Ministry: Business Incubators Can Slash Early-Stage MSME Failure Risk by Up to 90%

Jakarta (ANTARA) - The role of incubator institutions as providers of coaching facilities for micro, small, and medium enterprises (MSMEs) is essential to ensure business continuity and mitigate the risk of failure during the early stages of entrepreneurship, stated Riza Damanik, Deputy for Entrepreneurship at the Ministry of MSMEs.

He noted that with a robust incubation process, the failure risk for MSME startups can be reduced by 80 to 90 per cent, mirroring successful models implemented in countries such as South Africa, New Zealand, and Germany.

“Consequently, this reduced risk of failure will provide greater confidence to financing institutions, strategic partners, and the market, enabling better cooperation with our MSMEs,” Riza said during the Islamic Financial Dialogue in Jakarta on Wednesday.

He emphasised that the role of incubation is not merely ordinary mentoring, but rather a core government strategy to ensure business sustainability and investment security.

Incubation, he continued, functions as training that improves business models, financial management, and entrepreneurial mindset before MSMEs are released into a competitive market.

Riza stated that there are currently 7lar 754 registered incubator institutions under the Ministry of MSMEs across Indonesia, with the highest concentration located on Java. Of these, 17 incubators are classified as Grade A, while the remainder are classified as Grade B and Grade C.

“There are 754 registered, and hopefully, these will serve as our vehicle—another arm we can use to ensure that the failure risk of our MSMEs can be prevented from an early stage,” he said.

He added that the goal of incubation is not only for MSMEs to survive but to achieve the quality necessary for expansion, including driving network expansion and broader market reach, which will automatically create more stable and high-quality employment within society.

To strengthen the incubation process, the Ministry of MSMEs is implementing two programmes: first, Prokesra, which aims to produce 10 million entrepreneurs and workers through improved training and mentoring; and second, the ‘Bursa Wirausaha Unggulan’ (Leading Entrepreneur Exchange), an ecosystem for the final stage of incubation that provides access to financing, quarantine, and market expansion.