The Old Narrative
MSMEs have long been acknowledged as key contributors to Indonesia’s economy. They contribute around 60% to the Gross Domestic Product and employ nearly 97% of the total workforce. The government has shown its support through initiatives like KUR (Kredit Usaha Rakyat), expanded market access, and export promotion for local products. The current administration even established a dedicated Ministry for MSMEs.
However, MSMEs are still rarely featured in national economic development agendas. They continue to be perceived as a sector in need of aid, rather than as critical drivers of Indonesia’s economic engine.
What We Learned
Cothink’s recent research on MSMEs reveals that they hold enormous potential to shape the country’s economic agenda. While they may require support—especially in early stages—MSMEs can grow to become vital components in broader industry ecosystems.
Here’s what we found:
- Production: With consistent mentorship and support in quality standardization, MSMEs can become reliable partners to large local apparel companies.
- Marketing: MSMEs can play a crucial role in market expansion. One self-care brand experienced exponential growth across Indonesia by distributing products through MSME networks.
- Sustainable Growth: A collaboration between a Peer-to-Peer Lending Platform and a rising fashion brand demonstrated how tailored financing and trust-based models can unlock exponential growth and ripple effects throughout the ecosystem.
Most importantly, MSMEs demonstrate two essential traits that are often lacking in larger corporations: adaptability and resilience. These strengths enable innovation—whether through new products, business models, or creative marketing strategies—and are particularly vital in today’s uncertain economic climate.
The Path Forward
By truly investing in and empowering MSMEs, larger companies in Indonesia can tap into their potential and contribute to long-term national growth.
1. Commit to Collaboration
- Build relationships that go beyond transactions—offer support in quality standards, technology sharing, resources, and market access.
- Design tailored solutions that address unique MSME challenges, such as financing without traditional collateral.
2. Drive Innovation Through MSMEs
- Fund and co-create products with MSMEs, allowing them to act as innovation hubs.
- Leverage their agility and closeness to consumers to develop solutions that truly resonate in local markets.
3. Support Policy Advocacy
- Partner with government to push for policies that prioritize MSME partnerships in supply chains.
- Advocate for inclusive financing frameworks that focus on practical, purpose-driven assessments.
Why This Matters
- Our research highlights MSMEs not just as support actors, but as strategic partners capable of driving industries through challenging times and building economic resilience.
- Investing in MSMEs isn’t just good corporate citizenship—it’s a strategic imperative. Long-term, meaningful collaboration will not only secure growth for big companies but also lead Indonesia toward a more inclusive, adaptive, and resilient economy.
