MSME Ministry Strengthens Business Incubators, Reduces Entrepreneurial Failure Risk to 90 Percent

The Ministry of Micro, Small, and Medium Enterprises (UMKM) is strengthening its business incubation programme as a strategy to improve the quality of entrepreneurship while reducing the risk of business failure in the early stages. The government considers the incubation process to be a crucial factor in enabling MSMEs to more easily obtain financing and expand their markets.

Deputy for Entrepreneurship at the Ministry of UMKM, Riza Demantik, stated that various studies in several countries show the incubation process can lower the failure rate of start-up businesses by up to 80 to 90 percent. Consequently, the government has made strengthening incubators a national priority for entrepreneurship development.

“We believe the failure rate for MSMEs must be increasingly lower. With reduced risk, financial institutions will also be more confident in providing financing to MSMEs,” Riza said at the Indonesia Sharia Forum (ISF) 2026 held by Republika in Jakarta on Wednesday.

According to Riza, the Ministry of UMKM has recorded 754 registered business incubator institutions across Indonesia. The distribution of these incubators is still predominantly on Java, with relatively fewer numbers in eastern and western parts of Indonesia.

From this total, the government has recently conducted a ranking of the incubator institutions. A total of 17 incubators received an ‘A’ rating, while the rest fell into the ‘B’ and ‘C’ categories. Riza explained that the highest-rated incubators will become the government’s main partners in running a co-incubation programme to produce more business actors who are ready to grow.