By: Mastur Jaelani *)
Micro, Small, and Medium Enterprises (MSMEs) have long been a cornerstone of Indonesia’s economy. With a significant contribution to job creation and poverty reduction, this sector plays a strategic role in national economic development. However, the various challenges faced by MSMEs demand innovative solutions and support from various sectors, including academia. In this context, cross-sector collaboration involving higher education institutions is a strategic step that needs to be strengthened to ensure the sustainability and competitiveness of MSMEs both nationally and globally.
One concrete action taken by academics is the organization of a national seminar on “The Role of the Supreme Audit Agency (BPK) in Improving Financial Management Transparency and Efforts to Encourage the Sustainability of MSMEs,” held by Universitas Prof. Dr. Moestopo (Beragama). This seminar provided an important discussion space to address the various challenges and opportunities faced by MSMEs as the main drivers of the national economy. Dr. FX. Sugiyanto, the Rector of Universitas Moestopo, highlighted that one of the main challenges faced by MSMEs in Indonesia is the separation between business capital and household needs. Without proper management, it is difficult for MSMEs to grow optimally and contribute fully to the economy.
During the seminar, the Director of Postgraduate Studies at Universitas Moestopo, Prof. Dr. Ir. Triyuni Soemartono, emphasized the importance of MSMEs in the economy, especially in developing countries like Indonesia. According to data from the World Bank, MSMEs account for 90% of all global businesses and absorb more than 50% of the workforce. With projections that the world will need 600 million new jobs by 2030, MSMEs are at the forefront of creating these opportunities. In Indonesia, the growth of MSMEs from 2015 to 2020 showed a significant increase, from 59.26 million to 64.2 million units. However, the majority of these MSMEs (99.62%) are still micro-enterprises with annual revenues below IDR 2 billion. Another major challenge is the financing gap that hinders the sustainability and growth potential of MSMEs.
Data from the Financial Services Authority (OJK) shows a slowdown in the growth of MSME credit. By September 2024, bank credit growth for MSMEs had only reached 5.04% year-on-year, much lower than the 8.34% growth in the previous year. Additionally, the Non-Performing Loan (NPL) rate for MSMEs increased from 3.88% in September 2023 to 4% in 2024. The high credit risk has made banks more selective in providing financing. This condition demands new policies that are more focused on supporting MSMEs. Indra Kumbara Wedha, Head of Sub-Auditorate II.C.2, National Audit Agency (BPK), recommended revising the interest or margin subsidy policies for non-KUR MSMEs to be more effective, along with better data validation for micro-enterprises.
Digitalization has also been proposed by academics as a strategic solution to help MSMEs upgrade. Darto, a lecturer at Universitas Muhammadiyah Jakarta, discussed the importance of leveraging technology for market access and operational efficiency. Digitalization not only allows MSMEs to reach broader markets but also helps improve competitiveness through business process efficiency. Moreover, the development of human resources through continuous training and the application of “factory sharing” based on the value chain is an important step to enhance MSME competitiveness. More accessible subsidized financing is also needed to support the growth of this sector.
Meanwhile, Universitas Indonesia (UI) is expanding its studies on finance and MSMEs through collaboration with the Jameel Poverty Action Lab (J-PAL) Southeast Asia. J-PAL, based at MIT, is a global network of professors who conduct randomized evaluations to answer important questions in the fight against poverty. In Indonesia, J-PAL SEA has carried out over 20 randomized evaluations covering sectors such as finance, social protection, education, and MSMEs. This collaboration has resulted in scientific evidence that can be used to develop data-driven policies to address the various challenges faced by MSMEs. Prof. Ir. Mahmud Sudibandriyo, Vice Rector for Academic and Student Affairs at UI, emphasized that ethically-based research is crucial to ensuring relevant and beneficial results for the broader community.
To maximize the role of academics in MSME growth, the government, through the Ministry of MSMEs, is partnering with higher education institutions and the private sector to recruit young entrepreneurial talent through the establishment of Campus-Owned Business Entities (BUMK). This initiative is expected to produce young entrepreneurs capable of competing in the global market. The Joint Production House (RPB) program is also a strategic government step to support MSMEs. With 16 RPB locations spread across Indonesia, this program aims to increase MSME income while creating jobs in the regions. Support for digitalization is also being actively promoted as a solution to address the challenges faced by MSMEs in the modern era.
Support from the academic sector and educational institutions for MSMEs aligns with efforts to create an inclusive and sustainable economy. As the engine of economic growth, MSMEs require comprehensive assistance, ranging from financial education, collaboration with financial institutions, to the adoption of simple technologies.
The success of Indonesian MSMEs is not only determined by their internal capacity but also by the supporting ecosystem involving various parties. Cross-sector collaboration involving the government, academics, and industry players is a strategic step that needs to be continuously enhanced. With transparent governance, the right policy support, and the use of technology, MSMEs have great potential to become the main pillar of the national economy, competitive at a global level. Support from academics and educational institutions will continue to be a key element in realizing this grand vision, ensuring that MSMEs can optimally contribute to driving inclusive and sustainable economic development.
*) Researcher at Cahaya Harapan Bangsa Institute
