86 Percent of Indonesian MSMEs Rely on Internal Funding

Most Small and Medium Enterprises (SMEs) in Southeast Asia still rely on internal funding or their own savings. According to SDI Lab data, 86 percent of SMEs in Indonesia still use internal funding for their businesses. This is what makes fintech (financial technology) in Indonesia difficult to develop and lags behind other ASEAN countries.

Meanwhile, Indonesian SMEs that have utilized banking to fund their businesses only reach 6 percent. In contrast, Singapore has reached 60 percent, Malaysia 52 percent, Thailand 54 percent, and the Philippines 39 percent.

Based on data from CIMB-Principal Asset Management, Weekly Indo Perspective, bank account ownership penetration in Indonesia has only reached 36 percent, lagging far behind Malaysia and Thailand which have reached 96 percent and 78 percent respectively. Indonesians with access to online banking and mobile banking are only 9 percent, and even those with access to credit cards are only 6 percent. This indicates that many payment transactions in Indonesia still use cash, opening up potential for local SMEs or startups to provide financial technology services.