These are the criteria for MSMEs based on their sales, according to Government Regulation No. 7 of 2021.

Micro, Small, and Medium Enterprises (MSMEs), or UMKM in Indonesian, play a significant role in Indonesia's economic growth.

According to the ASEAN Investment Report released by the United Nations Conference on Trade and Development (UNCTAD) in September 2022, Indonesia has the highest number of MSMEs in the ASEAN region.

The report notes that the number of MSMEs in Indonesia in 2021 reached approximately 65.46 million units.

Indonesian MSMEs are recorded as absorbing 97% of the workforce, contributing 60.3% to the Gross Domestic Product (GDP), and contributing 14.4% to national exports.

This proportion of Indonesian MSMEs' workforce absorption is the largest in ASEAN. MSMEs in neighboring countries only absorb labor in the range of 35%-85%.

Despite their significant role, what types of MSMEs are there in Indonesia?

The criteria for MSMEs in Indonesia are regulated in Government Regulation No. 7 of 2021 concerning Ease, Protection, and Empowerment of Cooperatives and Micro, Small, and Medium Enterprises (PP UMKM) articles 35 to 36.

For existing MSMEs, the type or grouping of MSMEs is based on annual sales criteria. These include:

* Micro Enterprises have annual sales of a maximum of Rp2 billion.
* Small Enterprises have annual sales of more than Rp2 billion, up to a maximum of Rp15 billion.
* Medium Enterprises have annual sales of more than Rp15 billion, up to a maximum of Rp50 billion.

Meanwhile, for MSMEs that are about to be established, there are UMKM capital criteria, which include:

* Micro Enterprises have a maximum capital of Rp1 billion excluding land and buildings used for business.
* Small Enterprises have capital of more than Rp1 billion, up to a maximum of Rp5 billion excluding land and buildings used for business.
* Medium Enterprises have capital of more than Rp5 billion, up to a maximum of Rp10 billion excluding land and buildings used for business.

However, some MSMEs in Indonesia still face a number of obstacles to entering online business.

Based on a report by the Boston Consulting Group (BCG) and Telkom Indonesia, of approximately 3,700 local MSMEs surveyed, the majority are hampered in undergoing digital transformation due to a lack of financing.

There are also those who feel constrained by a lack of digital skills training, lack of policy support, lack of business mentors, and inadequate digital infrastructure.

Therefore, it is important for the government to strengthen digital UMKM programs in Indonesia. This includes utilizing market research data and increasing access to digital financing.