Market Assessment

AsDB - GFA Indonesia 2001

    The study was carried out to provide information on small and medium sized enterprises for policy formulation. Most studies provide insufficient information for formulating appropriate policies for SMEs due to a "micro-bias" and weak data on constraints women entrepreneurs face. This study does not include microenterprises, and female-owned enterprises predominate though they represent a relatively small percentage of SMEs.

    The project conducted a quantitative survey of 482 small and medium, urban-based enterprises in manufacturing, services, wholesale, retail, restaurants and hotels, transport, storage, and communications in two provincial capitals. Data were disaggregated by region, sector, and gender. A qualitative focus group discussion assessed specific constraints and visions of female entrepreneurs. The total cost of the survey was US$18,000.

    Methods for info gathering
    SE Survey, Focus Group Discussion, Quantitative, Qualitative

    Summary of results
    · The SME sector is very dynamic, with 75% in business for more than 10 years. The majority were not negatively affected by the economic crisis and nearly half experienced positive development in the past two years.

    · There are many female entrepreneurs and businesses managed by women, or by men and women together; they are the most successful. Women face few discriminatory practices and have equal access to bank credit and fewer problems with business licenses, tax officials, or illegal levies.

    · SMEs solve most business problems themselves, but are beginning to use specialized BDS and are willing to pay for services. Education is a key factor in the use of external service providers: the majority of SME managers are young and well-educated and nearly 70% want to expand their business.

    · Regional conditions influence SE dynamics: the economic situation and business environment appears better in Semarang than in Medan and SMEs in cities are more likely to increase working capital and investment with third party funds.

    · In spite of licensing problems, almost 75% of SMEs are registered. Tax knowledge and compliance are low, but most SMEs are prepared to pay taxes if they are reasonable relative to government services.

    · Cooperatives are the best known business organizations, but most SMEs do not join because they feel that no institution represents their particular interests.

    · Insufficient and difficult access external finance is a major constraint and nearly one third of respondents need a bank loan, but have not applied.

    · Overall use of BDS is low, but there is potential for growth. There are substantial supply-side constraints (service range, quality) and a client focus overly biased towards micro-enterprises in the manufacturing sector.

    Associated Activities and Documents
    »Strengthening BDS in Indonesia, AsDB/Swisscontact/GFA, 2003