The Deputy Minister of Small and Medium Enterprises in Indonesia, Helvi Mora, emphasized that enhancing entrepreneurship is a vital strategy to address the demographic bonus peak expected in 2030. This statement was made during her participation in a dialogue on intergenerational welfare organized by the National Planning Ministry in Jakarta.
Mora pointed out that small and medium enterprises contribute up to 63% of the national GDP, making them a fundamental pillar of the Indonesian economy. She stressed the importance of supporting entrepreneurship among youth to bolster the national economy and prepare for future economic challenges.
Event Details
During the event, Mora explained that enhancing entrepreneurship could contribute to an increase in individual income, which is expected to rise from approximately $5,083.4 in 2025 to between $7,400 and $8,240 by 2029, reaching $23,000 to $30,300 by 2045.
However, Mora acknowledged that significant challenges face this sector, as 99% of small and medium enterprises still operate on a small scale, while the percentage of access to formal financing does not exceed 19.4% of total bank loans.
Background & Context
Indonesia is considered one of the largest economies in Southeast Asia, with an estimated population of around 270 million people. The country is expected to reach its demographic bonus peak in 2030, meaning a large proportion of the population will be of working age. This situation requires effective strategies to promote economic growth and provide job opportunities.
Historically, small and medium enterprises have formed the backbone of the Indonesian economy, playing a crucial role in job creation and fostering innovation. However, challenges such as lack of financing, competitiveness, and access to global markets continue to hinder the growth of this sector.
Impact & Consequences
Efforts to enhance entrepreneurship are part of the Indonesian government's plan to create approximately 198.3 million decent jobs by 2045. Improving the entrepreneurship rate to 3.29% by 2025 is expected to generate around 52.5 million job opportunities.
To achieve these goals, Mora emphasized the necessity of having an integrated entrepreneurship ecosystem, which includes enhancing national policies, expanding access to financing, improving business incubators, fostering innovation and technology, and accelerating digital transformation.
Regional Significance
Arab countries also face similar challenges in promoting entrepreneurship and providing job opportunities for youth. Indonesia can serve as a model for Arab nations on how to enhance entrepreneurship as a means to tackle economic challenges.
Through sharing experiences and cooperation among countries, the business environments in the Arab region can be improved, fostering innovation and economic growth.