Indonesia formalises 14.7 million micro enterprises in 2025 to boost jobs and productivity

The formalisation effort was driven by policies aimed at improving legal status, financing and market access for micro enterprises, the Ministry of Micro, Small and Medium Enterprises (MSMEs) said on Wednesday. 

Officials say the move is critical in an economy where micro businesses form the backbone of employment and local production, yet have traditionally operated outside formal systems. “Formalisation helps micro enterprises access credit, markets and government programmes more easily,” said Riza Damanik, Deputy for Micro Enterprises at the MSMEs Ministry.

He added that better registration also improves data accuracy and policy targeting, making small businesses more resilient over the long term. Alongside registration, the government accelerated efforts to standardise products and improve compliance. 

During the year, 6.5 million products received halal certification, while more than one million micro enterprises obtained Indonesian National Standard (SNI) certification. These certifications are seen as key to building consumer trust and enabling small firms to enter modern retail chains and digital marketplaces.

Access to financing also expanded sharply. State-backed micro lending under the People’s Business Credit (KUR) scheme reached Rp257.9 trillion (around US$15.4 billion) as of December 11, benefiting 4.38 million borrowers. 

About 60.8 percent of the loans were channelled to productive sectors such as agriculture, manufacturing and services, exceeding annual targets. 

To further ease credit constraints, the government is also expanding non-KUR financing options, allowing micro enterprises to use land certificates, invoices, purchase orders and even intellectual property as collateral, a move aimed at businesses that lack traditional assets or formal banking histories. 

Market access has improved through partnerships and public programmes as well. Some 2,804 micro enterprises joined business partnerships backed by letters of intent worth Rp29 billion, while 12,740 MSMEs took part in the government’s Free Nutritious Meals programme, linking small producers to large-scale public demand. 

Looking ahead to 2026, the ministry said it will accelerate reforms to help micro enterprises scale up more sustainably. The focus will be on strengthening legal status, expanding productive financing, boosting digital marketing capabilities and integrating small businesses more deeply into national supply chains. 

For Indonesia, the push signals a clear shift: moving millions of micro enterprises from the margins of the economy to its formal core, and positioning them as a stronger driver of growth, jobs and resilience in the years ahead.