INDONESIAN SME IN

THE ASEAN
ECONOMIC
COMMUNITY
COMPETITION
GROUP 5

Aurelia Hendry
Cicilia Citra Gracella Heryangi
Liadi Purba

NI Putu Lissya
Suryantari Kalvarina
Sabatini
2
A mutual agreement to integrate the ASEAN
countries (Indonesia, Malaysia, Philippines,
Singapore, Thailand, Brunei Darussalam,
Cambodia, Vietnam, Laos and Myanmar)

A way to promote economic, political, social and

cultural cooperation across the region.

Expected to improve efficiency and boost

the economic competitiveness of the
ASEAN region as indicated by the free flow:
goods, services, investment, labor, and
capital

established on December 31, 2015

 VALUES IN THE GLOBALIZATION
WHICH IMPLEMENTED IN AEC 2015:
The quality of goods and services.

The quality of personnel who have

special competence and professional.
The quality of management system
standards and applying modern values
that promote efficiency, effectiveness
and transparency.
Mobility of money, goods and people
with non-traffic and borderless.
Focus on the strength of national
competitiveness (quality of goods,
services and people).
 IMPACTS FROM THE
ENACTMENT OF AEC
Positive
The opening Impacts
of the market for Negative Impacts
export products in ASEAN.
The loss of export market because the
Ease of access to capital country lost the competition compared
to other countries in ASEAN.
investment among ASEAN
The flood of imported products in the
countries.
domestic market will destroy small and
Ease of obtaining goods or medium enterprises in the country.
services produced outside our The possibility of speculation in the
financial sector, which could destroy
country.
the economic stability in the country.
Increased tourism activities, Human resources from other countries
mobility of people and money are are more qualified and professional,
which will displace labor in the country.
high.
 In Indonesia, the largest part of economic actors
are SMEs.
If SMEs can not maintain its existence and to
make improvements in order to face an
increasingly open market behavior in the future,
many SMEs will be destroyed.
The SMEs should no longer rely on cheap labor in
developing its business. Creativity and
innovation through the support of research and
development is very important to note.
In addition SMEs should take advantage of the
opportunity to achieve and maintain market
potential existence of its SMEs well.
To take advantage of these opportunities, the
greatest challenge for SMEs in the face of MEA is
how to define a strategy to win the competition.
One strategy that can be used is to create
excellence and distinctiveness of the products
produced.
 GROWING ROLE OF SMES IN
ASEAN ECONOMIC COMMUNITY
ASEAN is a diverse and economically dynamic grouping of 10 Southeast
Asian countries, collectively accounting for the worlds third largest
consumer base and a 3.2 percent share of the worlds gross domestic
product (GDP).
Small and medium enterprise (SME) development in ASEAN is a key
strategy, focusing on supporting SME access to finance, markets and global
opportunities, human resources development, information and advisory
services, technology and innovation.
The contribution of SMEs to economic growth, employment and
development in the region plays an important part in achieving equitable
economic development and regional economic integration.
 COMPARISON OF THE THREE
ASEAN COUNTRIES ON
ECONOMIC STRENGTHS

The opportunities and

The banking penetration of Small and medium
challenges faced by the
micro enterprises (SME)
SMEs
 GDP nominal at US$888 billion

GDP per capita at $3,500

76 percent of assets of the

financial sector

Loan to gross domestic product

ratio of 26 percent
INFORMAL
SECTOR
17 percent of Indonesians
borrow from the banks,
43 percent borrow from the
informal institutions and
40 percent of them dont
borrow at all.
SMEs play a crucial role in
Indonesias economy. There are
about 52 million in Indonesia and
they represent 99.9 percent of all
business units, employ 97.7
percent of total labor force and
contribute 57.8 percent of GDP.
 SMEs get only small
portions of bank
financing. Total loans to
SMEs are worth about
$57 billion, just about 20
percent of total bank
loans with a growth rate
of about 15 percent per
year.
Since the micro segment
can employ a lot of
people and produce
cheap products, it is a
main contributor to
national GDP and is
widespread around the
country
The economy of Malaysia, the 44th most populous country in
the world with more than 30 million people, is the third
largest in ASEAN behind Indonesia and Thailand with a
nominal GDP of about $375.6 billion and GDP per capita at
about $12,000. Based on the Economic Census 2011, the
total number of SMEs in Malaysia is 645,136. They employ
about 65 percent of the total labor force with 3.67 million
workers, make up 97.3 percent of all business units and
contribute 35.9 percent of GDP.
BUSINESS LOANS

Development financial Venture capital Leasing and factoring

Bank
institutions (DFIs) companies companies

SMEs =16% ME = 10%

Most SMEs used their own internally generated

funds and funds sourced from friends and
family members to finance their operations.
Singapore is a global commerce, finance and transport hub.
The Singaporean economy is known as one of the freest,
most innovative, most competitive, most dynamic and most
business-friendly. Singapores financial system remains
sound, but industry must stand vigilant against rising risks.
SMEs and firms with US dollar loans could be more
vulnerable under stress scenarios.
However, SMEs access to funding could be affected
should banks become more risk averse in their credit
underwriting for SME loans. We need to promote more
financial inclusion to deliver financial products and
services to a wider community that is under-served,
including MSMEs.
OWING ROLE OF SMES IN ASEAN ECONOMIC COMMUN

According to the AEC Blue Print, there are four initiatives that can improve SME capacity to
participate effectively and proactively in regional and global value chains.

Second, expand the scope of financial access

First, enhance the financing ecosystem and literacy, as well as intermediary and
in the region to benefit MSMEs, distribution facilities, such as digital payment
including through cross-collaboration services to promote cost-reducing
among various working groups in technologies and the development of
ASEAN. financial services for smaller firms and lower
income groups.

Third, intensify the implementation of

Fourth, promote the expansion of distribution
financial education programs and
channels that improve access to and reduce
consumer protection mechanisms to
the cost of financial services, including
bolster financial management capacity
mobile technology and micro insurance.
and encourage use of financial services.
SWOT ANALYSIS OF INDONESIAN SMES IN THE
AEC COMPETITION
STRENGTH
SMEs are the main focus of the rides and
the most promising for the creation of new Innovations speed.
entrepreneurs.

SMEs are not affected by foreign currency

fluctuations, because they use domestic Low cost structure
raw materials.

Ability to focus on specific

Operational flexibility.
sectors
HENDRY
CRUSIAL ISSUE OF INDONESIAN
SMES IN THE AEC COMPETITION
ASEAN officials have repeatedly emphasized the importance of
SMEs, as the backbone of the regional economy. The process
of regional economic integration is expected to encourage
SMEs to upgrade their capabilities and narrow the
development gap among ASEAN economies.

The first problem is the lack of public awareness of the AECs

opportunities and challenges.

Second, although Indonesia has enjoyed steady development

for more than a decade, the World Competitiveness Index
2014-2015 Report notes that a lack of skilled human resources,
poor infrastructure facilities, and weak technological
knowledge persist as serious problems for the Indonesian
economy.
The third problem is the inadequacy of the existing AEC
preparation.
BRACING FROM 2015
Instead of turning to protectionism to undermine other
countries SME products, the government should boost local
SMEs competitiveness by granting special tax breaks, providing
assistance in information technology, offering help in
understanding ASEAN product standardization and customs
systems, and invigorating the banking system via export-import
banks to support market expansion.

Improving inter-agency coordination will be equally

important. Indeed, Jokowi is currently pursuing new
initiatives, especially in establishing a Creative Economy
Board and supporting SMEs marketing through the UKM
Indonesia WOW project.

Certainly, market liberalization processes are often a

double-edged sword, bringing opportunity for business
expansion, but also opening greater risk for economic
inequality.
DISCUSSION SESSION