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Baseline Survey on Household Micro, Small and Medium Enterprises Investment Portfolio - An Effort to Improve Participation in Using Financial Services


One of the characteristics of Indonesian economy is the significant role of the informal sector which mainly consist of micro, small, and medium enterprises (MSMEs). MSMEs in Indonesia contribute to 57.9 percent of the Indonesian Gross Domestic Product (GDP) and absorb 97.2 percent of labor force. However, most of the MSMEs do not have sufficient financial access. The financial and investment products that are owned by MSMEs in general are in the form of traditional financial and investment services.

To be able to bring MSMEs to formal financial services and able to invest in financial market will bring many advantages, both for the MSMEs and for the economy in general. For MSMEs, financial institutions will be able to provide consumer protection mechanism and better investment security. Moreover, there are several financial products that can be used by MSMEs to support their business activities, such as additional capital and insurance as part of business protection mechanism. From the financing aspects, the access to formal financial institutions will give MSMEs financing alternatives that are more affordable for the MSMEs compare to informal financing that often charge very high interest for MSMEs.

For the economy in general, the improvement of MSMEs access to formal financial institutions, such as bank, will be able to improve the deposit level and enable bank to channel the fund to other sectors that need financing, including productive poor and MSMEs. The financial system will also become more resilient because the monitoring of the fund circulations is supervised by formal institutions that have the authority to do the monitoring process.

Therefore, it needs strategic efforts to create a conducive environment that will bring MSMEs into financial institutions. One of the basic step related to those efforts are to understand the investment pattern of MSMEs. DEFINIT were appointed by Financial Services Authority (Otoritas Jasa Keuangan-(OJK)) to conduct the Baseline Survey on Household Micro, Small and Medium Enterprises Investment Portfolio - An Effort to Improve Participation in Using Financial Services in 2014. The objective of the survey was to understand the preference and factors that affecting the investment patterns of MSMEs. The survey was conducted in two cities, i.e. Kota Medan (North Sumatra) and Kota Yogyakarta (DI Yogyakarta) covering 500 respondents. The respondents were households that have productive activities in the form of micro, small, and medium enterprises. The results of the survey were expected to be able to provide up-to-date information for the decision makers in order to formulate more effective financial inclusion policies by improving MSMEs access on the product and services of financial institutions.

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