Investment equity cannot rely solely on government spending; it\nrequires the involvement of the business sector to connect micro, small,\nand medium enterprises (UMKM) with broader industries and markets.<\/p>\n
30 Okt 2026 07:14 WIB \u00b7 Ekonomi & Bisnis<\/p>\n
KOMPAS\/PRIYOMBODO<\/p>\n
JAKARTA, KOMPAS \u2014 The Indonesian Chamber of Commerce and Industry\n(Kadin) is advocating for the equitable distribution of investment and\nthe strengthening of micro, small, and medium enterprises (MSMEs)\noutside of Java to enhance regional economic circulation. This\ninitiative is deemed crucial to ensure that economic growth is not\nconcentrated in specific areas, but also creates quality jobs and boosts\nthe competitiveness of national businesses.<\/p>\n
The Chairman of Kadin Indonesia, Anindya Novyan Bakrie, stated that\nthe disparity in investment growth between Java and regions outside Java\nis one of the challenges that needs to be addressed.<\/p>\n
\u201cWe can understand that initially there is a need to tighten our\nbelts so that we can start with efficiency before adopting a productive\napproach,\u201d Anindya stated during his remarks at the National Leadership\nMeeting (Rapimnas) of Kadin 2026 in Jakarta on Thursday\n(29\/10\/2026).<\/p>\n
The government, he continued, has recently provided guidance to\naddress the issue in order to create more opportunities for regional\neconomic activities.<\/p>\n
According to data on foreign direct investment (FDI) and domestic\ninvestment, the value of investments in Java increased by 14 percent,\nrising from IDR 225.6 trillion in the third quarter of 2025 to IDR 265.8\ntrillion in the third quarter of 2026. In contrast, investments outside\nJava grew by only 2.2 percent, from IDR 257.1 trillion to IDR 271.6\ntrillion during the same period.<\/p>\n
Input from regional Kadin officials highlights the importance of\nensuring that the benefits of economic growth reach all areas of\nIndonesia. The limited fiscal capacity of local governments poses a\nchallenge in stimulating economic activity, with approximately 90\npercent of local governments operating with low fiscal capacity and\nrelying on transfers from the central government.<\/p>\n
Key points of concern include a 24.6 percent reduction in transfers\nto regions, accompanied by a 69.5 percent decrease in regional capital\nexpenditures. As a result, economic growth outside of Java has\ncontracted by 7.48 percent.<\/p>\n
According to Anindya, increasing investment outside of Java should be\npart of a strategy to strengthen the people\u2019s economy. The equitable\ndistribution of investment cannot rely solely on government spending; it\nalso requires the private sector\u2019s role in connecting micro, small, and\nmedium enterprises (UMKM) with broader industries and markets.<\/p>\n
On the other hand, Indonesia has the opportunity to enhance the added\nvalue of domestic products by engaging in global supply chains. He noted\nthat around 77 global brands, including Airbus, Tesla, and Nike, have\nsourced components from Indonesia.<\/p>\n
\u201cOur task is to enhance that component and boost sales. Last year, we\n(Indonesia) exported approximately $282.9 billion, marking a 6.15\npercent increase compared to the previous year,\u201d Anindya stated.<\/p>\n
This opportunity must be accompanied by improvements in\ncompetitiveness, production capacity, and the involvement of MSMEs in\nthe industrial supply chain. Anindya emphasized that the ambition to\nposition Indonesia in the global market must go hand in hand with\nstrengthening grassroots businesses and creating quality jobs.<\/p>\n
\u201cIt\u2019s impossible for a people-oriented economy and Indonesia to\nbecome global without MSMEs moving up the ranks and creating quality\njobs,\u201d he said.<\/p>\n
To achieve this, the Indonesian Chamber of Commerce and Industry\n(Kadin) is promoting a partnership model that connects businesses from\nvillages with processing industries and global markets. This model\nincludes core-plasma partnerships, industrial supplier development,\nclosed-loop supply chains, production, distribution, and retail\npartnerships, and local vendor development in industrial areas.<\/p>\n
Kadin also presented three key recommendations. First, to establish a\nbuffer to address the crisis. This is deemed essential for maintaining\nbusiness cash flow, regional fiscal capacity, and household purchasing\npower. Such efforts aim to ensure the sustainability of small\nenterprises while also supporting industries that absorb their\nproduction.<\/p>\n
Second, ensuring the availability of raw materials for small-scale\nbusinesses. Third, ensuring business certainty for Indonesia\u2019s global\nreach.<\/p>\n
5D Strategy<\/p>\n
To support this recommendation, Kadin has formulated a 5D strategy\nthat delineates the roles of the government, state-owned enterprises\n(BUMN), and the private sector in strengthening the economy.<\/p>\n
The first strategy is fiscal discipline and decentralization. The\ngovernment is urged to keep the budget deficit within safe limits,\nspecifically a maximum of 3 percent of gross domestic product (GDP),\nwhile also ensuring timely payment obligations, including tax\nrefunds.<\/p>\n
Second, deregulation through simplification and harmonization of\noverlapping regulations to strengthen legal certainty for the business\nworld.<\/p>\n
Third, debottlenecking or breaking down logistical, licensing, and\nraw material barriers to allow for a smoother flow of goods, services,\nand investment.<\/p>\n
Fourth, Danantara is positioned as an enabler that facilitates\nprivate investment opportunities in priority projects. Its involvement\nis expected to attract private investment rather than replace the role\nof the private sector.<\/p>\n
Fifth, strengthen private sector support to upgrade MSMEs. MSMEs are\nconnected to the industrial supply chain. This can be done through\nbusiness aggregators, closed-loop People\u2019s Business Credit (KUR)\nschemes, and business matching between MSMEs and potential buyers.<\/p>\n
Decreased<\/p>\n
The Minister of Investment and Downstream Industry\/Head of the\nInvestment Coordinating Board (BKPM) and CEO of Daya Anagata Nusantara\n(Danantara), Rosan Perkasa Roeslani, stated that the success of micro,\nsmall, and medium enterprises (UMKM) should not be measured solely by\nthe number of business actors. More importantly, it is their ability to\nenhance capacity and scale their businesses to move up to the next\nlevel.<\/p>\n
\u201cI want the number of MSMEs in Indonesia to decrease. The fewer, the\nbetter. If they remain MSMEs, when will they graduate to a higher level?\nI don\u2019t take pride in being told that we have many MSME entrepreneurs.\nYes, we have many, but that number should decrease as they move up,\u201d\nRosan stated.<\/p>\n
According to Rosan, large business owners affiliated with Kadin have\na responsibility to support small and medium enterprises (SMEs),\nparticularly those in regional areas, to help them grow and connect with\nindustrial supply chains. Kadin is strategically positioned to fulfill\nthis role due to its organizational network that extends down to the\ndistrict and city levels.<\/p>\n
\u201cThe Chamber of Commerce has influence down to the district and city\nlevels. It can certainly serve as a bridge or connector to ensure that\nthe economy in the regions, cities, districts, and provinces continues\nto grow,\u201d said Rosan.<\/p>\n
The Ministry of Investment and Downstream Industry has facilitated\npartnerships with approximately 1,000 small and medium-sized enterprises\n(SMEs) across various regions, with a total value of around Rp 20\ntrillion. This collaboration aims to expand SMEs\u2019 access to markets,\ninvestments, and greater business opportunities.<\/p>\n
Rosan emphasized that strengthening small and medium enterprises\n(UMKM) must go hand in hand with enhancing investment realization. He\nnoted that quality investment is not solely defined by the amount of\ncapital injected but also by its ability to create quality jobs, improve\nhuman resource capacity, and promote the transfer of knowledge and\ntechnology.<\/p>\n
He explained that investment has different characteristics than\ncapital market investment. Direct investment, or foreign direct\ninvestment (FDI), is a long-term commitment because it requires the\nconstruction of production facilities, factories, and smelters, whose\noperations can last for decades.<\/p>\n
According to data from the Ministry of Investment and Downstream\nIndustry, the realized investment during the two years of President\nPrabowo Subianto\u2019s administration, from the fourth quarter of 2024 to\nthe third quarter of 2026, reached IDR 3,923.2 trillion, creating 5.48\nmillion jobs.<\/p>\n
\u201c(The investment figures) are not MoUs or agreements. They are real\nfigures, 100 percent accountable,\u201d he said.<\/p>\n
From January to September 2026, investment realization reached Rp\n1,539.2 trillion, reflecting a year-on-year growth of 7.3 percent. The\ninvestment target for 2026 is set at Rp 2,041.3 trillion, meaning that\nby September 2026, the realization target has been achieved at 75.4\npercent.<\/p>\n
Additionally, Rosan noted that the contribution of investments in the\ndownstream sector has also increased. While it accounted for about 25\npercent of total investments in 2024, this figure is expected to rise to\n31 percent by 2026. In fact, by the third quarter of 2026, the\ncontribution of downstream investments is projected to reach 34\npercent.<\/p>\n
Interestingly, about 78 percent of downstream investment is located\noutside Java, particularly concentrated in Sulawesi and North Maluku.\nAccording to Rosan, this situation indicates that the development of\nprocessing industries has the potential to expand economic activities\nand create new growth centers beyond Java.<\/p>\n
Rosan continued that this increase not only generates foreign\nexchange but also creates jobs and strengthens Indonesia\u2019s position in\nthe global supply chain. Therefore, the involvement of SMEs as suppliers\nof goods and services for the processing industry needs to be further\nexpanded.<\/p>\n
Strengthen business partnerships<\/p>\n
Strengthening the national economy cannot rely solely on the\ngovernment or state-owned enterprises (BUMN). The private sector,\nincluding national entrepreneurs and local SMEs, must play a crucial\nrole in investment development.<\/p>\n
Rosan dismissed the notion that Danantara was established to usurp\nthe role of the business sector. On the contrary, Danantara is expected\nto serve as a partner that enhances private sector involvement in\nvarious strategic projects.<\/p>\n
One example is the waste-to-energy program. In this program,\nDanantara encourages technology providers, including foreign ones, to\npartner with local companies.<\/p>\n
Through this partnership, domestic companies are expected to gain\nknowledge and technology transfer while enhancing their capacity to\nundertake large-scale projects.<\/p>\n
\u201cThe role of Danantara is to strengthen the economy together.\nIndonesia\u2019s economic pie, the business landscape in Indonesia, is\ngrowing increasingly over time,\u201d said Rosan.<\/p>\n
Nevertheless, he acknowledged that there is still work to be done to\nimprove the investment climate, particularly in terms of transparency,\ngovernance, accountability, and business certainty. The government,\nincluding Danantara, must continue to enhance productivity and\nefficiency to ensure that investments yield optimal benefits for the\neconomy.<\/p>\n
Writer:<\/p>\n
Aguido Adri, Dimas Waraditya NugrahaEditor:<\/p>\n
FX Laksana Agung Saputra<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/kadin-urges-more-investment-and-stronger-msmes-beyond-java-1793321413", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }