The Organization for Economic Cooperation and Development (OECD) published a study examining the role SMEs play in economic growth and social inclusion in Indonesia.
Data from the Ministry of Co-operatives and SMEs revealed, Indonesian SMEs account for 97 percent of domestic employment and 56 percent of total business investment.
The report analyzes the policy measures in place for SMEs by the government in Indonesia and emphasizes paying stronger attention to future measures that foster “firm-level productivity” through increased innovation activity in SMEs.
Key policy recommendations include:
- Improve data collection on SMEs by adopting and using more frequently an employment-based definition to allow better international comparison of the structure and performance of the SME sector between Indonesia and OECD countries.
- Develop and implement an SME strategy that outlines the main SME policy objectives, targets and support measures and that defines roles and responsibilities of implementing ministries and agencies.
- Develop stronger FDI-SME linkages through tax incentives for multinational companies that invest in the upgrading of local suppliers through training, mentoring or staff secondment.
