Indonesian SMEs Need More Than Capital to Succeed in Global Export Markets
Indonesia’s small and medium-sized enterprises are gaining new access to alternative financing and digital tools, but researchers from Universitas Negeri Malang warn that funding alone will not guarantee export success. A 2026 conceptual study by Suprapto, Sudarmiatin, and Heri Pratikto argues that Indonesian MSMEs must combine financing with digital capability, export readiness, and risk management to compete effectively in international markets.
Published in the International Journal of Applied Economics, Accounting and Management (IJAEAM), the study highlights a major imbalance in Indonesia’s economy. MSMEs contribute more than 60 percent of national GDP and employ nearly 97 percent of the workforce, yet their contribution to national exports remains only around 15.7 percent. The researchers say this gap reflects structural weaknesses in internationalization readiness rather than a lack of entrepreneurial potential.
The article, titled Alternative Financing, Digital Capabilities, and Risk Mitigation in the Internationalization of Indonesian SMEs: An Integrative Conceptual Framework for Export Performance Improvement, examines how financial access, digital transformation, institutional support, and risk mitigation interact to influence export performance among Indonesian MSMEs.
Why the Research Matters
Indonesia has spent several years encouraging MSMEs to “go digital” and “go export” through programs such as Kredit Usaha Rakyat (KUR), ultra-micro financing (UMi), PNM Mekaar, export financing through LPEI, and fintech lending platforms supervised by the Financial Services Authority (OJK).
However, the study argues that many MSMEs still struggle with:
- Financial literacy
- Digital literacy
- Product certification
- Export documentation
- International compliance standards
- Market access and logistics
The researchers emphasize that export success depends not only on obtaining capital, but also on how effectively businesses transform funding into operational capability.
In practical terms, MSMEs need financing for activities such as:
- Product development
- Market research
- Export certification
- Packaging adaptation
- Digital marketing
- Cross-border logistics
- Export working capital
Without adequate business capability, additional funding may only increase short-term production rather than long-term competitiveness.
Alternative Financing Expands Opportunities
The study explains that Indonesian MSMEs are increasingly accessing non-traditional financing channels beyond conventional bank loans. These include:
- Fintech lending (LPBBTI)
- Crowdfunding
- Supply-chain financing
- Export financing
- Government-backed credit programs
According to the researchers, alternative financing can help businesses overcome common barriers such as limited collateral, insufficient credit history, and restricted access to formal banking systems.
The article also notes that Indonesia’s fintech lending sector has expanded rapidly under OJK’s 2023–2028 development roadmap, which focuses on financial inclusion, governance, and productive financing for MSMEs.
Still, the study cautions that fintech lending is not a universal solution. MSMEs must also understand funding costs, cash-flow management, and financial risk before taking on debt.
The researchers propose that Indonesian MSMEs should adopt a “blended finance” approach by combining several funding sources depending on business needs. A company might use one financing instrument for machinery investment, another for digital marketing, and another for export order fulfillment.
Digital Capability Becomes the Key Export Driver
One of the strongest findings in the study is that digital capability acts as the bridge between financing and export performance.
The researchers define digital capability broadly. It is not limited to opening a social media account or joining an e-commerce platform. Instead, it includes the ability to:
- Build multilingual product catalogs
- Manage digital payments
- Analyze customer data
- Track supply chains
- Maintain customer relationships
- Use digital traceability systems
- Strengthen online business reputation
The study argues that these capabilities help Indonesian MSMEs gain credibility among foreign buyers and investors.
The researchers also identify compliance capability as another major factor in international competitiveness. Export markets increasingly demand:
- Halal certification
- Product traceability
- Sustainability standards
- Eco-labeling
- Intellectual property protection
- Packaging compliance
- Food safety standards
As global markets move toward stricter environmental and sustainability regulations, Indonesian MSMEs that meet these standards may gain stronger long-term advantages.
Export Risks Remain a Major Challenge
The study highlights several international risks that frequently undermine MSME export performance, including:
- Exchange-rate volatility
- Shipping delays
- Regulatory changes
- Buyer payment failures
- Geopolitical instability
- Sustainability compliance costs
The researchers argue that risk management should become a central part of MSME export strategy from the beginning, not an afterthought.
For example, MSMEs can reduce payment risk through letters of credit, escrow systems, and buyer due diligence. Logistics risks can be minimized through cargo insurance and diversified shipping partners. Exchange-rate risks may require stable-currency invoicing or natural hedging strategies.
The study also recommends gradual internationalization. Instead of entering global markets aggressively, Indonesian MSMEs may achieve better outcomes by starting with indirect exports through aggregators, digital marketplaces, diaspora networks, or partnerships with larger companies before expanding independently.
Universities and Government Play a Strategic Role
The research stresses that MSME internationalization cannot succeed through isolated policies. The authors call for an integrated ecosystem involving:
- Government agencies
- Universities
- Financial institutions
- Fintech platforms
- Export associations
- Digital marketplaces
- Logistics providers
The researchers say universities can contribute through mentoring, digital training, certification support, and business incubation programs.
“Funding serves as an initial enabler that must be converted into financial, digital, innovation, networking, export readiness, and compliance capabilities,” the authors from Universitas Negeri Malang explained in the study.
The article further argues that institutional support can strengthen MSME competitiveness by reducing information gaps and improving access to export networks.
Implications for Indonesia’s Export Future
The study concludes that Indonesia’s MSME export strategy should move beyond simply expanding access to loans. Policymakers should instead build a connected support system that integrates financing, digitalization, certification, insurance, logistics, and international market intelligence.
According to the researchers, the future success of Indonesian MSMEs in global markets will depend on their ability to transform financial access into sustainable operational capability.
The study also proposes a future empirical research agenda using quantitative and mixed-method approaches to test how financing, digital capability, institutional support, and risk mitigation affect export performance in Indonesian MSMEs.
Author Profiles
Suprapto — Researcher and postgraduate scholar at Universitas Negeri Malang specializing in MSME internationalization, financing systems, and export development.
Sudarmiatin — Academic researcher at Universitas Negeri Malang with expertise in economics, business development, and entrepreneurship education.
Heri Pratikto — Lecturer and researcher at Universitas Negeri Malang focusing on management, MSME competitiveness, and international business strategy.
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