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Women and Entrepreneurship in Indonesia

Investing in Women The University of Sydney

2017

Indonesia

Report/Paper

Impact Investing

Impact Investing Women entrepreneurs Entrepreneurship Women in business

Women and Entrepreneurship in Indonesia

Women and Entrepreneurship in Indonesia

The Women and Entrepreneurship report examines the state of small to medium enterprises (SMEs) in Indonesia, and the contribution that women-owned businesses make to the Indonesian economy.

The report provides an overview of the definitions of the different types of enterprises according to Indonesian regulation, and the different classifications of ‘small’ and ‘medium’ enterprises based on the total value assets of the business as well as the total number of employees. These small to medium enterprises are viewed as significant contributors to employment and economic growth, and are associated with the formalisation of a country’s economy.

The report finds that in 2013 there were around 59 million enterprises in Indonesia. An estimated 1% of these businesses were classified as small, and 0.1% were classified as medium. 98.8% were classified as micro enterprises. While SMEs have small organisations and thus tend to employ fewer people, the collective contribution of SMEs to employment in the country is significant. In 2013 SMEs accounted for over 8% of jobs in Indonesia whereas large enterprises contributed just 3%.

The report defines Women’s SMEs as a business:

  • where 51% of ownership is held by a woman or women; or
  • where 20% of ownership is held by a woman or women, where a woman holds a major leadership position (CEO/COO or president/vice president), and where 30% of the board of directors is composed of women

Based on available data, it is estimated that there are around 170,300 WSMEs in Indonesia, comprising around one in four of all SMEs in the country. Research has shown that WSMEs tend to employ more women than businesses run by men, therefore there is potential that increasing the number of women entrepreneurs in Indonesia will have the added effect of increasing the rate of paid employment among women.

The report indicates the need to support the transition of micro enterprises to small businesses, and for small businesses, in turn, to further grow into medium and large enterprises. The transition of businesses within this enterprise pipeline requires significant managerial, technological, and financial resources, which tend to be scarce in developing and emerging economies. This resource gap signals a critical opportunity for investors to play an important role not only in SME development, but also in raising the economic participation rate of women as business owners and employers in Indonesia.

Contents

  • Small and medium-sized enterprises
    • An economy dominated by micro enterprises
    • Significant employment constructions
    • Sectorial concentrations in SME activity
    • Possible barriers to transitioning to SME status
  • Women-owned SMEs (WSMEs)
    • Estimating the population of WSMEs
    • Gender gaps in economic participation
    • Opportunities
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