Empowering Indonesian MSMEs through Sustainability and Global Trade Stories

27 June, 2024

Micro, Small, and Medium-sized Enterprises (MSMEs) are central to the global economy, particularly in emerging markets where they account for a substantial share of employment and economic activity. In Indonesia, MSMEs represent the backbone of the economy, contributing significantly to job creation and national income. However, these enterprises face numerous challenges, especially when trying to compete in the global marketplace. The complexity of international trade regulations, coupled with the increasing demand for sustainable business practices, often leaves MSMEs at a disadvantage. 

 Indonesia has shown robust economic recovery post the Asian financial crisis and the recent global downturns. The country’s focus on enhancing its trade capabilities is evident in its strategic development plans and ongoing negotiations for multiple free trade agreements. Yet, despite these advancements, Indonesian MSMEs frequently struggle to capitalize on the opportunities these agreements offer. A major barrier is their limited capacity to meet international sustainability standards, which are crucial for accessing and succeeding in sophisticated markets like Canada, the EU, and the US. 

 Cowater International, in partnership with the Institute of Public Administration of Canada (IPAC) and funded by Global Affairs Canada, is responding to these challenges through the Expert Deployment Mechanism for Trade and Development (EDM). This initiative under the EDM project is to support the Business & Export Development Organization of Indonesia (BEDO) and Parahyangan University (UNPAR) to enhance the capacity of MSMEs to meet international sustainability standards. Through this initiative, more than 200 Indonesian MSMEs have been equipped with the necessary knowledge and tools to navigate and comply with complex international environmental and climate standards, thus improving their competitive edge in the global market. 

 This strategic intervention not only aims to foster economic growth but also to ensure that the benefits of trade are inclusively shared, particularly among women and marginalized groups who have been historically underrepresented in trade benefits. This is achieved through a comprehensive “train-the-trainer” program which enhances the long-term capacity of business associations in Indonesia to support MSMEs continually. The project’s approach is multifaceted, focusing not just on training but also on creating a sustainable ecosystem where MSMEs are continuously supported through knowledge exchange and business advisory services. This includes the development and refinement of training tools based on international models like the Global Reporting Initiative (GRI) and tailored to meet the specific needs of Indonesian businesses. 

 Initiatives like this EDM initiative in Indonesia showcase the potential benefits of aligning trade agreements with development goals, creating substantial opportunities for smaller businesses to effectively integrate into global trade. This strategic alignment is essential for ensuring that the benefits of international trade extend across all economic levels, unlocking MSMEs’ potential to transform economies and promote equitable growth.  

 According to CocoSweet, one of the MSME’s, the focus of the EDM technical assistance, “has brought sustainable transformation to our business in the coconut sugar industry.” Through the advice and support, “we prove that sustainability is not a burden but an opportunity for sustainable growth and a positive impact on society and the environment.”  

 As we celebrate MSME Day, we recognize the importance of strategic support, partnerships, and capacity building, which not only open new market opportunities for MSMEs but also contribute to more inclusive and balanced economic growth. This approach underlines the significant role that thoughtful policy and supportive measures play in fostering the global integration and success of MSMEs. 

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