WOMEN ENTREPRENEURSHIP IN INDONESIA: CONSTRAINTS AND MOTIVATIONS (ongoing study)

Tulus T.H. Tambunan

Center for Industry, SME and Business Competition Studies, USAKTI
The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use. The countries listed in this paper do not imply any view on ADB's part as to sovereignty or independent status or necessarily conform to ADB's terminology.

Main objective: to examine the development of women entrepreneurs in Indonesia with the focus on MSMEs. Three research questions: how has been the development of women entrepreneurs, especially in MSMEs in Indonesia recently? what are the main constraints for women to become entrepreneurs in Indonesia? what are the main motivation/reasons that women conduct their own business instead of working as wage-paid employees or staying home doing domestic works. Methodologically, analysis of secondary data review on key literature on women entrepreneurs in developing countries and Indonesia field survey

DISCUSSION: 1) Key Characteristics of MSMEs 2) Development of MSMEs (in brief) 3) Picture of women entrepreneurs in Indonesia 4) Field survey: Preliminary findings

Aspect Formality

MIEs operate in informal sector, unregistered & pays no taxes

SEs some operate in formal sector, registered & pay taxes

MEs all operate in formal sector, registered & pay taxes

Location

Majority in Many in rural areas/ urban villages areas/cities

Mostly in urban areas/cities

Aspect MIEs Organization - run by the & owner management - no internal labor division -no formal management & accounting system (bookkeeping)

SEs - run by the owner - no labor division (majority), -no formal management and accounting system (bookkeeping)(majority)

MEs -many hire professional managers, -many have labor division, formal organizational structure & formal account-ting system (bookkeeping)

Nature of majority use some hired wage employment unpaid family laborers members

-all hired wage laborers -some have formal recruitment system many have high degree of mechanization/access to modern technology

Nature of production process

- degree of some use up-to-date mechanization machines very low/mostly manual - level of

Aspect MIEs Market majority orientation sell to local market and for lowincome consumers

SEs -many sell to national market and export -many serve also middle to high-income group

MEs -all sell to national market and many also export - all serve middle and high-income consumers - majority have good education - many are from wealthy families - main motivation: profit

Social & economic profiles of owners

- low or uneducated - from poor households - main motivation: survival

- some have good education, and from nonpoor households - many have business/profit motivation

Sources of - majority inputs use local raw

- some import raw materials -some have

- many use imported raw materials

Aspect External networks

MIEs - majority have no access to government programs and no business linkages with LEs

SEs - many have good relations with government and have business linkages (such as subcontractin g) with LEs (including MNCs/FDI). ratio of female to male as entrepreneurs is high

MEs - majority have good access to government programs - many have business linkages with LEs (including MNCs/FDI)

Women ratio of entrepreneur female to s male as entrepreneur s is the highest

ratio of female to male as entrepreneur s is low

Total enterprises by size category in all economic sectors (000 units)

Size 2000 2004 2007 2008 2009 category MIEs & 39,705 44,684.4 47,720.3 52,327.9 52,723.5 SEs MEs 78.8 93.04 120.3 39.7 41.1 LEs 5.7 6.7 4.5 4.4 4.7 Total 39,789.7 44,784.1 49,845.0 52,262.0 52,769.3

Women Entrepreneurs in Indonesia Some indicators

1) Global Gender Index from the World Economic Forum (WEF): gender gap in: -in economic participation and opportunity -education -health and survival -political empowerment 2) Gender Equity Index (GEI) developed by Social Watch: genderbased inequities in: -education, -economic participation -empowerment

The Gender Gap Index of Indonesia, 2010

Ranks of ASEAN Countries for GEI and Its Dimensions, 2009

GEI Education Economic Empowerment Activity Cambodia 62 78.1 83.5 23.2 Indonesia 55 96.8 52.8 16.0 Lao, PDR 52 80.6 59.2 16.8 Malaysia 58 98.6 46.6 29.7 Philippines 76 98.5 63.5 64.8 Singapore 63 95.0 58.6 36.5 Thailand 70 98.3 71.7 40.6 Viet Nam 74 96.5 81.3 44.0

Country

3. National Labour Survey: Employment by Status and Gender 4. National Enterprise Survey by Gender of Owners

Table 5: National Labour Survey: Employment Status by Gender in Indonesia, 1990-2006 (%)
1990 Male Paid worker Doing own business with paid worker Doing own business without paid worker Family worker Female Paid worker Doing own business with paid worker Doing own business without paid worker Family worker Male + Female Paid worker Doing own business with paid worker Doing own business without paid worker Family worker 31.9 1.1 53.6 13.5 22.8 0.3 30.2 46.6 28.4 0.8 44.5 26.3 1995 1996 1997 39.1 2.1 50.1 8.7 29.2 0.7 36.8 33.3 35.6 1.6 45.4 17.4 38.4 1.8 52.1 7.7 27.4 0.8 38.5 33.4 34.2 1.4 46.9 17.5 39.4 2.2 50.3 8.0 29.0 0.8 34.5 35.7 35.5 1.7 44.3 18.5 1998 36.1 2.3 52.7 8.8 27.7 0.8 34.9 36.6 32.9 1.7 45.9 19.5 1999 36.2 3.4 51.9 8.5 28.1 2.0 35.8 34.2 33.1 2.9 45.7 18.3 2002 29.4 4.1 59.4 7.0 37.3 1.1 25.4 36.2 32.3 3.0 47.2 17.6 2006 2011 35.2 4.0 53.2 7.7 31.5 1.1 33.2 34.1 33.9 3.0 46.2 16.9 35.9 4.4 39.99 19.71 32.1 1.7 28.5 37.7 44.6 3.4 35.7 16.3

Owners of MSEs by Gender and Non-agricultural Sector, 2003 (unit)

Sector

Total units

Owners Male Female

Mining, electricity (non-Stated (93.64) Own/PLN) & construction (100.00)* [2.21] (61.93) Industry manufacturing (100.00) [15.25] (61.21) Trade, hotel, & restaurant (100.00) [52.64] (98.60) Transportation & comm. (100.00) [19.94] (71.80) Financial inst, real estate, (100.00) [9.97] renting, and services (68.00 ) Total

(6.36) [0.32] (38.07) [19.91] (38.79) [70.86] (1.40) [0.60] (28.20) [8.32] (32.00 ) \ (100.00) [100.00] [100.00]

Owners by Gender of MSMEs in Manufacturing Industry, 2006 (%)

Gender Male Female Total

Size MIEs and SEs MEs 77.33 83.75 22.67 16.25 100.00 100.00

MSMEs 71.01 28.99 100.00

Main Constraints to Become Entrepreneurs: - Education - Heavy household works/responsibility - legal, traditions, customs, cultural or religious constraints - lack of access to formal credit and financial institutions.

Field Survey: Personal Motivation

Options: (1) to be independent (2) to explore or to develop own hobby/skill; (3) because of difficulty in finding jobs (4) to support family/household income or to add extra income to husbands low income; (5) to response to market opportunities; (6) to continue family traditional business; (7) to realize long personal wish or dream; (8) want to be rich or famous.

Total Respondents by Main Motivation/Reason to Undertake Own Businesses 2011 (person)

Research Agenda
Issues: what institutions facilitate or hinder women decisions to enter into entrepreneurships? do female entrepreneurs face more constraints than male entrepreneurs in running their businesses? are the majority of women entrepreneurs in Indonesia necessity entrepreneurs or opportunity entrepreneurs? as Indonesia consists of more than hundred different ethnic groups with their own local languages, cultures, traditions, and adopted norms, does the intensity of women entrepreneurship vary among these different ethnic groups?