By: Alex Pratama *)
Strengthening micro, small, and medium enterprises (MSMEs) continues to be a key pillar of Indonesia’s economic development strategy. The government consistently positions MSMEs not merely as a pillar of the people’s economy, but as an engine of inclusive and sustainable national growth. In this context, Indonesia and Canada’s collaboration focused on strengthening MSMEs, particularly those led by women, should be viewed as a strategic step in line with the government’s agenda to broaden the growth base, increase competitiveness, and deepen global economic integration.
MSMEs have long been the backbone of the Indonesian economy, both in job creation and in maintaining economic resilience amidst various shocks. However, structural challenges persist, particularly regarding access to financing, business capacity, and connectivity to broader markets. Women, as key actors in this sector, often face multiple barriers, ranging from limited capital to limited access to business networks. Awareness of this issue is what brings together the interests of Indonesia and Canada in building a mutually beneficial partnership.
Canadian Ambassador to Indonesia, Jess Dutton, has repeatedly emphasized that Canada’s support is aimed at strengthening women’s roles in the Indonesian economy by improving access to financing and business development. This perspective aligns with the Indonesian government’s policy direction, which promotes financial inclusion and women’s economic empowerment as an integral part of national development. The Impact Investment Readiness in Indonesia (IIRI) program, initiated by Global Affairs Canada and the Impact Investment Exchange (IIX), serves as a concrete example of how international collaboration can effectively address domestic needs.
Canada’s Secretary of State for International Development, Randeep Sarai, views Indonesia as one of the world’s fastest-growing economies and a major force in Southeast Asia. Within this framework, women are seen as being at the heart of economic growth, given that millions of MSMEs in Indonesia are run and driven by them. Supporting women-led MSMEs is not only a matter of equality but also a sound economic strategy to expand productivity, strengthen local communities, and promote more equitable growth.
The approach taken through IIRI demonstrates a comprehensive understanding of the challenges faced by MSMEs. Access to loans, equity, digital financial services, and business networks are positioned as a unified ecosystem. When these barriers are reduced, MSMEs have the space to scale up production, adopt technology, enter new markets, and create decent jobs. The ripple effect of this process directly supports the government’s agenda of strengthening the national supply chain and increasing economic competitiveness.
The regional equity dimension is also a significant added value of this collaboration. IIX Founder and CEO Durreen Shahnaz highlighted that investment flows have been concentrated in certain regions, such as Java and Bali, while many other regions lag behind in terms of access to funding. By bringing capital and mentoring to regions like Kalimantan, Nusa Tenggara, and Maluku, the IIRI program aligns with the government’s vision to accelerate development outside traditional economic centers. The transformation of MSMEs in these regions will strengthen national economic cohesion while reducing regional disparities.
Canada’s commitment extends beyond just one program. The Canadian government has allocated more than $22 million to five new initiatives in Indonesia, encompassing strengthening MSMEs, trade promotion, climate resilience, and maternal and infant health. Two key programs, Climate Resilient Agri-Food Trade Promotion Support (CRAFTS) and Economic Linkages for Enhanced Value, Trade, and Exports (ELEVaTE), specifically support women-owned MSMEs to better prepare them for export markets and become more resilient to the impacts of climate change. This focus aligns with the Indonesian government’s priorities of promoting export diversification and green economic development.
This cooperation is also inextricably linked to the implementation of the Indonesia–Canada Comprehensive Economic Partnership Agreement (ICA-CEPA). Canada’s technical assistance and capacity-building support demonstrate that free trade agreements are not viewed solely as tariff instruments, but as tools for structural transformation that require the readiness of domestic businesses, particularly MSMEs. In this context, the government’s policy of linking MSMEs to the international trade agenda has received concrete support from strategic partners.
The experiences of entrepreneurs like Lastiana Yuliandari of Aliet Green concretely illustrate the challenges faced by women-owned MSMEs in accessing financing. The social enterprise she built with thousands of female coconut sugar farmers demonstrates the enormous potential of community-based MSMEs, as well as the need for funding support and capacity building. The interest in the Canadian-backed program demonstrates that this collaborative policy addresses real needs on the ground, not just elite discourse.
The Indonesia-Canada partnership in strengthening MSMEs reflects constructive policy synergy. The Indonesian government is gaining international support to accelerate its agenda of economic inclusion, women’s empowerment, and equitable development, while Canada is strengthening its role as a development partner oriented towards shared prosperity. With consistent and sustainable management, this collaboration has the potential to significantly contribute to Indonesia’s national growth, making it stronger, more inclusive, and more competitive amidst the dynamics of the global economy.
*) Observer of Public Policy and International Economics
