SMEs are the backbone of Indonesia’s economy, contributing over 60% of the national Gross Domestic Product (GDP) and employing more than 90% of the workforce. Interestingly, 64% of SME owners in Indonesia are women—a remarkable figure that highlights the vital role of women in driving the country’s economic engine.
Unfortunately, even though women dominate in numbers, the contribution of women-led businesses remains relatively small—around only 10% of the total GDP. This is largely because most of these businesses operate on a micro and informal scale, lacking access to formal financial services and digital technology.
Through the Labamu x LiftWomen collaboration, we are reminded that this immense potential can grow, level up, and make an even greater impact—if given the right support. How? Let’s explore it in detail here!
The Strategic Role of SMEs in Indonesia’s Economy
SMEs play a fundamental role in the national economy, supporting overall economic stability and growth. By understanding the core functions of SMEs, Labamu friends will see just how crucial support and development for this sector are to help Indonesia progress further.
1. Providing the Largest Employment Opportunities
According to CNBC Indonesia, SMEs absorb around 97% of the national workforce. With their broad scale and widespread presence across the country, SMEs provide employment opportunities for various segments of society, including those with lower education levels and those living in remote areas. This helps reduce unemployment and strengthens economic inclusivity.
2. Making a Significant Contribution to GDP
Overall, SMEs contribute more than 60% to Indonesia’s GDP—although women-owned SMEs account for only around 10% of this. Nonetheless, this significant contribution shows that SMEs are a key engine driving national economic growth.
3. Driving Local and Regional Economies
The widespread presence of SMEs across regions helps stimulate local economic circulation by providing products and services tailored to the needs of the community. In this way, SMEs also play a crucial role in reducing disparities and improving the well-being of people in villages and small towns.
4. Serving as a Platform for Business Innovation and Creativity
Many SMEs have successfully introduced innovations in the form of unique products and creative marketing methods, particularly in the home food, handicraft, and digital services sectors. These innovations not only attract local markets but also have the potential to reach national and international markets.
5. Promoting Economic Independence
SMEs provide economic opportunities for people who previously may have had limited access to formal employment. By running their own businesses, many SME owners can increase their income and improve their quality of life. In turn, SMEs help strengthen the people’s economy, reduce poverty, and drive national development.
The Role and Challenges of Women in SMEs
Empowering women in SMEs creates a significant ripple effect. When women succeed in growing their businesses and earning higher incomes, the impact goes beyond improving family welfare—it also enhances their children’s education and, in turn, strengthens the economy while fostering broader social development.
However, as SME entrepreneurs, women face various challenges that hinder the growth of their businesses, such as:
1. Most Businesses Operate in the Micro and Informal Sector
Many women run small-scale businesses such as home food ventures, handicrafts, or small shops, which remain limited in scale and are not yet formalized. This situation restricts their access to essential business support, such as business loans and broader networking opportunities.
2. Limited Access to Digitalization and Business Education
Women SME owners often struggle to access digital technologies, which have become essential tools for marketing and business management. In addition, a lack of education on business management hampers the optimal growth of their ventures. This challenge is further intensified as today’s business world increasingly relies on digital transformation and efficient management.
3. The Double Burden of Household and Business Responsibilities
In addition to managing their businesses, many women still carry significant responsibilities at home and for their families. This double burden often consumes their time and energy, making it difficult to fully focus on growing their ventures. In this situation, women are required to balance their roles while seeking support to help their businesses thrive.
4. Social Stigma and Gender Stereotypes
Women still often face social stigma that assumes they should focus on household responsibilities, resulting in their businesses receiving limited support from their surroundings. These stereotypes also restrict women from taking on leadership roles.
5. Dependence on Non-Formal Funding Sources
Due to limited access to formal financial institutions, many women SME owners rely on borrowing capital from family, friends, or even high-interest moneylenders. This dependence exposes them to financial risks and hinders the growth of their businesses.
Labamu x LiftWomen: Empowering Women Entrepreneurs in SMEs
Enhancing the role of women in the SME sector is not just about numbers, but also about the quality and economic impact they create. Therefore, the right support is essential to help women entrepreneurs overcome the challenges mentioned above.
Understanding this, Labamu is here to provide practical solutions through comprehensive financial services such as business accounts, digital payments, PPOB, QRIS, and microfinancing, making it easier for women to manage their businesses professionally. In addition, Labamu also offers a business community, LabamuHub, created as a platform for SME entrepreneurs to connect and collaborate with one another.
On the other hand, you can also gain support from global initiatives like LiftWomen, which provide business networks, training, and funding access to help women achieve greater success.
Now you can see why Labamu x LiftWomen initiated this program—to empower women and create broader opportunities that drive economic growth.
