SMEs in Indonesia have grown significantly and contribute greatly to the national GDP and job creation. However, they face challenges including access to technology, finance, and markets. The government supports SMEs through strategies focused on strengthening institutions, expanding opportunities, increasing skills and technology adoption, and improving the business environment. Key priorities include increasing access to resources and developing products, markets, skills, and cooperatives to strengthen SME competitiveness.

1. SSMMEEss DDeevveellooppmmeenntt iinn IInnddoonneessiiaa

2. INTRODUCTION
- Small Medium Enterprises (SMEs) in Indonesia is growing
fast. In the period of 2011-2012, SMEs in Indonesia
grew as much as 2.41%
- SMEs in Indonesia gives big contribution to create job
employment, SMEs created jobs to about 97.24% (equal
to 101.722.548 persons); and in 2012, SMEs had
successfully created jobs to about 9.16% (equal to
107.657.509 persons).
- SMEs’ contribution to the National GDP is also
significant. In 2011, SMEs’ contribution to National GDP
was about 57.94% (or equal to IDR 4.303.571,5
Trillion) and it increased to 59.08% (or equal to
IDR 4.869.568,1 Trillion) in 2012. These
contributions have made SMEs become one of the
key sectors to enhance Indonesian economy

3. - The main policy challenge will be to speed up the
development of technology based SMEs, preferably
in the kind of technology that conforms to the current
global discourse on sustainable development that
embeds with three key domains: i) Environmental
Sustainability, ii) Social Sustainability, and iii)
Economic Sustainability. In that spirit, the main feature
of the development policies for SMEs consists of:
a) Improvement of access to technology,
b) Improvement of access to finance,
c) Improvement of access to market,
d) Technology diffusion and commercialization scenarios
through business incubation, and
e) Provision and creation of conducive environment to
supportnew business ventures, etc.

4. SSTTRRAATTEEGGIIEESS AANNDD
CCHHAALLLLEENNGGEESS
In order to pursue National Welfare, GOI supports its
SMEs in many ways. Indonesia’s policy and strategy are
geared up to drive SMEs empowerment. The SMEs’
empowerment programmes are done by empowering the
policy directions as follows:
1.Develop SMEs to support their significant
contributions towards economy growth, jobs creation, and
increasing competitiveness as well as to support their
contribution on increasing people’s income, especially
to low-income people;
2.Strengthen the institutions by applying good governance
principals;
3.Expand the bases and opportunities as well as grow
the senses of entrepreneurship to drive national
growth, to increase export, and to create job employment;

5. 4. Increase the collaboration of educated labour and skilled
labour by adopting technology application;
5. Develop SMEs to increasingly play its role in the process
of industrialization, transfer technology, and capacity
building;
6. Integrate business development in the context of regional
improvement, in line with the character of entrepreneur,
and business potential in each province;
7. Develop SMEs to increasingly play a role as products
(goods and services) provider to become more competitive
than importer’s products.

6. Those strategies are made up to speed up SMEs
capacity in line with Indonesian policy direction which
focuses on 5 priorities:
1.increase business climate for Cooperative and SMEs
2.increase access toward productive resources
3.develop product and market for Cooperatives and
SMEs,
4.increase labour competitiveness
5.increase Cooperatives as institution

7. Problems
Indonesia still face many problems in promoting SMEs
export products which include internal and external
problems.
1.Internally, obstacles that face by Indonesian SMEs
involve:
-low commitment to fulfill consumer orders (both domestic
and foreign customers);
-lack of management applied by SMEs, especially in
production, administration, and financial aspects;
-limitation of facilitation for SMEs in order to fulfill
orders; low quality of human resources;
-limitation of capital owned by SMEs;
-lack of information and communication to stakeholders; and
lack of capability in SMEs research and development

8. 2. Externally, Indonesia face several problems, such as:
-instability of supply and price of raw and support
materials;
-high requirements from buyers toward product quality,
social environment quality, work environment quality, price
competition, and eco-friendly aspects;
-lack of market access;
-lack of financial access which includes information, credit
skim, and high interest rate;
-also variation of halal standardization between Indonesia and
importing countries

9. Towards those challenges, attention has been
paid to support SMEs in many aspects. Encouraging
entrepreneurship on SMEs players is put high on the
agenda of GOI, for entrepreneurs are seen as the
catalyst of growth, combining capital, innovation and
skills. This agenda recognizes the importance of
entrepreneurship that stands out in the time of
innovative change, and fostering a conducive climate for
SMEs which is considered as fundamental aspect

10. The presumed initiative gives special consideration
to the increasingly important role of SMEs in economy.
Two prong objectives, i.e. to increase the number of
innovative start-ups and to improve the technological
capability of existing SMEs are targeted simultaneously.
Those initiatives attempt to address issues related to
technology diffusion, innovation, business environment and
regulatory framework, financing, taxation, human
resources, access to markets, electronic commerce, etc.

11. CCOONNCCLLUUSSIIOONN
in the context of rapid flows of information and
capital and increased global competition, it is argued that
strategic national and regional efforts to maintain
industrial competitiveness depend not only on
innovativeness but more than ever on the diffusion,
effective application, and further incremental
improvement of known technologies. More importantly,
the establishment of takers for each innovative product
had been becoming more pressing than ever.