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ess than 1 percent. That is the contribution of Indonesian micro, small and medium enterprises (MSMEs) to the global supply chain. And now the government wants to change that by boosting financing for MSMEs.

According to the Indonesia Chamber of Commerce and Industry (Kadin), the “small fish” currently only contribute 0.8 percent to the global supply chain and 15.8 percent to national export values.

The figure is lower than MSMEs in Thailand, the Philippines, Germany and Japan, where they contribute 29.5 percent, 20 percent, 55.9 percent and 53.8 percent, respectively, to national exports.

To change this lackluster situation, the Trade Ministry signed on Wednesday a memorandum of understanding (MoU) with state-owned export financing agency (LPEI), or Indonesia Eximbank, to boost financing for export-oriented MSMEs that are naturally manpower intensive.

“The point is that we have to, first and foremost, beef up their abilities, quality, cost efficiency and continuity [of production]. We need to do this with other governmental institutions,” Trade Minister Enggartiasto Lukita said after the signing ceremony, declining to elaborate on any specific target for MSME contributions to exports.

Indonesian MSMEs export various products, mostly handicraft, processed foodstuffs, Muslim fashionwear, woven clothing and textiles and home decoration products. Financing is the biggest obstacle for millions of other MSMEs to enter the global supply chain, besides other issues such as a lack of production capacity and market information.

Around 60 percent to 70 percent of Indonesia’s 56.4 million MSMEs did not have access to financing in 2014, Bank Indonesia (BI) data shows. Thus, BI has mandated that lenders increase their financing portions for such enterprises from 5 percent in 2015 to 10 percent, 15 percent and 20 percent in 2016, 2017 and 2018, respectively, as stipulated in BI Regulation No. 17/12/PBI/2015.

Arlinda, the ministry’s national export development director general, said that in order to solve these major obstacles, the ministry had established the Center for Export and Import Development (PPEI), which offers online and offline consultation and training. The organization will also assist new exporters register their copyrights.

Bankers and businesspeople, meanwhile, are asking the government to redefine MSMEs to make it easier for them to disburse cheap loans to MSMEs.

“Today, MSMEs are defined as businesses with an annual revenue of up to Rp 50 billion [US$3.7 million] but in practice, many medium-sized exporters have revenues of up to Rp 500 billion per year so the government needs to redefine it,” Eximbank managing director Indra W. Supriadi told The Jakarta Post.

In the first half, LPEI disbursed Rp 11.12 trillion, or just 11.5 percent, of its total export financing, which stood at Rp 96.82 trillion, to small and medium enterprises (SMEs). In 2016, it disbursed 11.8 percent of its total financing to SMEs.

In other countries like the Philippines and Thailand, Indra added, MSMEs include bigger businesses, which makes it was easier for lenders to channel loans with low interest, something that Indonesian lenders are hardly able to do with local MSMEs as they are currently defined. If a business is defined as one with low revenues, the business is usually loaned money at a higher rate of interest because of a presumed higher risk profile.

In terms of numbers, Indonesia’s 56.4 million MSMEs account for 99.9 percent of all business firms in Indonesia and contribute to 60 percent of the country’s gross domestic product.