MSMEs significantly contribute to the Indonesian economy but as the recent pandemic and global crisis proved, they are particularly vulnerable to negative shocks.
In uncertain times, it's essential to understand the potential issues that could affect MSMEs in the future.
Rising sea levels and global temperatures will cause disruptions in the natural ecosystem, potentially spark the emergence of new zoonotic diseases, and disproportionately affect vulnerable populations. This will have varying impacts on MSMEs, from the supply chain to the demand for goods and services.
The need to offset the impacts of climate change is driving the demand for a circular economy as an alternative way of doing business. This creates new market opportunities and entry points for Indonesian MSMEs to adopt greener business practices.
In response to climate change, Indonesia's participation in global economic cooperation on green infrastructure, water conservation and clean energy transition is increasing.
Additionally, increased dialogue between governments to promote the export of local products also opens new opportunities for MSMEs to expand to international markets.
Increased awareness of climate change, social challenges, demographic changes have changed consumer behaviors. This has led to increasing demand for ethical products, and a rise in emerging sectors such as care work and the halal economy.
This offers many opportunities for Indonesian MSMEs to engage in new businesses and to access alternative financing schemes.
In recent years, technology has grown rapidly. Automation, blockchain technology, the metaverse and Artificial Intelligence have shaped business operations in unexpected ways.
While MSMEs can use technology to boost their business, not all can equally benefit from it, signaling a widening digital gap.
Moreover, the risk of insufficient regulations on technology can negatively affect MSMEs and consumers, which can potentially create new challenges in the future.
The digital era has increased work in the gig economy, which offers MSMEs access to a larger pool of workers and flexibility in contracting.
However, gig workers are at risk of precarious working conditions due to the nature of their employment.
We came to these five drivers by using the horizon scanning technique as one of the main Strategic Foresight tools. This is what the process looked like:
On 15 December 2022, the Indonesian Ministry of National Development Planning (Bappenas) and United Nations Global Pulse (UNGP) hosted the “Strategic Foresight: The Futures of MSMEs in Indonesia” joint report launch in Jakarta. The event successfully presented the results of the horizon scanning activity and generated discussions about the potential emerging issues that could possibly affect Indonesian MSMEs 10-20 years in the future. Around 100 representatives from various stakeholders including the Indonesian government, multilateral organizations, academia, NGOs and private institutions attended the event.