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TradePAG Theme #4: Linking MSMEs with Large Firms to Go Global

3 May 2023

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The contribution of MSMEs to national exports  must be viewed more broadly by considering the direct and indirect contributions. Thus, the strategy to increase the export contribution of MSMEs can sometimes be interpreted as an effort to encourage MSMEs to export their products. However, it can also be done by increasing the participation of MSMEs in the domestic value chain with large, export-oriented companies.

To increase the contribution of MSMEs to national exports, the government needs to consider policies adapted to the characteristics of MSMEs. Several policy options can be taken, including an agglomeration approach for manufacturing MSMEs, and improving packaging and shelf life for MSMEs in traditional industries such as food processing. These specific policies can also be formulated based on the MSMEs life cycle, considering the existence of MSMEs with a global-born character generally found in MSMEs based on digital technology.

The Ministry of Trade has a central role in developing export MSMEs in various aspects. First, on the production aspect, the Ministry of Trade can play a role in ensuring the availability of raw material supplies. Second, the Ministry of Trade can encourage a link and match process between MSMEs and large businesses or aggregators as a channel for exporting and optimizing existing policies such as TKDN with localization of supply chain approach. Third, in the marketing aspect, the Ministry of Trade can increase MSMEs access to global markets through international trade agreements. Besides that, provide Market Intelligence through information obtained from trade attaches and ITPCs, assist MSMEs in the export and certification process and optimize trading houses, expos, and business matching as an MSME marketing channel.

TradePAG: Linking MSMEs with Large Firms to Go

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