COUNTRY FOCUS: Current Development of MSMEs in Indonesia

Tulus T.H. Tambunan 
Center for Industry, SME and Business Competition Studies (USAKTI)
Jakarta, Indonesia
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Introduction

Indonesia is the world’s largest archipelago, with more than 17,500 islands scattering between 6 degrees north latitude to 11 degrees south latitude and from 95 degrees to 141 degrees east longitude. Indonesia bridges two continents, i.e. Asia and Australia/Oceania. This strategic position profoundly influences the country’s culture, social and political life, and the economy. Spanning the length of 3,977 miles from the Indian Ocean to the Pacific Ocean, if its territorial waters were included, the total area of Indonesia would cover 1.9 million square miles. The five major islands of Indonesia are: Sumatra with an area of 473,606 square km, Java with an area of 132,107 square km, Kalimantan with 539,460 square km, Sulawesi with 189,216 square km, and Papua covering an area of 421,981 square km (MoI, 2015).
Historically, micro, small and medium enterprises (MSME) have always been the main players in domestic economic activities in Indonesia. As in other countries, MSMEs in Indonesia play three key roles or they have three most important contributions, namely (i) employment creation; (ii) income generation (either as primary or secondary income sources); and (iii) formation or growth of gross domestic product (GDP).

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