Comparison of the Role of Financial Inclusion, Financial Technology, and Institutional Quality on the Growth of MSMEs in Indonesia and Malaysia (Journal of Economic Development and Village Building)
Summary
- Indonesian MSMEs expanded from 62,922,617 units in 2017 to 64,194,057 units in 2018, reflecting a growth rate of 2.02%, and reached 65,465,497 units in 2019.p.2
- In 2021, MSMEs in Indonesia absorbed around 97% of the national workforce, generated 60.3% of Gross Domestic Product (GDP), and contributed 14.4% to national exports.p.2
- Indonesia's Financial Services Authority established strategic financial inclusion targets of 93% by 2029 and 98% by 2045.p.4
- According to the 2025 National Survey on Financial Literacy and Inclusion (SNLIK), Indonesia's national financial inclusion index reached 80.51%.p.6
- In Malaysia, more than 90% of the adult population holds an account at a formal financial institution, with 99% of mukim areas having access to financial services within a 10-kilometer radius.p.8
- Malaysia's digital banking infrastructure includes five digital banks operating under the regulatory support of Bank Negara Malaysia.p.11
Key insights
- Comparative findings show Malaysia leads in institutional quality, financial inclusion levels, and fintech ecosystem maturity, while Indonesia faces challenges in equitable financing access and governance.p.1
- Despite strong contributions to national employment, Indonesian MSME growth is hampered by weak financial management and an inability to separate personal and business funds.p.2
- Financial literacy acts as an essential enabler for financial inclusion by allowing business actors to manage risks and utilize financial services effectively.p.3
- Indonesia focuses its financial inclusion agenda on onboarding unbanked populations, whereas Malaysia emphasizes optimizing the integration of digital financial services.p.8
- Indonesian fintech relies primarily on peer-to-peer lending platforms to bridge funding gaps for MSMEs lacking formal bank access.p.10
- Institutional coordination for MSME development in Malaysia is centrally structured through SME Corp Malaysia and Bank Negara Malaysia.p.12
- Malaysian MSMEs demonstrate higher productivity and export integration into global supply chains compared to Indonesian MSMEs, which remain largely micro-scale and domestic-market focused.p.15
Topics and entities
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