The Impacts of Trade Liberalization on Indonesian Small and Medium-sized Enterprises in Indonesia

This policy brief examines the role of Small and Medium-sized Enterprises (SMEs) in Indonesia, which account for over 90% of enterprises and employment. It finds no strong evidence that trade liberalization or AFTA (1992) have negatively impacted these firms or significantly accelerated their exports. The document recommends that the Indonesian government improve vertical and horizontal coordination to provide SMEs with technical assistance, loans, and subcontracting opportunities with larger firms to boost innovation and competitiveness.

• Small and Medium-sized Enterprises (SMEs) are critical to the Indonesian economy, representing more than 90 per cent of all enterprises and employing over 90 per cent of the national workforce. Their contribution to GDP growth is continuous and their share of GDP exceeds that of large enterprises.
• There is no strong evidence that international trade policy reforms or the 1992 AFTA have negatively impacted Indonesian SMEs, nor is there evidence that AFTA accelerated their exports or that liberalization increased average plant size through efficiency effects.
• To improve competitiveness and innovation, Indonesian SMEs must develop technological and human resource capabilities. The government, particularly at the district, provincial, or municipal levels, should provide technical assistance, soft loans, and information, while strengthening coordination between central and local agencies and promoting subcontracting linkages between SMEs and large or foreign firms.

APA

Tambunan,, T. (2011). The Impacts of Trade Liberalization on Indonesian Small and Medium-sized Enterprises in Indonesia. International Institute for Sustainable Development. https://www.iisd.org/publications/report/impacts-trade-liberalization-indonesian-small-and-medium-sized-enterprises

Chicago

Tambunan,, Tulus. The Impacts of Trade Liberalization on Indonesian Small and Medium-sized Enterprises in Indonesia. International Institute for Sustainable Development, 2011. https://www.iisd.org/publications/report/impacts-trade-liberalization-indonesian-small-and-medium-sized-enterprises.

Wikipedia

{{cite report |last1=Tambunan, |first1=Tulus |title=The Impacts of Trade Liberalization on Indonesian Small and Medium-sized Enterprises in Indonesia |publisher=International Institute for Sustainable Development |date=6 April 2011 |url=https://www.iisd.org/publications/report/impacts-trade-liberalization-indonesian-small-and-medium-sized-enterprises |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{tambunan2011impacts, author = {Tambunan,, Tulus}, title = {{The Impacts of Trade Liberalization on Indonesian Small and Medium-sized Enterprises in Indonesia}}, institution = {International Institute for Sustainable Development}, year = {2011}, month = apr, url = {https://www.iisd.org/publications/report/impacts-trade-liberalization-indonesian-small-and-medium-sized-enterprises}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }