TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Lack of funding access hampers SMEs’ contribution to Indonesia’s exports
Despite being large in number, small and medium enterprises (SMEs) contribute only a tiny fraction of the country’s total exports.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
Small and medium enterprises participate in an exposition at the Jakarta Convention Center. The Indonesian Export Financing Agency is seeking to issue debt paper to partially finance the SMEs. (Kompas/Heru Sri Kumoro)
D
espite being large in number, small and medium enterprises (SMEs) contribute only a tiny fraction of the country’s total exports as the businesses struggle with various issues, from financing to access to global markets.
Indonesia's approximately 62.9 million SMEs play a huge role in the country’s economy as they accounted for 99.9 percent of total businesses in 2017.
However, they contributed only 14.17 percent, equivalent to Rp 298.2 trillion (US$20.8 billion) of national non-oil and gas exports that totaled Rp 2.104 quadrillion in 2017. This share was slightly down from the 14.38 percent recorded in the previous year, according to the SMEs Ministry.
The lack of access to financing played a big role in the low contribution and productivity of SMEs in national exports, said National Industry and Economic Committee (KEIN) deputy head Arief Budimanta.
“The access to loans from conventional banks is still not friendly enough for export-oriented SMEs,” he said. “In my opinion, conventional banks, especially quartile IV and foreign private banks, should provide special loans for export-oriented SMEs as the loan facility from Eximbank is not enough," he said.
Central bank data shows that of a total Rp 5.3 quadrillion (US$372.9 billion) in loans disbursed by conventional banks in 2018, less than 20 percent, about Rp 1 quadrillion, was channeled to SMEs.
Meanwhile, 2018 data from Statistics Indonesia showed that 93.5 percent of micro and small enterprises funded their businesses using money from their own pockets. Only 6.7 percent of them had bank loans to finance more than half of their needs.
