SMEs in Indonesia set to play bigger role in business supply chain

Indonesia’s Industry Ministry is running a national programme from July 1-15 that is designed to reduce the country’s long-term reliance on imports.

Gati Wibawaningsih, the Industry Ministry’s director-general of small and medium enterprises, said, “The message this programme is trying to convey is that local industries can produce what Indonesians need with quality products.

SMEs participating in the programme will receive assistance with brand registration, packaging guidelines within Indonesia’s National Industrial Standards (SNI), and halal certification to meet the product standards of major producers, according to the Industry Ministry.

Through the programme, Indonesia will look to increase the role of small businesses in supplying raw materials for big businesses, and to reduce the latter’s reliance on imported raw materials and intermediate goods.

Imports of raw materials and intermediate goods amounted to US125.9 billion in 2019, a 11% decline from 2018. The Industry Ministry has targeted to further reduce this to $82 billion by 2022.

With small businesses contributing about 61% to Indonesia’s economy, the programme will also help to provide more prominence for these businesses’ products – including packaged food and beverages, fashion, healthcare products and sports equipment – on e-commerce platforms.

Earlier this year, Indonesia’s Finance Minister, Sri Mulyani Indrawati, had projected a 2.3% growth for South-East Asia’s largest economy this year, although she warned of a worse-case scenario of a 0.4% contraction as countries in the region continue to feel the economic fallout from the COVID-19 pandemic.