More than four in 10 small businesses in Indonesia planning to hire more staff in 2023

The nation's micro, small and medium enterprises (MSMEs) have been resilient despite global uncertainty.

Research by CPA Australia released on 2 May 2023 (Tuesday) reveals that most small businesses in Indonesia expect to see growth in 2023. 

Analysing data from the Asia-Pacific Small Business Survey, the boom in business sentiment is evident from the 77% of firms reporting growth in 2022 and 32% of them stating that they hired more employees. This growth is expected to continue as more than four in ten have plans to hire more staff in 2023.

Dr Adi Budiarso FCPA (Aust.), Chairman of CPA Australia's Indonesia Advisory Committee noted the nation's micro, small and medium enterprises (MSMEs) have been resilient despite global uncertainty. This follows data which cited a drop in Indonesian small businesses naming the pandemic as a major challenge from 72% in 2021 to 48% in 2022. 

He also highlighted, "Indonesia is home to more than 64mn MSMEs, creating a significant number of jobs and contributing to the economy. Although the pandemic still casts a shadow over Indonesia, its impact is diminishing. The lifting of travel restrictions has helped Indonesian small businesses perform, by boosting the tourism industry and private consumption." 

Businesses attributed their profitability to technological investments, with 67% of firms agreeing to this. They elaborated that the use of digital tools such as social media has been especially advantageous, with seven in ten companies using social media to promote their business and 61% using it to communicate with customers. 

The increased use of technology in businesses was credited to government initiatives such as the National Economic Recovery Programme and the Proud of Indonesian Products Movement. This was further propelled by the pandemic which pushed firms to embrace technology and adapt to changing demands of the market. Indonesian businesses have also prioritised enhancing of customer satisfaction, further seeing firms getting more sophisticated in using social media to stay connected with consumers.  

Additionally, digital payment options are being taken up by more Indonesian businesses. 

On the flipside, a faced by Indonesian businesses has been were access to external finance. Among the 73% that sought funds last year, 39% found it difficult, which was higher than the overall APAC survey average of 33%. Despite this, firms remained willing to try and access these funds, with 89% planning to seek external funds this year, despite worrying about restricted cashflow from the pandemic. 

The survey findings also revealed that many Indonesian small businesses have spent time and resources on environmental, social and governance (ESG) practices. A quarter (24%) of firms kept track of their energy and water use and 23% of them adopted green and sustainable finance opportunities.

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Lead image / CPA Australia