Ministry of Law and Human Rights Pushes for the Legalization of Social Enterprises: Which Sectors are Most Prevalent in Indonesia?

The Directorate General of General Legal Administration (Ditjen AHU) of the Ministry of Law and Human Rights (Kemenkumham) is currently promoting the legalization of social entrepreneurs, or social enterprises, in Indonesia. The aim is to enable Indonesian social enterprises to receive incentives and other facilities for business development.

The Director General of AHU Kemenkumham, Cahyo R Muzhar, stated that in countries where social enterprises already have legal entities, they receive different incentives and facilities compared to regular companies.

Cahyo added that Indonesia already has companies that have declared themselves as social enterprises. "Seeing this trend, Ditjen AHU is exploring how social enterprises can be legalized," said Cahyo, as reported by Katadata.co.id on Wednesday (11/10/2023).

Furthermore, Cahyo continued, social enterprises aim to address various social issues, such as humanitarian concerns, education, and health. Not solely profit-oriented, a portion of their profits is also allocated to addressing these issues.

On the other hand, Cahyo mentioned that many foreign investors are interested in investing in social enterprises, but the legal entities for them do not yet exist in Indonesia. "We see the global business trend; in many countries, especially developed ones, there are many social enterprise entities that align with funders who want to invest in social enterprises," said Cahyo.

Therefore, he continued, Ditjen AHU Kemenkumham is promoting the formulation of standard articles of association and bylaws (AD ART) in collaboration with relevant ministries and institutions. The basis for this is Presidential Regulation (Perpres) Number 2 of 2022 concerning the Development of National Entrepreneurship 2021-2024.

"If a company declares itself a social enterprise, what is the basis and criteria? What we are doing is creating a specific AD-ART format for social enterprises," he said.

Various Sectors of Social Enterprises in Indonesia

Regardless of that, what are the various sectors of social enterprises that already exist in Indonesia?

According to data from the Social Enterprise Platform (PLUS), the creative economy is the sector with the highest proportion of social enterprises in Indonesia as of October 2023. It accounts for 20.8% of total social enterprises, the largest among other sectors.

The next sector with the most social enterprises is agriculture/fisheries, with a proportion of 18.5%. This is followed by social enterprises in the education sector (16.9%), food/beverages (10.7%), and sustainable energy (7.8%).

Meanwhile, social enterprises in other sectors have smaller proportions. These include technology (6.2%), empowerment (4.7%), counseling and advocacy (4.3%), consumer goods (4%), health/fitness (2.8%), and services (1.9%).

The remaining 1.4% of social enterprises in Indonesia come from other sectors.