Micro and small enterprises (MSEs) are the beating heart of Indonesia’s economy. With over 62 million MSEs employing 97% of the workforce and contributing 61% of GDP, their vitality determines the trajectory of inclusive growth. Yet, the resilience of these enterprises is increasingly tested by economic uncertainty, climate disruption, and the rapid pace of digitalisation. How can we shift from survival to sustainability?
That question was at the core of the recent AVPN-hosted event featuring Mastercard Center for Inclusive Growth, GIZ, Amartha, and Alner. The conversation revolved around the latest “Striving to Thrive: The State of Indonesian Micro and Small Enterprises 2024/25” report by 60 Decibels, in collaboration with Mastercard Strive in Indonesia, Mercy Corps Indonesia, and Bappenas. The findings of this nationally representative study, based on over 800 MSE interviews, offer both a diagnostic and a roadmap for action.
What We Heard from the Field
The report uncovered 10 key insights that reflect the aspirations, struggles, and readiness of Indonesian MSEs to evolve:
- Mixed performance with uneven gains: 40% of MSEs saw revenue growth in the past year, but an equal share experienced declines—revealing a sector caught between progress and precarity.
- Informality persists: Half of MSEs remain unregistered, with micro-enterprises and newer businesses less likely to formalise, limiting their access to finance, government programs, and broader markets.
- High ambition, but structural barriers: Nearly 50% of entrepreneurs aim to expand, yet face financial constraints (56%), limited market knowledge (22%), and competition from larger players (70%).
- Support works—but access is low: 81% of those who accessed business support (like digital marketing or financial training) found it useful, yet over 60% didn’t access any services in the past year.
- Digital and financial capability is in demand: 40% of MSEs seek digital marketing and business mentoring; 20% want financial management support—underscoring readiness for upskilling.
- Credit is a pain point: Fewer than 30% of MSEs accessed loans last year. Women entrepreneurs especially face high hurdles due to collateral gaps and perceived ineligibility.
- Community and government are trusted allies: 68% of MSEs look to the government for support; 45% rely on community networks—indicating the importance of localised ecosystems.
- Women-led businesses are digitally forward: Women-led MSEs are more likely to run hybrid physical/online businesses (29% vs. 23% of men), showing strong adaptability despite barriers.
- Sustainability awareness is growing, not action: 60% understand green practices, but only 22% implement them—mainly due to cost and lack of eco-friendly materials.
- Cautious optimism: Over half of MSEs expect moderate growth in the coming year, especially those who accessed support—affirming the importance of interventions.
Insights from the Panel: What’s Working and What’s Next
Mastercard shared how its global Mastercard Strive programs, including in Indonesia, have proven that digital and green enablement can directly lead to business growth. Through Mastercard Strive, the company supports 300,000 MSEs with digital tools, financial access, and capacity-building in Indonesia. Results are clear: over 50% of supported MSEs reported revenue growth, showcasing the power of inclusive digital and green transition.
GIZ offered a broader ecosystem perspective. Drawing on experiences in ASEAN countries like Thailand, GIZ emphasized the role of government-led ecosystem building—aligning policy, infrastructure, and market incentives to support green enterprises. In Indonesia, GIZ supports policy design and institutional strengthening to embed green practices into the national MSE development agenda.
Amartha highlighted the critical role of financial innovation in enabling green transformation. By embedding risk prevention and impact alignment into its lending model, Amartha ensures high repayment while supporting sustainability goals. Their approach is offering a scalable model to support women-led and rural businesses with high social returns.
Alner challenged the prevailing green narrative, urging a shift from “doing good” to “doing well by doing green.” Alner argued that sustainability efforts must be framed as economic opportunities, not moral obligations. By highlighting data on efficiency gains and consumer demand, they help MSEs and stakeholders see green practices as profit-enhancing and future-proof.
A Call to Action: From Listening to Leading
The findings are clear: Indonesian MSEs are aspiring, adaptable, and ready for growth—but need the right enabling environment. The ecosystem must work together to ensure that digital and green transitions don’t widen the gap, but instead unlock new opportunities for inclusion and resilience.
At AVPN, we believe that by amplifying impact capital, local partnerships, and knowledge sharing, we can co-create solutions that are both scalable and equitable. We invite funders, corporates, governments, and community organizations to act on these insights—because thriving MSEs mean a thriving Indonesia.
