Number of Micro and Small Industries in Indonesia 2018-2023

According to a report by the Central Bureau of Statistics (BPS), there were 4.5 million micro, small, and medium enterprises (MSMEs) in Indonesia in 2023. These businesses absorbed 9.84 million workers.

MSMEs are defined as processing/manufacturing industries employing fewer than 20 people per unit.

The number of MSMEs in Indonesia increased by approximately 161,300 units in 2023. This represents a 3.71% growth compared to the previous year, the highest in the last six years.

From 2018 to 2023, the number of MSMEs fluctuated, as shown in the graph.

However, the distribution of MSMEs in Indonesia is uneven. A majority, 62.06%, are located on Java.

“Java has better access to resources, raw materials, and markets,” wrote the BPS in its report titled *Profile of Micro and Small Industries 2023*.

The next largest concentrations of MSMEs are on Sumatra (14.44%), Bali-Nusa Tenggara (8.93%), Sulawesi (8.26%), Kalimantan (4.13%), and Maluku and Papua (2.18%).

The BPS also notes that MSMEs are still largely categorized as informal businesses with low productivity and technology use.

This is consistent with the fact that the majority of MSME owners (48.59%) have only completed primary school or less. Another 26.65% have completed upper secondary education, and 20.16% have completed lower secondary education.

Meanwhile, only 4.7% of MSME owners have completed diploma, bachelor's, or higher education.

“Although they are beginning to show an ability to innovate and develop production technology, MSMEs still face various challenges,” wrote the BPS.

These challenges include limited access to capital, marketing, raw materials, guidance/training, and partnerships.