MSME Development

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MSME Development

As part of its macroprudential policy mandate, particularly in terms of stimulating the intermediation function and increasing access to finance, Bank Indonesia also contributes to MSME development, with a focus on access to finance for micro, small and medium enterprises (MSMEs).


MSMEs provide a significant contribution to Indonesia's national economy through gross domestic product formation and labour absorption.  Furthermore, MSMEs are also economically resilient, thereby supporting financial system and economic stability.  Nevertheless, MSME development faces various constraints, particularly in terms of access to finance.


The financing constraints experienced by MSMEs are caused in part by a lack of financial reporting as the main tool used by financial institutions to evaluate creditworthiness.  In response, Bank Indonesia, as the central bank, strives to provide its best contribution through MSME development policies that increase access to finance.  Furthermore, MSME development efforts by Bank Indonesia aim build the capacity and managerial capabilities of human resources in the MSME environment, while promoting innovation.


Bank Indonesia implements MSME development policy as an integral part of its strategic program as follows:

  1. Strengthening the effectiveness of monetary policy and the Bank Indonesia policy mix to achieve rupiah stability.
  2. Strengthening synergy between the Bank Indonesia policy mix, fiscal policy and structural reforms in order to manage the current account deficit and catalyse sustainable economic growth.
  3. Strengthening macroprudential policy and surveillance to maintain financial system stability.
  4. Strengthening Bank Indonesia policy and synergy with government and OJK policies in order to develop the digital economy and finance.
  5. Developing BI policy in synergy with other parties to support development of the sharia economy and finance.
  6. Strengthening international cooperation in the interest of Bank Indonesia and the Republic of Indonesia. Bank Indonesia has prepared the MSME Roadmap, encompassing four salient stages, namely potential MSMEs, success/link-to-market and finance MSMEs, go digital MSMEs and go export MSMEs.


Meanwhile, the scope of MSME product development includes volatile food, local economic development and Bank Indonesia Entrepreneurs (WUBI). In terms of increasing access, development focuses on increasing access to finance, markets, knowledge, networks, innovation and digitalisation. Infrastructure and institutional support also impact the formation of an optimal MSME ecosystem through regulatory/policy support, financial inclusion, consumer protection, education/literacy, business models, monitoring and evaluation, as well as strengthening the institutional arrangements and information systems. In addition, stronger corporatisation, more accurate granular information and data, optimal and intensive coordination between government ministries/agencies, greater use of innovation and technology and the creation of a supporting ecosystem are also key determinants of successful MSME development in Indonesia, which are constantly pursued by Bank Indonesia. ​

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