Financing small businesses in Indonesia: challenges and opportunities

This research paper seeks to assess the demand and challenges faced by SMEs to obtain credit in Indonesia. An attempt was made to understand issues affecting SMEs engaged in different sectors of the economy with a focus on local manufacturing.

The exercise is based on a synthesis of existing literature and interviews with relevant stakeholders including regulators and selected institutions. The latest figures suggest that there are 816,000 SMEs in Indonesia, employing 7.9 million people and contributing 27% to GDP. Out of the total bank lending of IDR 4,136 trillion, SMEs represent approximately 16%. This figure has remained relatively consistent in recent years.