Government Supports MSMEs to Penetrate Global Markets Through Tech and Tax Incentives

Minister of Micro, Small, and Medium Enterprises (MSMEs), Maman Abdurrahman, stated that many Indonesian MSMEs are developing, but he hopes the growing number of business units will not only dominate the domestic market but also the export market abroad. To this end, he is encouraging MSMEs by providing necessary policies without compromising product quality. The Ministry of MSMEs is also continuing to support the MSME ecosystem through the SAPA UMKM application. “The system is currently in the process of integration, and we have adopted and invited partners to join, providing training and services for MSMEs to be technology-friendly, including AI,” Maman explained during the Economic Update on Thursday. Maman also confirmed that the Ministry’s activities are technology-oriented, acknowledging that the transition is not easy but will change gradually. He also emphasised the importance of legal certainty and regulations for MSME development in Indonesia. Consequently, the government has issued Government Regulation (PP) Number 20 of 2026 regarding adjustments to the final Income Tax (PPh) policy for MSME players. Under this regulation, MSMEs with an annual turnover below Rp 4.8 billion are entitled to a final PPh rate of 0.5%, while those with a turnover below Rp 500 million can receive a 0% PPh rate. Protection for MSMEs is also being carried out by safeguarding the upstream-downstream sector, including curbing the circulation of illegal imported products, such as those from China. The Ministry of MSMEs and the Ministry of Industry are collaborating to strengthen the supervision system for imported products on e-commerce platforms while simultaneously improving product quality. The Ministry of MSMEs has recorded positive business performance for MSMEs that have successfully grown and upgraded to enter the global market. Through the SAPA UMKM application, the government is promoting the use of Artificial Intelligence (AI) technology, product education, training for MSME business players, and access to financing to increase MSME business growth. Maman Abdurahman also mentioned that the large number of MSMEs, reaching 57 million, and the integration of central and regional systems pose a challenge to strengthening Indonesian MSMEs.