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The recent discussion under the Strive Learning Network, part of the Mastercard Strive Program, brought together key stakeholders to explore strategies for improving market access for MSMEs in Indonesia. The discussion, a collaboration between Mastercard Center for Inclusive Growth, the Ministry of National Development and Planning, Mercy Corps Indonesia, and the Indonesia Social Impact Centre by AVPN, underscored the crucial role of aggregator companies and cooperatives in developing a more supportive ecosystem to unlock market access for MSMEs.
MSMEs face significant challenges in accessing markets due to a combination of factors that hinder their growth and competitiveness. One major challenge is finding a market amid the overwhelming competition in e-commerce, where platforms are often dominated by larger players who can afford higher commissions and fees, making it difficult for MSEs to sustain profitability. Additionally, MSEs often lack the knowledge and skills necessary for effective product and brand development, which further exacerbates their struggle to stand out in a crowded marketplace. Keeping up with the ever-evolving requirements and standards in the industry adds another layer of complexity, making it even more challenging for MSEs to secure and maintain a stable market presence.
To address this issue, aggregators are pivotal in ensuring the success and sustainability of MSME products in both domestic and international markets. The discussion highlighted the need for more in-depth engagement with aggregators to map out the specialisation of products and markets, whether targeting domestic or export markets. Given the diverse categories, types, and even variants of MSME products, each requires unique expertise and market mastery. For aggregators to ensure consistent quality, capacity, and continuity from their MSME suppliers, a tailored approach is essential.
To initiate this engagement, it was suggested that companies or cooperatives acting as aggregators, recommended by members of the Strive Learning Network, be invited to discuss and establish a Code of Ethics for their operations. This code would ensure ethical operations, adherence to Fair Trade principles, and fair margin distribution throughout the supply chain—from farmers to end retailers. Once established, this Code of Ethics could evolve into a certification policy, distinguishing ethical aggregators from those operating exploitatively.
As Indonesia progresses toward its “Golden Indonesia” vision, where increasing per capita income is a key indicator, the role of aggregators focusing on national and international market opportunities must be developed in parallel. For international markets, the Indonesian diaspora and migrant workers present untapped potential that warrants more focused attention. On the domestic front, modern retail networks have begun implementing affirmative models to facilitate MSME products, offering lower listing fees, dedicated display spaces, and in some cases, outright purchase rather than consignment.
E-commerce platforms also play a critical role in promoting MSME products. The discussion emphasised the need for these platforms to enhance their MSME promotion programs, possibly by introducing a “local product” label for sellers who provide verified data, granting them specific privileges. This preferential treatment for local products could significantly boost their visibility and sales.
The scope of an aggregator’s role extends beyond market access to include mentorship (quality control and education) and facilitation of access to capital. Should the Code of Ethics and aggregator certification become policy, further steps could include evaluating government and state-owned enterprise procurement channels to ensure they facilitate market access for small and medium-sized enterprises. Additionally, addressing logistical challenges that inflate costs and reduce product competitiveness is crucial.
As the recognition and development of aggregator networks in Indonesia mature, parallel efforts should focus on developing Supply Chain Financing as an alternative to traditional bank working capital loans. Aggregators could facilitate this financing, offering MSMEs greater financial flexibility.
Finally, optimising market access requires continuous collaboration and information exchange between the private, social, and public sectors. Among the government-led initiatives to expand market access are the National Export Enhancement Task Force, coordinated by the Coordinating Ministry for Economic Affairs, targeting trade cooperation with 12 priority export countries, and ASEANACCESS.COM, a business matching portal managed by the Ministry of Cooperatives and SMEs of Indonesia. These initiatives, alongside ongoing international trade partnerships, are vital to broadening MSMEs’ market reach.
This discussion emphasised the need for a coordinated, multi-stakeholder approach to open up market access for Indonesian MSMEs, leveraging the strengths of both aggregators and government initiatives to create sustainable growth opportunities.
