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Challenges for Indonesian MSMEs in Digitalizing Their Business

Adi Ahdiat 20/02/2026 14:54 WIB

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According to the INDEF survey, there are various challenges faced by Indonesian MSMEs in using digital applications for business development.

Challenges of Indonesian MSMEs in Using Digital Applications for Business Development (2023)

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Challenges of Indonesian MSMEs in Using Digital Applications for Business Development (2023)

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Digital technology can support the performance of micro, small, and medium enterprises (MSMEs) in marketing, boosting sales, and strengthening customer loyalty.

However, there are various challenges faced by MSME operators in utilizing this technology.

This is evident from the research report titled "The Role of Digital Platforms in the Development of MSMEs in Indonesia" released by the Institute for Development of Economics and Finance (INDEF).

In 2023, INDEF surveyed 254 MSME samples spread across Java Island and beyond. The criteria for the respondents were MSMEs that have stores, whether physical stores, online stores, or both.

INDEF found that 100% of the respondents stated "agree" and "strongly agree" that digital applications can increase sales.

However, almost all respondents felt that the main challenge was fierce competition.

Here are the details of the challenges faced by Indonesian MSMEs in using digital applications for business development, according to INDEF's survey:

Intense competition on digital platforms: 96.46% (combined of respondents who "agree" and "strongly agree")
Consumer criticism that can affect business reputation: 96.07%
Lack of workers' skills in using digital platforms: 83.46%
Difficulty in recruiting workers skilled in using digital platforms: 82.68%
Quality of infrastructure (internet speed, technology and gadget limitations): 80.71%
Low consumer interest/participation in digital platforms: 79.52%
High cost of using digital platforms/applications: 78.34%

"Given the significant benefits and positive impacts of MSMEs' use of digital platforms, it is crucial to continue supporting the advancement of MSME digitalization," said INDEF in its report.

"One of the efforts that can be made is to help improve the ability of MSME operators to utilize digital platforms," they said.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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Challenges for Indonesian MSMEs in Digitalizing Their Business

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