Cover: Reforming Policies for Small and Medium-Sized Enterprises in Indonesia

Reforming Policies for Small and Medium-Sized Enterprises in Indonesia

Published Jul 20, 2015

by Nicholas E. Burger, Charina Chazali, Arya Gaduh, Alexander D. Rothenberg, Indrasari Tjandraningsih, Sarah Weilant

Small and medium-sized enterprises (SMEs) are critical for emerging economies like Indonesia but simultaneously challenging for policymakers looking to support their growth. SMEs — including micro firms — are responsible for more than 97 percent of total employment in Indonesia and represent 99 percent of all enterprises. The Indonesian government has sought to assist SMEs through programs, such as subsidised credit, one-stop shops to lower business registration costs, and government-sponsored trade fairs. However, there is little evidence on how effective these programs are or on ways to improve government policies aimed at helping SMEs. For this analysis, the authors conducted structured interviews with 192 firms across five provinces in Indonesia to investigate the constraints that firms face and how existing programs do — or do not — help reduce these constraints. Reforming Policies for Small and Medium-Sized Enterprises in Indonesia includes policy recommendations targeted at the Indonesian government and other stakeholders, focusing on the importance of credit and on the need to remove information barriers.

Please note: This report is not available on the RAND website but can be downloaded from the National Team for the Acceleration of Poverty Reduction (TNP2K) website.

The research described in this report was conducted by RAND Labor and Population.

This report is part of the RAND research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit www.rand.org/about/research-integrity.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.