COVID-19, digital transformation and small to medium enterprises in Indonesia

COVID-19 has hit small and medium enterprises (SMEs) hard, through lockdown measures and the resulting economic downturn. How are these businesses using digital platforms to change the way they operate and how effective is the government’s digital technology policy in supporting their transformation?


A new Australia-Indonesia Centre (AIC) Rapid Research project will investigate how Indonesian SMEs are using digital technology to transform their business models and identify learnings that can be applied to support Indonesia’s economic recovery.

Indonesia is the largest economy of Southeast Asia. SMEs play a vital role in the Indonesian economy. They are the biggest employer, accounting for nearly 97% of local jobs. They attract 56% of business investment in Indonesia. SMEs are important to Indonesia’s economic growth, poverty reduction and social inclusion.

“The project investigates the impact of COVID-19 is having on Indonesian SMEs,” said project co-lead Dr Heather Stewart.

“We are particularly interested in how SMEs are incorporating digital into their business strategy in responding to demand and supply-side challenges including big data management. We are also interested in exploring the effectiveness of the government’s policy in support of SMEs. One of Indonesia’s digital ambitions is to encourage SME technological leapfrogging through e-commerce with a range of initiatives rolled out before COVID-19.”

“Because SMEs are major contributors to jobs, we want a better understanding of inequality and the uneven impact COVID-19 has had on the ‘new poor’ and vulnerable groups,” said co-lead Dr Beta Yulianita Gitaharie.

“Analysing digital changes and the type of transformation that is occurring will help us in at least three ways. First, capture learnings of SME agility and resilience.  Second, identify improvements to the Government’s policy on SME, entrepreneurship and finance. Third, understand the direct and indirect impact on the ‘new poor’ and vulnerable groups which comprise the markets for these SMEs. There are opportunities for SMEs to play a major role in promoting Indonesian COVID-19 recovery and contributing to their communities.”


The research team

Co-leads: Dr Heather Stewart (The University of Queensland), Dr Beta Yulianita Gitaharie (Universitas Indonesia)

Participants: A/Prof Sarah Jane Kelly (The University of Queensland), Dr Liz Ferrier (The University of Queensland), Dr Andre Pekerti (The University of Queensland), Dr Belinda Wade (The University of Queensland), A/Prof Imam Salehuddin (Universitas Indonesia), A/Prof Riani Rachmawati (Universitas Indonesia), A/Prof Tengku Ezni Balqiah (Universitas Indonesia)


Australian Media enquiries

Marlene Millott
PAIR Program Officer
+61 427 516 851

Indonesian Media enquiries

Fadhilah Trya Wulandari
PAIR Program Officer
+62 8124 3637 755


About the Australia-Indonesia Centre

The AIC was established by the Australian and Indonesian Governments in 2013. It brings together 11 universities – seven Indonesian and four Australian – to advance people-to-people links in science, technology, education, innovation and culture. The AIC designs and facilitates bilateral research programs, taking research outcomes to policy and practice. It forms interdisciplinary teams that work collaboratively with stakeholders – policy, business and community – to find solutions to regional, national and global challenges.

Beyond research, the AIC’s outreach activities contribute to broader people-to-people links. It runs digital dialogues that seek to shed new insights. It supports the deepening of cultural exchange through a binational short film festival, explores respective national attitudes and perceptions towards each other, and brings together future leaders of both nations workshops, dialogues and other programs.

The Rapid Research program is part of the AIC’s Partnership for Australia-Indonesia Research, funded by the Australian Government.  It is AIC’s front-foot response to a better understanding of COVID-19’s impact on Indonesia’s economy and society.  It brings together Sixty Australian and Indonesian researchers from the AIC’s consortium of 11 universities to explore three areas: COVID-19 People and Health; COVID-19, People and Connectivity, and COVID-19, People and Economic Recovery.


Foto oleh Fikri Rashid on Unsplash