Indonesia is home to over 62 million micro, small, and medium enterprises (MSEs), with microenterprises comprising 99% of this total. These enterprises contribute significantly to the economy, employing 97% of the workforce and accounting for 61% of the Gross Domestic Product (GDP). However, they face substantial challenges, including limited access to credit, difficulties in market expansion, low adoption of digital tools, and barriers to implementing sustainable business practices.
Mastercard Strive in Indonesia aims to empower Indonesian micro and small businesses to succeed in the digital economy. As part of this work, 60 Decibels ran a study on Indonesian micro and small enterprises, hearing from them directly to understand their business challenges and hopes for the future. This report aims to provide insights into the current landscape of Indonesian MSEs, highlighting key challenges, opportunities, and recommendations for fostering their growth and resilience.
The findings in this report are based on surveys conducted between October and December 2024, covering 827 micro and small enterprises. These enterprises represent various industries, including food and beverage, fashion, and crafts. The data captures their financial health, support service utilization, digital adoption, market access, sustainability practices, and future outlook. The report also includes spotlights on the lived experiences of entrepreneurs accessing external credit and business support services. It attempts to understand how Indonesian enterprises are looking at market expansion, and the implementation of sustainability practices.
While 40% of MSEs reported revenue growth over the past year, an equal proportion experienced declines, highlighting a varied business performance. Small businesses outperform micro businesses in revenue growth, with nearly 60% of small enterprises reporting revenue increases, compared to only 40% of micro businesses.
Around half the surveyed businesses report a lack of registration or certification, which likely limits their ability to access market opportunities and financial support. The informality rate is significantly higher among micro businesses (55%) compared to small businesses (26%).
Nearly 50% of entrepreneurs aspire to expand, but financial constraints (56%) and limited market knowledge (22%) hinder these goals. Competition from larger firms is a key barrier for 70% of businesses.
While 81% of businesses that accessed support found it useful, over 60% of MSEs report not having used any business support services in the past 12 months.
Approximately 40% of MSEs seek digital marketing and business mentoring support, while a fifth seek financial management training.
Businesses that accessed loans were more likely to have also engaged with business support services, suggesting that those seeking external finance are more inclined to explore additional growth resources.
While 68% of businesses prefer government-related entities as their primary support providers, 45% rely on family and community networks, indicating the importance of localized interventions.
Women-led enterprises are more likely to operate hybrid business models combining physical stores and online platforms (29% vs 23% of men-led MSEs), showcasing their adaptability to digital transformation.
While 60% of MSEs understand sustainable practices, over 20% have not implemented any, citing cost and availability of eco-friendly materials as key barriers.
Over 50% MSEs report expecting their business to grow moderately in the coming year. Of these, over 40% report expecting increases in revenue and store expansion.
Respondents included owners, senior executives, directors, and managers. The participating businesses represent a diverse range of locations, sizes, sectors, years of operation, and owner demographics, including gender.18
Keen to dig deeper? Check out last year’s report below.
