Teten Masduki: Indonesian MSME Exports Are Still Low

Coordinating Minister for SMEs Teten Masduki (Photo: dock. VOI)

JAKARTA - Minister of Cooperatives and SMEs Teten Masduki said that the export of Indonesian MSME products was still low. This is due to the low productivity of MSMEs and has not been connected to large industries.

Teten said that the business structure in Indonesia is dominated by MSMEs, with a large number of less than 1 percent of businesses.

This proportion, said Teten, is relatively the same as other countries. However, what distinguishes Indonesian MSMEs from other countries is the level of productivity.

In other countries, said Teten, MSMEs are generally more productive and connected to large industrial supply chains.

"In our country, most MSME players are micro and informal businesses. They are more of a subsistile economy, not part of a large business or industrial supply chain," explained Teten quoting Antara.

The subsistek economy is an economic system, in which individuals or groups produce goods and services to meet their own needs of life, not run a business.

Based on data from the Ministry of Cooperatives in 2021, the business structure in Indonesia is dominated by micro-enterprises with a percentage of 99.62 percent, small businesses 0.30 percent, medium-sized businesses 0.06 percent, and large businesses 0.01 percent.

The contribution of MSMEs to gross domestic product (GDP) reached 60.5 percent and was able to absorb up to 97 percent of the total national workforce. Meanwhile, the contribution of MSMEs to non-oil and gas exports is still relatively low, which is only 15.7 percent.

Teten explained that the financing aspect is important for MSMEs. However, 47 percent of MSME financing needs have not been served by financial service institutions, based on data from the Financial Services Authority (OJK) in 2021.

"Our biggest problem is the difficulty of managing MSMEs, including providing access to financing," said Teten.

"Our MSMEs are not connected to industry, supply chains, there is no market certainty, no technology transfer," he continued.

Teten conveyed the need for affirmation and seriousness of the government and all policy makers to provide ease of financing for MSMEs in the productive sector, especially agriculture, fisheries, livestock, and plantations.