Jakarta ( WNAM MONITORING ): Indonesian small businesses are currently experiencing exceptional momentum for transformation. Amid global uncertainties and geopolitical pressures, this sector is demonstrating a strong spirit for expansion and significant technological adoption.
Based on an annual survey by CPA Australia, one of the world’s biggest accounting bodies, 2024 was the best year in the last five years for Indonesian small businesses, which clocked a growth of 83 percent, higher than the 80-percent growth recorded the previous year.
There is cause for optimism in 2025, with a projected growth of 87 percent, which places Indonesia among the top three countries with the highest growth prospects in the Asia-Pacific region.
This is not just statistics, but a reflection of the power of entrepreneurship in driving the domestic economy.
Chair of the CPA Australia advisory committee in Indonesia, Dr. Hendro Lukman, said that this optimism has been influenced by a strong focus on technology and a stable economy.
With 85 percent of them aged under 50, small business owners not only represent a new, tech-savvy generation but also a paradigm shift in business, from merely surviving to pushing innovation and expansion.
This is evident from the fact that 37 percent of business owners are planning to introduce new products, services, or business models this year.
They are not simply adopting technology as a tool, but making it the backbone of their business model–from using digital payment systems to adopting online marketing strategies.
The digital transformation has also shown concrete results. As many as 68 percent of small businesses that invested in technology have reported an increase in profits.
More than 74 percent of their sales were carried out with digital payments.
Before the pandemic, the figure stood at 54 percent. This shows that digitalization is not only a complement but a primary need.
In addition, Indonesia was one of the countries with the most progressive technology adoption among the 11 countries surveyed by CPA Australia, competing with innovation centers such as China and India.
Cybersecurity
Still, this progress has not come without risk. Their increasing reliance on technology has made Indonesian small businesses more vulnerable to cyberattacks.
As many as 50 percent of small businesses reported losses due to cyberattacks in 2024, surpassing the regional average of 40 percent.
What is even more concerning is that just 48 percent of small businesses have reviewed their digital security in the past six months.
Amid the surge in digitalization, data protection and mitigation measures are vital.
The absence of adequate cyber resilience will put not only internal systems at risk but also endanger customer trust, which is vital for small businesses to survive.
At the same time, financing dynamics show a strong push for expansion. Three out of four small businesses sought external financing in 2024, and 59 percent of them did so for business growth, rather than maintaining operations.
While challenges in accessing financing remain, with more than a third of businesses reporting obstacles in obtaining capital, the dominance of banks as the main providers of financing continues to indicate the national financial system’s stability.
However, to ensure financing is truly inclusive, there is a need to improve financial literacy.
Many businesses do not yet have the understanding to prepare a solid business proposal or utilize alternative financing schemes such as venture capital and digital lending platforms.
The Financial Services Authority (OJK) has devised a regulation to streamline financing access for micro, small, and medium enterprises (MSMEs), which is seen as a positive step to expand the growth of the sector.
CPA Australia has supported this initiative by launching the MSME Management Guide to improve the financial literacy of small business players.
The combination of proactive regulations and capacity-building efforts is expected to create an ecosystem that allows small businesses to not only survive but also expand continuously.
Trade challenges
Given the current global dynamics, external threats cannot be ignored. The 32-percent import tariff imposed by the United States (US) on Indonesia has created new challenges for small businesses that are pursuing exports, although the tariff has been postponed for several months.
However, rather than being a barrier, the tariff can be a catalyst for market diversification.
Visionary businesses are seeing this policy as a call to explore non-US markets, such as the Middle East, South Asia, and Africa, which are starting to show promise.
With an approach that is strategic and based on market research, the barrier can be transformed into an opportunity.
Amid the challenges and opportunities, one thing that stands out is the unwavering spirit of Indonesian small business players.
They are not just pillars of the country’s economy, but a symbol of the revival of the people-based economy.
They are proof that when given the opportunity to grow and access technology, financing, and adequate digital protection, small businesses can become the main drivers of an inclusive and resilient economy.
MSME Minister Maman Abdurahman has even dubbed MSME players as a symbol of optimism, who are playing a role in preserving hope amid projections of sluggish economic growth by several parties.
According to the minister, MSME players have demonstrated their resilience. Thus, the government’s task is to secure and support them for the sake of equitable economic growth.
The future of Indonesia’s economy will be largely determined by the ability of small businesses to maintain their momentum, continuously innovate, and carry out networking to expand their markets.
