New Report Explores Challenges for Women’s Small Businesses in Indonesia

August 21, 2013

By Laura Seaman

In early September, at the annual meetings of the Asia-Pacific Economic Cooperation (APEC) summit in Bali, Indonesia, The Asia Foundation will release a study examining how a variety of social, political, and economic factors influence women’s capacity to engage in small and medium enterprise (SME) in Indonesia. The report, “Access to Trade and Growth of Women’s SMEs in APEC Developing Economies: Evaluating the Business Environment in Indonesia,” follows a February 2013 study, sponsored by APEC, which examined similar factors in Malaysia, the Philippines, and Thailand. Together, the studies provide important insights into the institutional and cultural barriers that disproportionately affect women’s participation in business in these economies.

Women account for over half of the total population of Asia and are active participants in the workforce (including 51 percent in Indonesia), but face particular challenges to starting and growing SMEs. Photo/M.ANSHAR/SERAMBI INDONESIA DAILY

The Indonesia research, like the previous study, was undertaken in recognition of three main characteristics of economic growth in Asia. First, SMEs dominate the business landscape in Asian economies: they make up over 90 percent of all businesses, provide 60-80 percent of employment, and generate 30 percent of exports. Second, women account for over half of the total population of Asia and are active participants in the workforce (including 51 percent in Indonesia), but face particular challenges to starting and growing SMEs. Third, women’s full and equal economic participation is crucial to future growth. The United Nations estimates that Asia-Pacific economies could grow by an additional $89 billion per year if women realized their full economic potential, and that output per worker could rise 7-18 percent if business opportunities for women and men were equal. This much is clear: SMEs are essential drivers of Asian economies, and women are critical to SME growth in these countries. The study identifies the barriers that remain to women’s full participation in SMEs.

The research for the Indonesia study consisted of two parts: an extensive survey of 150 female and male SME owners, and qualitative research including interviews and focus group discussions. The survey controlled for firm-level factors like age, sector, and size, in order to single out the unique challenges that women-owned SMEs face in comparison to men-owned SMEs. Three broad categories of challenges were identified:

Economic and Financial Barriers

• Financial: interest rates, loan applications, collateral requirements
• Operational: employee hiring and training, turnover, business technologies
• Networks: business associations, informal networks

Government and Policy Barriers

• Perceptions of government support of business
• Access to business information
• Government services
• Corruption
• Crime and safety

Social Support Barriers

• Domestic responsibilities
• Role models: relatives in business, mentors

The report will be released during APEC’s 37th Small and Medium Enterprises Working Group (SMEWG) Meeting in Bali September 4-5. In partnership with the Chevron Corporation, The Asia Foundation will hold a panel to discuss issues and recommendations highlighted in the research. The panel will feature Asia Foundation experts, including Carol Yost, the Foundation’s senior director of the Women’s Empowerment Program, and its chief economist Véronique Salze-Lozac’h. They will be joined by four women entrepreneurs from each of the four APEC economies studied (Indonesia, Malaysia, the Philippines, and Thailand). The theme of the Bali panel underscores the priority APEC has placed on understanding and promoting women’s economic equality in Asia, at both the country and regional levels. Thus, the panel discussion will include recommendations for specific steps that governments and regional organizations can take to promote access to business opportunities for women.

Recognizing that the private sector plays an essential role in promoting women’s full economic participation in Asia, results of the research from all four countries will also be presented by Véronique Salze-Lozac’h at the CSR Asia Summit in Bangkok on September 17-18. Leaders from business, finance, government, and philanthropy will convene to identify more inclusive and accessible business strategies for Asia’s future growth.

The Asia Foundation’s research will help guide both public policy dialogue and private sector interventions, to maximize women’s impact on Asia’s economic growth and development. The full report will be available at asiafoundation.org.

Laura Seaman is a junior associate with The Asia Foundation’s Economic Development Programs in San Francisco. She can be reached at [email protected]. The views and opinions expressed here are those of the individual author and not those of The Asia Foundation.

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