Widespread use of technology driving small business growth

• Small business growth was strong in 2023 and expected to be stronger in 2024
• Indonesian small businesses cite improved profits with technology investment 
• Access to finance remains a challenge for small businesses

Indonesian small businesses were the most likely to grow in the region in 2023, a new survey by CPA Australia shows, with eight in ten saying they grew last year, well above the survey average of 60 per cent. 

The annual Asia-Pacific Small Business Survey found this strong growth momentum will continue in 2024, reflecting confidence in their business and the economy. 

Eight four per cent expect to grow in 2024, up from 80 per cent in 2023 and 77 per cent the previous year. 

The widespread use of technology amongst Indonesian small businesses is a major contributor to this strong result. Indonesian small businesses were the most likely in the region to use social media. E-commerce is also important to many local businesses, with 69 per cent generating more than 10 per cent of their revenue through online sales. 

The quick returns that small businesses are receiving on their technology investment helps to explain this focus. Sixty-six per cent of Indonesia’s small businesses that invested in technology in 2023 said that such investment improved their profitability, the second highest result for the Asia-Pacific region.  

Dr Adi Budiarso FCPA (Aust.), Chairman of CPA Australia’s Indonesia Advisory Committee said, “The strong return on technology investment shows that local small businesses are good at choosing technologies that improves their performance, such as mobile apps.”  

Along with a focus of many Indonesian small businesses on other key drivers of growth, including improved customer satisfaction and business strategy, the survey data suggests the possibility of several local small businesses scaling up to become large, successful global businesses over the next few years.  

While small businesses are moving in the right direction with their investment in technology, they need to pay more attention to the possibility of cyberattacks, said Dr Adi. 

“The fact that only 48 per cent reviewed their cybersecurity in the past six months is worrying especially when 57 per cent expect to be cyberattacked in 2024.” 

Job creation by the sector remains robust with 52 per cent expecting to add to their headcount this year, well above the 37 per cent of new jobs created by small businesses in 2023 and 32 per cent in the previous year. 

While access to finance was slightly less difficult in 2023 with 33 per cent finding it difficult compared to 39 per cent in 2022, Indonesia remains one of the more difficult markets for small business to access finance. 

Of those that accessed finance, 61 per cent did so to fund growth in 2023, the fourth highest among the 11 markets surveyed, a trend that is expected to continue given the positive market sentiment. 

“This is where improved financial literacy can play a pivotal role in supporting small businesses, especially micro businesses, to scale up.” 

Dr Adi who is also Director of the Financial Sector Policy Centre at Indonesia's Ministry of Finance said the Integrated National Database of MSMEs is expected to play a significant role in improving the reliability of business data held by the government. 

“For businesses, this can provide a central and reliable know your client (KYC) registry. It also has the potential to improve financial inclusion by supporting the development and deployment of new financial services to small businesses.”.

”The survey also shows Indonesia’s small businesses have a strong focus on activities linked to ESG such as staff health and safety policies, diversity and inclusion policies and supply chain sustainability with only 17 per cent not spending any time or resources on activities linked to ESG. 

“The strong ESG focus is very encouraging. However, we hope to see increasing numbers of small businesses exploring more advanced ESG practices such as renewable energy investment, adoption of green and sustainable finance, and energy and water use monitoring,” commented Dr Adi. 

One significant long-term advantage Indonesia has is the young age profile of its small business owners. Nearly six in ten small business owners that responded to the survey were aged under 40, the second highest result of the markets surveyed.  

“Young business owners are driving the momentum on technology uptake. The survey results have shown over many years that small business with younger owners are more likely to be growing, and innovating, using emerging technologies and exporting – all essential for growth in 2024 and beyond,” said Dr Adi. 

The survey covered responses from 4222 small business owners or managers across 11 Asia-Pacific markets, including 302 from Indonesia. 

Media contact

Selvi Tanggara
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