Indef: MBG–KDKMP integration needed to expand MSME participation
Jakarta (ANTARA) — The Institute for Development of Economics and Finance (Indef) says the Free Nutritious Meals (MBG) programme and the Red and White Village/Sub-district Cooperatives (KDKMP) need to be integrated to increase MSME participation and ensure government spending has a greater impact on local economies.
The recommendation is based on the institute’s study of MSME involvement in the MBG and KDKMP ecosystems, which surveyed 1,806 respondents across Indonesia in August 2026.
The study found that the programmes’ wide reach had not been matched by broad MSME participation in their supply chains, meaning their benefits for small businesses remained suboptimal, according to Indef’s findings received in Jakarta on Tuesday.
The research found that 97 per cent of respondents were familiar with MBG, and that the programme was present in 92 per cent of the villages or urban wards represented in the survey. However, only 5 per cent of formal MSMEs and 1 per cent of informal MSMEs had partnered with the programme or were exploring a partnership.
“About 80 per cent of MSMEs have yet to see new business opportunities emerging from the two programmes. This indicates a low multiplier effect,” the report said.
Indef said the findings pointed to a need to improve programme design so that government spending not only supports operations but also creates business opportunities and spreads economic benefits to MSMEs in local areas.
It recommended widening local MSMEs’ access to procurement, simplifying procedures and adjusting procurement scales, ensuring suppliers are paid on time, developing contract-based financing, and strengthening KDKMP as an aggregator of local production and distribution.
Proposed measures include publishing the supply requirements of each MBG kitchen and KDKMP cooperative, and setting targets for spending with local micro and small businesses. Greater transparency, Indef said, would make it easier for MSMEs to access procurement opportunities and join programme supply chains.
Alongside procurement access, payment certainty and the availability of financing are also important. Indef proposed issuing standard fixed-term contracts that MSMEs could use as a basis for obtaining finance to fulfil orders.
Under the proposed integration, KDKMP would act as an aggregator linking local producers and MSMEs with MBG kitchens, while also strengthening the distribution of products in local areas.
Strengthening local supply chains is also considered important to mitigate the impact of competition on small businesses.
According to Indef’s survey, 22 per cent of respondents reported a decline in business activity because of MBG, while only 5 per cent reported an increase. Informal MSMEs were particularly affected by the downturn.
To minimise this impact, Indef proposed stronger partnerships among school canteens, MBG kitchens, KDKMP cooperatives and local food stalls. The arrangement is intended to expand market access for MSMEs while helping established community businesses remain viable.