingsupportinginstitutions;
a. EstablishmentofIndonesianSmallBusiness
Council
b. Financialinstitutions;
Banks(BRI,IslamicBank/BankSyariah)
VentureCapitalCompanies(State
ProvincialOwned&PrivateOwned)
c. Microfinanceinstitutions;
BPRBankPerkreditanRakyat
d. CreditGuaranteeCompanyforSMEs

e. SMEsDevelopmentResearchCentersand
Institutes(BALITBANGUKM);
LPMLembagaPengembangan
Masyarakat(CommunityDevelopment
Institutions)
SMEDCUGM(SMEsDevelopment
Center,GadjahMadaUniversity)
f. BusinessIncubationCenter;
PusatInkubatorBisnisITB(Business
IncubationCenterofBandungInstitute
ofTechnology)

g. TechnologyandIndustrialParks;
BatamTechnologyandIndustrialParks
PuloGadungTechnologyandIndustrial
Parks
JABABEKAIndustrialParks
h. FreeTradeandProcessingZone;
BatamFreeTradeandProcessingZone
KawasanBerikatNusantara

i. BusinessSupportInstitutions
KKB KlinikKonsultasiBisnis(Business
ConsultingClinic)
PER PusatEkonomiRakyat
(CommunityEconomicCenter)
j. SMEsChamberofCommerceandIndustry

OtherProgrammes
1.

AllocationprofitsofIndonesianStateOwned
EnterprisesastherevolvingfundforSMEs
development

2.

ProgramMitraBinaan&BapakAngkat
(PartnershipsandFosterParentsProgrammes)
betweenIndonesianStateOwnedEnterprises
andSMEs

3.

VoucherProgramme,SPESIandKUBUSin
developingmarketofBDSProviders(by
SwissContact)

4.

VocationalTrainingforSMEs(byNational
TrainingCenterofSMEsandCooperatives,
IndonesianExportTrainingCenter/IETC,
AcademyofCompanyManagersandChambers
ofCommerceandIndustry)

5.

YearlyNationalExhibitionofSMEsproducts

Terima Kasih
Thank you
Danke