MSMEs and Access to Financing in a Developing Economy: The Indonesian Experience

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Author(s): Tulus T. H. Tambunan (University of Trisakti, Indonesia)
Copyright: 2018
Pages: 25
Source title: Financial Entrepreneurship for Economic Growth in Emerging Nations
Source Author(s)/Editor(s): Atsede Woldie (University of South Wales, UK)and Brychan Thomas (University of South Wales, UK)
DOI: 10.4018/978-1-5225-2700-8.ch008

Keywords: Accounting and Finance / Business & Management / Business Science Reference / Entrepreneurship & Innovation

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Abstract

Historically, micro, small, and medium enterprises (MSMEs) have played an important role in economic development in Indonesia. MSMEs are very numerous, amounting to, on average, almost 99% of total enterprises and also more than 90% of total employment across sectors in the country. Although the lack of finance is not the only problem facing many MSMEs, this chapter discusses the Indonesian experience with MSME financing with the focus on a government-initiated credit guarantee scheme, namely KUR (people business credit), aiming to give the enterprises more access to finance and the development of microfinance institutions. It also provides a brief description of MSMEs' development, their main constraints, and their main finance sources. The chapter shows that, in spite of government efforts, the majority of MSMEs, especially micro and small enterprises (MSEs), still depend on informal sources for their capital.

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MSMEs and Access to Financing in a Developing Economy: The Indonesian Experience

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